HR Block or CPA?

Tax, SDIRAs & Cost Segregation
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HR Block or CPA?

Tatyana E.
CA · Member since 2011 · 39 posts · 5 votes

I'm a new landlord and I can't decide whether I have to do my taxes at HR Block or shall I go to CPA.

Last year I brough my mother to the US from abroad (adding dependant), bought 2 houses, paid cash for both but took the money from HELOC on my place to buy a rental one (means I have payments like mortgage but not mortgage - ?), got a property manager (and paid her), got tenants (and 1st month rent and deposit), went through eviction process (eviction attorney fees etc.), fixed the house (expenses), put it back to the market (expenses).

In the meantime I pay property tax, water, sewer, garbage, HOA etc. for 3 houses - my mother has no income but she lives separately, so it's my place, my mother's place (I'm the legal owner) and rental.

Off course, I have full time job.

Is it something complicated that CPA should handle or is there nothing complicated and HR Block can handle it?

Thank you so much in advance!

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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
14y

Go with a CPA with real estate expertise. Start a long-term trusted adviser relationship that will pay dividends for decades. Here's one of many reasons; when the IRS audits you, who do you want to go to bat for you?

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  • Joe Delia
    Involved In Real Estate · Rochester Hills, MI · Member since 2010 · 812 posts · 178 votes
    14y

    Getting a CPA is a must imo. Mine is worth his weight in gold. Does dozens of REI returns and is always in the loop.

    I'm sure H&R can handle it, but, if you're going to stay in the REI game, you need to get a cpa.

    0Reply
  • Robert AdamsBusiness Member
    Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
    14y

    Definitely get a cpa. A good cpa will save you more money than the fees they charge. Plus if you get audited you can have them represent you instead of having to have a face to face with the irs yourself.

    [email protected]702-349-9175
    The Adams Team at Rothwell Gornt Companies4.972 Reviews
    WebsiteView Page
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  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y

    Tatyana,

    With your situation it does not matter what you do as long as you do your due diligence on who you meet with. I know plenty of preparers who work for H&R Block that I would trust with any tax return. At the same time I know plenty of CPAs who I wouldn't trust with a 1040EZ.

    If you choose to go to H&R Block, you can use their tax pro search product, look for someone who is an EA and or a CPA.

    Your price will probably be roughly the same maybe a bit cheaper at Block versus a GOOD CPA. I worked for H&R for many years. I will say they are a great value for their price provided you meet with an excellent preparer. Block's guarantees are great compared with how much of a fight you would put up with from a CPA if they make a detrimental mistake.

    Bottom Line:

    Ask the qualifications of both. Go with your gut. It can be common to interview plenty of accountants before you choose. Remember your money is in their hands.

    -Steven the Tax Guy

    Your guide to IRS laws, rules and regulations.

    I represent YOU before the IRS.

    [email protected]224-381-2660
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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y

    Go with a CPA with real estate expertise. Start a long-term trusted adviser relationship that will pay dividends for decades. Here's one of many reasons; when the IRS audits you, who do you want to go to bat for you?

    2Reply
  • Tod R.
    Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
    14y
    Originally posted by Jon Klaus:
    Here's one of many reasons; when the IRS audits you, who do you want to go to bat for you?

    Maybe starting out you can get comfortable with HRB, but when Jon puts it this way, I know who I would rather have going into the auditor's office...

    0Reply
  • Account Closed
    Investor · Lacey, WA · Member since 2011 · 21 posts · 1 vote
    14y

    I'm a big fan of CPA's(mine got me started in REI). I think a good tax person will save help you take all the deductions you earned, a great one will help direct you to new avenues of tax savings.

    Also right now(tax time) many CPA's are swamped until filing time. You might want to file an extension so you can interview them when they are able to give you there full undivided attention. If you're looking to build a long term relation.

