Transcripts

Kevin McCormally's Tax Tips-The Race Against Time

PRATT: Many Americans will spend the weekend working on their 2006 tax return. The federal filing deadline is Tuesday. But don’t sweat it. We’re here to help. In tonight’s tax tips, what to do if you think you won’t get your taxes done on time. Here’s our tax expert, Kevin McCormally, editorial director of “Kiplinger’s Personal Finance.”

KEVIN MCCORMALLY, EDITORIAL DIRECTOR OF “KIPLINGER’S PERSONAL FINANCE”: Let’s call this “form 4868 weekend,” a time millions of procrastinating taxpayers and their paid advisors will be filling out a form 4868 rather than a 1040. The 4868 pushes the tax deadline all the way back to October 15. If you’re among those needing extra time, you can file the form electronically, if you use tax software or print out a copy and get it in the mail by midnight, April 17. We’ve got a link to the form on the NIGHTLY BUSINESS REPORT web site.

The catch, of course, is that while this buys you extra time to fill out your tax forms, it doesn’t push back the deadline for paying whatever tax you owe. You need to do enough of your 2006 tax work to come up with a reasonable estimate of how much you’ll owe. Send in a check with your 4868 if you file by mail, or authorie the I.R.S. to dip into your bank account on April 17 if you file electronically. You’re in good company if you need an extension. Each year between eight and nine million of your fellow filers just can’t make the April Deadline. If you need more time to finish your federal return, you probably need more time for your state forms too. Check your state’s rules. Some automatically grant an extension to those who file the federal form. Others demand their own forms be filed too.

Now here’s one of my favorite tax tips, if you have a refund coming-as about 70% of all taxpayers do. You don’t have to ask fo ran extension. You see, the penalty for late filings is a percentage of the amount you owe with your return. If Uncle Sam owes you, there is no penalty. If you are making certain, rather arcane elections on your return, it does need to be filed by April 17, even if you have a refund coming. But that applies to relatively few taxpayers. If you’re sure you’ll get a refund, you can probably take the weekend off without shame. But file as soon as you can to get your money back. I’m Kevin McCormally.