Running out of time

By Jon Moffett | April 14, 2009 at 12:00a.m.

Experts give filers some last-minute tax advice to avoid penalties.

YOUNGSTOWN — The best advice for filing taxes is not to wait until the last minute.

But since the deadline for filing returns is Wednesday, those who prepare tax returns have limited options.

“The most important thing is for people to file on time,” said Eric Erickson, spokesman for the Internal Revenue Service. “If you don’t file, you face penalties.”

Erickson said there are two types of penalties regarding taxes, failure to file and failure to pay. But filing taxes is the crucial first step in the process.

He said people who are filing at the last minute may want to consider filing for an extension by downloading a 4868 form off the IRS Web site, irs.gov. According to information from the IRS, about 77 percent of taxpayers had filed their returns as of April 3.

He added that failing to file actually offers a more severe penalty than failure to pay.

“The penalty for failure to file is 5 percent of unpaid taxes for every month or part of a month you haven’t paid,” Erickson said. “Failure to pay is one half of 1 percent for every month or part of month you haven’t paid.”

By filing for an extension, taxpayers have a longer grace period to file their taxes, Erickson said.

Local tax experts weighed in on why people sometimes wait until the last minute to file their returns.

“I think people are afraid to face facts sometimes,” said Robert Ackerman, CPA, and owner of Ackerman Tax Services in Liberty. “I don’t really know why people wait.”

Ackerman has worked in the business for almost 50 years. He and his wife, Lenore, work with about 300 individuals and a few businesses come tax time.

Ackerman agreed with Erickson on filing for an extension, saying, “The deadline is not fixed in cement. People can get extensions in time from the federal government to file the tax return.”

Ackerman said the easiest way to avoid being penalized for filing late is to file electronically. About 95 percent of Ackerman’s clients file their returns online, he said. He added that electronic filing is quicker, easier and leaves fewer chance for error.

“It saves me time, it saves my clients time, and it’s easier,” he said.

Erickson said taxpayers are encouraged to file online to avoid costly mistakes and delays in their return. It’s also beneficial because returns come much faster.

“If you file a paper return, you mail it in and wait for us to mail your return, which could take six to eight weeks,” he said. “By using e-file, we put the money directly into an account about seven to 10 days later.”

The process also is much quicker, Erickson said. He added that his own personal return was completed online within an hour.

Filing electronically also limits potential mistakes because most tax software automatically detects problems, Erickson said. He added that many problems occur because taxpayers hurry through their returns.

“When you rush is when you make mistakes,” he said. “Make sure to double check your return. ... Make sure with all the information you’ve entered that there are no human errors, which could delay the process.”

He said some of the most common mistakes are made by entering incorrect dates and Social Security numbers.

Ackerman said people should have all of their necessary paperwork available so tax preparers can be as efficient as possible.

He added the best way to stay ahead of the game is to not wait until the last minute.

jmoffett@vindy.com