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  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y

    Jon,

    It doesn't matter who is behind the preparers name, HR Block, CPA or otherwise or who they work for. You just want the accountant who is going to best present your case to the auditor.

    See my posts on questions to ask your accountant to find out their true qualifications.

    While writing the IRS's Return Preparer Exam I had some conversations with some auditors and appeals agents. And in those conversations with some of the agents, an arrogant representative who says he is going to "show the auditor" will do nothing but hurt his client. An audit is all about negotiation and citations. Be careful with your accountant. Just make sure you're comfortable with the way your accountant will present your case to the IRS; in that case. That can be very detrimental in an audit.

    Someone who is too aggressive is not who you want to bad for you when you're in the bottom of the 9th, bases loaded and down by three. You want someone who will be calm cool and experienced with pressure.

    -Steven the Tax Guy

    [email protected]224-381-2660
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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y

    Steve, I totally agree that people and negotiation skills are paramount in a critical audit. I took the H&R tax prep class many years ago. When I think about my cluelessness, even after the class, to think I was prepared for a comprehensive audit would have been folly. On the other hand my CPA has been guiding his clients through these audits for most every year out of the past 30 years. Despite his somewhat adversarial style, he has learned to get to favorable outcomes.

    He also knows my finances inside and out. He even knows the way my. thinks about REI opportunity and tax. He gives me sanity checks on my "creative" ideas.

    0Reply
  • Tod R.
    Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
    14y

    Steven, I've never dealt with HRB but my impression is that you don't necessarily deal directly with a CPA or even an enrolled agent. I would've guessed it is reviewed and signed by one, but I thought the client deals with a trained data entry person. Do you get an EA or CPA assigned to you or do you get a different one each year?

    0Reply
  • Brian K.
    Rental Property Investor · Buffalo, MN · Member since 2010 · 511 posts · 92 votes
    14y

    I to would go with a CPA that knows real estate and will uderstand how to find things to your advantage or be able to deal with things that might not come up alot. Also, if you plan on buying more you will have that relationship built up already to take advantage of in helping you. Long term the money spent on a CPA will pay for itself.

    0Reply
  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y
    Originally posted by Jon Klaus:
    I took the H&R tax prep class many years ago. When I think about my cluelessness, even after the class, to think I was prepared for a comprehensive audit would have been folly.

    Jon,

    I'm glad you found yourself someone great to work with. Oh dear God! To think about an audit after the tax prep class would never happen. Those who offer representation have often been in the business 20+ years and have a good track record. Block had 15 or so different preparer titles which their pay was also based upon as incentive to learn more topics. Those titles were based upon topics on which they had tested on. I taught a lot of H&R Block's advanced training courses and I will say the problem is that the associates have a choice as to what classes to take rather than forcing them to further themselves.

    Tod,

    No, You do not have to be an EA or CPA to electronically file a tax return; however, almost everyone who prepares returns should be able to preparer the level of return you have when you sit down with them. Anyone you meet with will have taken the Income tax course as well as been required to take 24 - 30 continuing education hours.

    Bryan,

    That is the key. Someone who understands real estate investments and matches your business strategy.

    Due diligence is most important.

    -Steven the Tax Guy

    [email protected]224-381-2660
    1Reply
  • Robert AdamsBusiness Member
    Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
    14y

    I would also like to add, when you are looking for a cpa try to use one that has previously had experience working as an irs agent.

    [email protected]702-349-9175
    The Adams Team at Rothwell Gornt Companies4.972 Reviews
    WebsiteView Page
    0Reply
  • Jeff S.
    Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    14y

    I’ve had a business relationship with my CPA for nearly 30 years and he’s become a trusted advisor. Not only do we get tax advice, but he understands our risk tolerance and personal finances, and he's helped set up our retirement plans and family trust. He’s not a lawyer but obviously understands tax law and has been around the block enough to provide us with rudimentary financial legal advice. My CPA is also a great resource when I need a reference for a lawyer, insurance agent, or other business professional. I can’t imagine obtaining this level of support from H&R Block.

