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February 5, 2023

Scrambling to meet tax day deadlines

Procrastinators have until 5 p.m, today to get their tax returns in the Gilroy mail:
That’s when the Gilroy post office closes, and after that last-minute filers will have to travel to San Jose to post offices on Meridian or Lundy to get their tax returns postmarked on time. Those post offices will be open until midi night.
And when the Gilroy post office opened at 8 a.m. today, a line of last-minute filers snaked out the door, but by mid-morning the line bean to shrink.
We’re not that swamped. I’m surprised,’; said supervisor Julie Thompson. “When we first opened, the line was out the door and around the corner.”
Many people were waiting in line to get their payment installment program or of paying with credit cards. 
Those who wait until the last minute are usually the ones who owe, Bowe said. 
pacica6ca wt.:4311rd and to make sure they have the enough postage, Thompson said.”It’s just human nature,” he said. “Tax season is fun in February and early March because those are all the people who are getting returns.” 
Maria Leonardo, who owes the government this year, usually files her returns a couple of days before April 15, but she was in line to have her sister’s returns mailed through certified mail.  Many middle-class people are actually paying slightly less in federal taxes than they did in 1995. 
“I’m not really in a hurry,” she said. “As long as it’s stamped today, that’s the important thing.”  According to the Congressional Budget Office, taxpayers with the median family income — about $39,000 in 1999 — will pay 18.9 percent of their income in all federal taxes this year. That compares to 19.7 percent four years ago, and is about $400 less. 
For those who aren’t ready to file their returns, the next best thing is to file for an extension. That’s what Neiva Vemdluscolo was doing at the post office. Vemdluscolo has an accountant do her taxes, but she was waiting for more documents to be able to fill them out completely.  That might provide some small comfort as people rush to one of the hundreds of larger post offices that will stay open late, many until midnight, to handle the crush of up to 40 million state and federal tax returns to be dispatched today. 
• “We still have to get some papers from companies,” she said.  But there was depressing news as well. The Tax Foundation, a nonprofit tax research group, said today “Tax Freedom Day” would be May 11, a day later than last year. The foundation calculates it would take an average worker until that date to earn enough to pay his or her share of all federal, state and local individual and corporate taxes. 
• Many of Gilroy’s certified public accountants were swamped this morning with last-minute preparation of returns. CPA Gary Bowe, however, took that into consideration and left tax day for emergencies.  A reminder: If you can’t finish in time, file for an extension using Form 4868 and pay the Internal Revenue Service as much of your estimated bill as possible to avoid interest and penalties. 
“We try to stay as late as needed on the 14th, so we’re prepared to deal with crises on the 15th,” he said.  Bowe also has answered questions from taxpayers over the phone, but he cautioned that tax preparers might not be able to give too much information. 
On Wednesday, Bowe had people coming into his office asking to have their taxes done, many without wanting to file an extension. But by then it is too late to complete the tax returns without an extension, said Bowe, who prepares about 400 returns during tax season.  “Preparers have to be careful because giving advice can give you liability as a tax preparer, even if you didn’t prepare the taxes,” he said. 
“To rush them through is when mistakes happen,” he said.  And the one thing that Bowe has noticed that people miss claiming on their returns is the dividend reinvestment on mutual funds. 
And filers will want to do all they can to get their returns in on time because the late penalties can be steep.  “They don’t keep track of that, and they’ve already paid taxes on it,” he said. 
“If it’s postmarked April 16, it’s a late return,” Bowe said. “If they have a balance owing, they would incur a 5-percent penalty on the balance.”  This means that people could wind up paying the taxes twice. 
Late returns are charged a 5-percent penalty each month on the balance. Some taxpayers do not file their returns on time because they do not have enough money to pay what they owe.  The IRS expects to receive 126 million individual income tax returns this year, with total income taxes projected at $828.6 billion. That’s just under half the $1.7 trillion in overall federal tax collections used to pay for everything from cruise missiles to food stamps. 
Even then, they are better off filing on time and paying part of the balance or applying for an extension, Bowe said. The charge for paying only part of the amount owed is 0.5 percent of the remaining balance, instead of 5 percent of the whole balance for late fees.   
Filers also have the option of setting up a   
Dispatch wire services contributed to this report.

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