I tried to find the methodology for this statistic, but H&R Block isn't making it very easy to find on their website or elsewhere on the internet. On the plus side, they do have a lot of interesting statistics about a billion dollars. Did you know that if you stack up a billion dollar bills, the pile is 109,250 meters high? Apparently, this billion comes, at least in part, from the 56 million Americans who will do their taxes on their own this year, and H&R Block estimates 11 million of those could contain errors that left money on the table. (Their site claims that H&R Block professionals found more money for one in five people, with $460 per person, on average.) So the question is: should I try to do my taxes on my own?
I've always done my own taxes, using H&R Block's or TurboTax's software (or, in earlier years, just paper forms). The cost of the software varies, but if I hunt around on Amazon.com or wait for a deal to come through on email, it seems I can get both state and federal for about $25-40. I usually have to get the second or third tier of software, too, as we do rent out a room in our house, and that gets a little more complicated trying to depreciate a portion of our home. But $40 is still much less than $246: which is the average cost for a CPA to file a Schedule A and a state return. So at least on the front end, it seems we're saving about $200.
That said, the amount of money I'd be leaving money on the table is, by definition, an "unknown unknown." If I were aware of the error, I'd correct it. But I'm not (so I can't, and I won't, but...) Using H&R Block's statistics, I have a 20% chance leaving money on the table, and that average error would cost me $460. But the math says I should not pay the extra $206 to hire a professional, for a one-in-five chance of netting $460. (I would need a one in five chance to net over $1,000 for the odds to point to hiring a professional.) This also means that, even though Americans might have left one billion on the the table by not using H&R Block, they'd be paying H&R Block several times more than that had each one of those do-it-yourself tax payers simply paid them $246.
But these are all just gross averages: who knows where my individual situation fits in? And then there's the fact that doing taxes is kind of a chore. I don't hate the process of filing my taxes, but I wouldn't say I particularly enjoy them, either. It's boring, and there are better ways to spend a weekend. Regardless of the money spent, this might be a case for outsourcing.
Do you readers pay a professional to do your taxes? Or are there reasons you prefer to DIY?
*Photo is from zaneology at Flickr Creative Commons.