It's crunch time for taxpayers and tax preparers - Ahwatukee Foothills News: Valley And State

It's crunch time for taxpayers and tax preparers

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Posted: Tuesday, April 12, 2011 1:47 pm | Updated: 10:35 am, Mon Apr 18, 2011.

In the lobby of Mack's Tax Service & Estate Planning in Chandler, alongside the Civil War memorabilia, are clocks.

At least 10 of them dot the room. Dozens more could be added, but it will not buy the number-crunchers there any more time, which - as always this time of year - is at a premium.

"I'm self-employed, so work tends to be on my head as soon as the alarm goes off," owner Gloria Mack said. "I got in the office at 9:30 a.m. yesterday, and I was home to watch the news, at 10 p.m. And that was on a Sunday."

The work figures to not cease until the Monday filing deadline for Mack, who has been inundated with the returns of the usual procrastinators, as well as those of customers who aimed to be punctual but had their filings pushed back by an Internal Revenue Service processing delay in January.

Also, Mack added, the sluggish economy has made some hesitant to file, as putting food on the table and keeping the lights on take priority over paying taxes.

"There's still a lot of procrastinators," Mack said, "but people who normally are early have been waiting, too."

The extra three days before this year's tax deadline - which is usually April 15 - is due to Emancipation Day, a District of Columbia holiday that falls on Saturday. As a result, the holiday is being observed on Friday, and by federal law, District of Columbia holidays impact tax deadlines, just as national holidays do.

According to IRS data, 20 to 25 percent of taxpayers file during the last two weeks before the deadline.

One of those is Kelly Kahlstrom, who waited in Mack's office as returns were prepared for her signature. The Glendale resident usually files early but has been bogged down with working and going to school full-time.

"I just didn't have time to get everything together," Kahlstrom said. "Usually, Gloria does everything with my papers in January, and I'm here picking everything up by February 15. ...

"I've never been in a tax office where it's this busy, where everyone is coming in and going. I'm usually done long before that."

While Mack is swamped, Arizona Department of Revenue spokesman Anthony Forschino indicated that overall, the state's taxpayers are filing at a slightly brisker pace than last year.

The department expects to receive 2.8 million filings, and it has received about 5 percent more returns than at this point in 2010.

"The crush is fairly typical," Forschino said. "We've probably gotten a hundred thousand or so more returns than we did last year, but it's about the same pace we had in the past."

The IRS delayed processing returns from taxpayers who itemized deductions and claimed education-expense deductions. Those filings could not be accepted because of changes in the 2010 tax law that were not finished until December, and the IRS needed time to reprogram its processing systems to account for them.

Forschino said that his department's processing budget was not affected by $1.1 million in cuts to the state budget, so processing is proceeding as normal.

One of the more frequent situations tax preparers are seeing this year: Clients getting socked with taxes from early withdrawals from their 401(K) or IRA to make ends meet while unemployed.

For people younger than 59½, such withdrawals are subject to a 10-percent early penalty, then taxed from 10 percent to 35 percent, depending on the tax bracket. Exceptions include using the withdrawal money to buy a first home or pay for health insurance, or for those who are disabled.

"There are seven things that money out of an IRA will cover," Mack said. "Living expenses are not one of them."

Mack spoke to one of her clients this week via phone call from Saudi Arabia, where she is serving in the military. Her husband is unemployed and has worked temporary commission jobs, and the couple want to ensure that they have all of the self-employment tax forms properly completed.

"Years ago, filing day was March 15, and they moved it to April 15," Mack said. "It would not be such a bad thing if they moved it to May 15, with all the forms and hoops that are required."

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