    I could be wrong, but I thought H&R Block just prepared taxes. Even if they were great at this, and they just might be, you won’t receive the trusted advice from them that you’ll obtain from a long relationship with a CPA.

    Jeff

    0Reply
  • Kevin Yeats
    Lender · Fort Pierce, FL · Member since 2009 · 825 posts · 486 votes
    14y

    How about an Enrolled Agent?

    0Reply
  • Bill Walston
    Real Estate Investor · Northeast TN, TN · Member since 2008 · 516 posts · 361 votes
    14y
    Originally posted by Kevin Yeats:
    How about an Enrolled Agent?

    Kevin, an EA may be an excellent alternative, as many have expressed in earlier posts in this discussion. It depends on the EA's experience and background, just as it would depend on a CPA's experience and background. Any tax pro that you select should have experience working with and advising real estate investors. Better yet, find one like Steven Hamilton II who has both the experience of working with real estate investors and the added advantage of investing himself.

    If you are looking for advice other than in the tax area (such as budgeting and financial planning) I would lean towards the CPA, but that's just me...

    It's not the credentials behind the name but the knowledge between the ears...just sayin' :)

    0Reply
  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y

    Jeff S

    Many preparers, even at H&R Block are accountants who simply file returns there for their clients, because H&R Block makes it easier for them to do business. H&R provides a guaranteed check while you're working, you will get some benefits and Their E&O insurance is great.

    I have plenty of clients who I would prepare their tax return while I worked for H&R Block. My clients had the same relationship with me as they would've had with any other accountant except, I had an excellent E&O policy and an A+ tax education program behind me. Any of my clients from when I was there contacted me personally when they had issues or received any kind of letter if they failed to bring me a piece of information.

    Kevin Yeats,

    I am an Enrolled Agent. I have been for many years now. Most EA's who have their own practice handle everything from business consulting, accounting and payroll, and offer full financial services. I know of some who even have attorney's who will meet with you and them if you need legal advice.

    As Bill said "It's not the credentials behind the name but the knowledge between the ears...just sayin' :)" That is definitely the truth.

    -Steven the Tax Guy

    [email protected]224-381-2660
    0Reply
  • Jeff S.
    Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    14y

    Thanks Steven Hamilton II for the clarification.

    Among the business decisions I often make are how aggressive to be with my taxes. My CPA, who signs my returns but really has little risk here, will usually present me with my options, advice on the potential risks, and the possible consequences.

    I'm curious, since H&R Block provides the E&O insurance, is there any pressure on its agents to remain conservative and maybe not provide its clients with all their options to minimize insurance claims and losses? Thanks.

    Jeff

    0Reply
  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y

    Jeff S,

    No, it typically it depends upon the person you're working with and their comfort level in which they will advise you. This is why I always say go with someone very experienced in your line of work. They will know from the line of work what is average.

    I have a tendency to advise aggressively; There is nothing wrong with arranging your affairs in a way to which you do not have to pay as much in income tax. Plus the IRS typically audits less than 2% of tax returns.

    I do not condone blatantly taking erroneous deductions; however, arrange your situation in your favor through intricate planning.

    -Steven the Tax Guy

    [email protected]224-381-2660
    1Reply
  • Tatyana E.
    OP
    CA · Member since 2011 · 39 posts · 5 votes
    14y

    Just wanted to say HUGE THANK YOU to everyone for invaluable advice.

    I set up an appointment with a very good and experienced CPA for next Tuesday. I have tons of questions, off course, but I don't want to abuse your generosity and will probably torture CPA:). And off course I'm reading this forum and already learned a lot.

    Once again, thank you so very much!

    1Reply
  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y

    Tatyana,

    You are interviewing them for the position of your accountant. You have every right to ask them those questions and discover their qualifications.

    -Steven the Tax Guy

    [email protected]224-381-2660
    0Reply
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