H&R Block 2026: A Self-Employed Filer's Audit

The test return

A reasonably ordinary self-employed scenario: a freelance graphic designer, $97,000 gross self-employment income, $14,800 in business expenses (home office, software subscriptions, equipment depreciation, mileage, professional development), $8,400 in 1099-MISC payments to subcontractors, single filer, otherwise W-2-free.

We filed the same return in H&R Block Self-Employed ($89.95), TurboTax Self-Employed ($129), and FreeTaxUSA Deluxe ($14.99). Same inputs, same expense allocations, same QBI claim.

The bottom-line tax liabilities

Software	Federal Refund	State Refund	Total Cost (federal + state filing)
H&R Block	$1,640	$290	$128.90
TurboTax	$1,328	$284	$179
FreeTaxUSA	$1,612	$290	$14.99 + $14.99

The federal refund difference between H&R Block and TurboTax was $312. That's not a calculation error — both produced mathematically valid returns. The difference came from where each tool aggregated certain expenses and how each handled the home-office deduction.

Where the difference came from

Home office method. H&R Block's interview asked, near the start of the Schedule C section, whether the user wanted to use the simplified method ($5/sqft up to 300 sqft) or the actual-expenses method. We tested both. The actual-expenses method produced a higher deduction in our scenario ($1,640 vs $1,200) because the home had above-average property tax and utilities. H&R Block flagged this and recommended actual.

TurboTax defaulted to the simplified method without surfacing the comparison. The user has to manually navigate to the alternative to compare. We opted for actual on TurboTax too, but the default-path bias would have cost the user $440 in deductions.

QBI deduction. Both tools correctly identified the user as eligible for QBI (income below the SSTB phase-out threshold for single filers). The 20% deduction on qualified business income was handled correctly in both cases. The QBI calculation produces a $5,300 reduction in taxable income; both tools captured it.

Section 179 vs. depreciation. The user purchased a $3,800 piece of equipment during the year. H&R Block's interview offered Section 179 expensing (full $3,800 deducted in current year) as a default with depreciation as the alternative. TurboTax's interview defaulted to depreciation (5-year MACRS) without prompting for Section 179. The Section 179 election produced an additional $760 deduction in current year for the user.

These two differences — home office method and Section 179 election — accounted for most of the $312 federal liability gap.

What FreeTaxUSA did

FreeTaxUSA produced essentially the same federal liability as H&R Block ($28 difference, well within rounding). The interview is bare-bones — it asks for inputs, does the math, doesn't proactively prompt for optimizations. For a user who knows what to claim, FreeTaxUSA is the rigorous and cheap choice. For a user who needs the software to remind them to consider home office method or Section 179, FreeTaxUSA won't help.

We've recommended FreeTaxUSA for years for users with simple-to-moderate returns who know their tax situation. For Schedule C with multiple optimization decisions, the lack of prompting is a real feature gap.

QBI: the SSTB question

The Qualified Business Income (Section 199A) deduction is 20% of qualified business income for pass-through entities, subject to phase-outs and limitations for Specified Service Trades or Businesses (SSTBs). Health, law, accounting, financial services, performing arts, consulting, and several other categories are SSTBs.

Our test taxpayer's income was below the phase-out threshold ($191,950 single in 2025), so SSTB status was irrelevant — full QBI deduction available. Both H&R Block and TurboTax handled this correctly.

We separately tested an SSTB scenario (consultant at $230,000 income, in the phase-out range) to verify the calculations. H&R Block correctly applied the W-2-wages-and-UBIA-of-property limitation; the QBI deduction was reduced from the full 20% to a partial amount. TurboTax produced the same result. FreeTaxUSA also handled it but required manual entry of W-2 wages paid to employees, which is a fair ask but undocumented in the interview.

The Live Tax Pro Review

H&R Block offers a "Tax Pro Review" add-on for approximately $130 that includes a 30-minute review of the return with a CPA before filing. We bought this on the test return.

The CPA reviewed the return, asked about a couple of expense categorizations, and confirmed the QBI calculation was correct. They flagged that the home office percentage (calculated based on 240 sqft / 1,400 sqft = 17.1%) seemed low and asked whether the home was actually larger or whether the office was actually larger. We confirmed the inputs.

Total time: 27 minutes. Total value: probably more useful for a less-experienced filer than for our test scenario, but the safety net is real and the price ($130 vs. TurboTax's ~$200 for similar service) is reasonable.

What we'd change

H&R Block's biggest gap is cryptocurrency reporting. The interview asks whether you had crypto activity but doesn't natively integrate with crypto tax software exports. For users with active crypto trading, the workflow is to use Koinly or CoinTracker to produce a Form 8949 export, then manually reconcile the totals into H&R Block's reporting. This is friction that competitors (notably FreeTaxUSA via its CSV import) handle better.

The state filing fee of $39 brings the total cost to roughly $128.90 for federal + state filing, which is closer to the TurboTax bundle (~$179) than the headline $89.95 suggests. Still cheaper, but the marketing focuses on the federal-only price.

The verdict

For Schedule C filers in 2026, H&R Block Self-Employed is competitive with TurboTax at meaningfully lower total cost, produces equivalent or better tax liability outcomes through its more proactive interview prompting, and offers a credible Live Tax Pro Review safety net.

For users with cryptocurrency activity, the workflow remains painful and an export-from-Koinly approach is unavoidable.

For very straightforward returns with no Schedule C optimization decisions, FreeTaxUSA at $14.99 remains the value choice.

H&R Block earns its 2026 ranking. TurboTax doesn't earn the premium it's still charging.