Transcripts

Kevin McCormally's Tax Tips-Doing Your Own Return

SUSIE GHARIB: Well, it`s that time of year again, time to get out the calculators, the pencils and the forms and get ready to file your Federal income taxes. This year, you have a few more days than usual to get the deed done. Since April 15 falls on a Saturday, the deadline is on midnight on Monday, April 17. And to help you once again, this year we`ll be giving you some advice every Monday night for the next six weeks. Here`s our tax guru, Kevin McCormally, editorial director of "Kiplinger`s Personal Finance" with tonight`s tax tip.

KEVIN MCCORMALLY, EDITORIAL DIR., "KIPLINGER`S PERSONAL FINANCE": The numbers are numbing. By one estimate, the cost of completing our tax returns this spring will surpass $110 billion. And I hate to say it, but a lot of that money is being wasted. The fact is, many of you who pay someone to do your taxes could probably handle the chore just fine by yourself. Sure, the tax law is idiotically complex. But for millions of Americans, tax returns are pretty darn simple.

I was reminded of that the other day when a friend told me she had paid $89 to have a tax shop do her return. Not bad, you might think, until I tell you all she need was a 1040 e-z form. The single page e-z really is easy. In this case, it involved entering two numbers from my friend`s W-2, finding one number in the tax tables and doing some simple subtraction. $89 was a princely sum for that little effort. Her financial life was simple, and so was her return.

Another friend, a doctor, usually pays $600 to $800 to have her return done. This year, she decided to try software and called me in a panic. It can`t be this easy, she said. I must have missed something. I told her to check her do-it-yourself return against the package her accountant put together last year. That`s always a good test. And if you still have cold feet, you can always ask your accountant to go over your numbers. It`ll probably cost you less than having him or her start from scratch.

Clearly, some people need help -- and let me make this clear -- they are well-served by accountants, CPAs and other preparers. But returns are often more intimidating than complicated. Before you haul your papers to a preparer, look over last year`s forms and ask yourself this: what are you really getting for the money? I`m Kevin McCormally.