Transcripts

"Kevin McCormally's Tax Tips"-Deadline Day

SUZANNE PRATT: The day that many Americans dread is finally here -- your 2007 federal tax return or an extension form needs to be postmarked by midnight tonight. As we wrap up this year's tax tips, our tax guru, Kevin McCormally of Kiplinger's Personal Finance, says now's the time to start thinking about next year.

KEVIN MCCORMALLY, EDITORIAL DIRECTOR, KIPLINGER'S PERSONAL FINANCE: This is the day Lincoln died, the day the Titanic sank, the day your tax return is due. But there's good news for those of you burning the midnight oil to finish the forms -- there's a very good chance you don't have to kill yourself to get to the post office by midnight.

Remember, if you have a refund coming, which 75 percent of all taxpayers do, there is no penalty for filing late. So if you've got money coming back, it's fine to drop your return in the mail tomorrow.

Now, another reminder -- today is not the end of the tax season. It's closer to the beginning. Between now and the end of the year, you'll have many opportunities to cut your tax bill for 2008. Are you maxing out your 401(k)? Have you considered whether using a ROTH 401(k) offers you a better deal? And when you rebalance your portfolio this year, be tax- smart, harvesting losses to hold down the tax on profits.

Are you planning a significant contribution to charity this year? Remember that giving appreciated securities can be really generous to you.

Now, let me close by going back to the beginning, to those 75 percent of taxpayers who get refunds. This year, the average refund hit another record -- over $2,300 -- and that's not a good thing. On average, taxpayers let the government take nearly $200 a month more out of our paychecks than the IRS deserves. Sure we love our springtime refunds, but doesn't it make more sense to get your money when you earn it? And you can do just that by filing a new W-4 with your employer. If you claim more withholding allowances on that form, you'll get an instant boost in take- home pay. I like to call it giving yourself a raise, or starting to collect next year's refund next pay day.

I'm Kevin McCormally.