H&R Block’s Top DIY Questions Focus on Health Care, New Laws and Common Inaccuracies
Taxpayers don’t know how tax laws impact them individually – and it’s costing them
Mostly gone are the days of taxpayers sitting down with a sharp pencil and a calculator at the kitchen table to do their taxes. Yet, H&R Block (NYSE: HRB) found that even with the modern conveniences of online tax prep, do-it-yourself taxpayers often file with inaccuracies – and have many questions.
This tax season H&R Block online clients have daily, unlimited, free access to H&R Block tax experts. Through real-time chat, H&R Block tax experts are answering questions that vary in complexity and giving do-it-yourself clients instant access to tax advice.
“The questions we receive from taxpayers via our free, unlimited chat assistance highlight tax complexity as well as the need for some real, live tax advice,” said Heather Watts, director of digital products at H&R Block. “Certain topics are trending and clients really want to understand what applies to them and how they can maximize their deductions.”
The top 10 questions generally can be summarized in these three categories:
- Health care – how to sign up for it and how to note it on the tax return
- New laws and regulations – the new simplified home office deduction is a change confusing taxpayers, as are laws that have been around but are new to them, such as residency rules for filing state returns
- Common inaccuracies – this includes itemized deductions, Schedule C filing and education tax breaks.
Health care – have it, prove it, but when?
A common question about health care reform is how taxpayers need to indicate they have health insurance when filling out their 2013 tax return. The answer is they don’t. This is because the tax return taxpayers are filling out now is a record of what happened in 2013; proving they had health insurance in 2014 will be done on the return they fill out next year. Open enrollment through the marketplaces ends March 31, which is the deadline to sign up through the federal or state marketplaces. In addition, it’s also the deadline to avoid any potential penalty for not having health insurance.
Because some employers are required to indicate on their employees’ W-2s the value of the health care coverage the employee received, some taxpayers might think they have to do something with that number on their 2013 return, but they don’t. H&R Block’s helpth.com (help getting health insurance) aids consumers in understanding the implications of the Affordable Care Act on a more personal level.
New laws and regulations –and old ones that seem new – confound taxpayers
One of the changes taxpayers have questions about is the new, simplified deduction for home offices. This change allows taxpayers to take a home office deduction of up to $1,500, depending on the square footage of the office, without having to save receipts to calculate relevant home expenses. The rules of this are confusing to taxpayers even though it is a simplified calculation method: $5 for each square foot up to a maximum of 300 square feet.
Some laws that are not new but continue to confuse taxpayers deal with state filing requirements, which can be especially difficult for military spouses. Though it has been around since 2009, the Military Spouse Residency Relief Act continues to be misunderstood. The act allows civilian spouses of service members to be taxed only by their home state when specific qualifications are met.
Common inaccuracies are costly and all too common
A recent H&R Block Second Look® review study revealed that when taxpayers prepare their own tax returns, about 1 in 5 of them leave money on the table – totaling $1 billion.
The study found that some of the most common inaccuracies affected a variety of taxpayers, including small-business owners and students. The study found taxpayers leave money on the table due to the following, among other things:
- With one-third of the national workforce identifying as freelancers, many people don’t realize they should file a Schedule C, which is how sole proprietors report business losses and profits.
- There are more than 18 million people in college, but only two-thirds are claiming one of the higher education tax breaks; the tuition and fees deduction alone helps reduce taxable income by up to $4,000.
- Nearly one-third of all taxpayers claim itemized deductions, but perhaps millions more could benefit by claiming eligible expenses, including medical expenses, job expenses, casualty losses, charitable contributions and real estate taxes.
Taxpayers also have questions about how and when to file an amended tax return. Taxpayers who think there could be inaccuracies on their previous three years’ returns could benefit from H&R Block’s free Second Look® review to ensure they received the maximum refund possible. This offer is good at participating offices for the review of 2010, 2011 and 2012 income tax returns not prepared by H&R Block. For more information about filing tax returns now or for tax tips all year long, visit www.hrblock.com or call 800-HRBLOCK.
About H&R Block
H&R Block, Inc. (NYSE: HRB) is the world’s largest consumer tax services provider. More than 625 million tax returns have been prepared worldwide by and through H&R Block since 1955. In fiscal 2013, H&R Block had annual revenues of $2.9 billion with 24.8 million tax returns prepared worldwide. Tax return preparation services are provided in over 11,000 company-owned and franchise retail tax offices worldwide by professional tax preparers, and through H&R Block digital products. H&R Block Bank provides affordable banking products and services. For more information, visit the H&R Block Newsroom
With the uninsured penalty being 630% higher than 2014, taxpayers are taking advantage of getting health insurance coverage through the federal marketplace.
Open enrollment for health insurance is a time people can make changes and take advantage of the tax opportunities when these decisions are made.