Transcripts

"Kevin McCormally's Tax Tips"-How To Pay This Tax Day

SUSIE GHARIB: And finally, it's tax day. And with a midnight deadline looming for Americans to file their Federal return, President Obama is promising to re- write what he's calling the monstrous U.S. tax code. Meanwhile, if you're afraid to file because you can't afford to pay all that you owe, the final installment of our series "Tax Tips" has some suggestions. Here's our tax guru, Kevin McCormally, editorial director at "Kiplinger's Personal Finance."

KEVIN MCCORMALLY, EDITORIAL DIRECTOR, KIPLINGER'S PERSONAL FINANCE": I want to close this series by addressing two serious tax matters. First, for those of you out there who owe more than you can afford to pay, you ask me, what do I do? I say, don't try to hide. File your return on time, even if you can't send a check for what you owe. That will protect you from the government's stiff failure to file penalty. In a few weeks, you'll get a bill from the IRS and at that time you can call the number on the form and start the process of working things out. You might, for example, set up an installment payment plan to pay off your debt. The IRS is stressing how reasonable it's being in these tough economic times. And, on the bright side, IRS interest rates are at rock bottom levels. Second, for all of you getting big, fat refunds, please, visit your company's payroll office tomorrow morning to file a new W4 form. The W4 controls how much tax is withheld from your checks. And this year's refund is proof positive that you had too much withheld last year. Claiming more allowances on your W4 will cut withholding and increase your pay. Think of it as getting next year's refund in installments, starting next pay day. Need added incentive? Think of cutting withholding as your patriotic duty. After all, the first thing President Obama did to get the economy moving was to convince Congress to cut withholding to hike paychecks for workers. And the fact is, most Americans can boost their own paychecks by far more than that act of Congress did. All you need to do is file a new W4 so you get more of your money when you earn it rather than as a tax refund next spring. I'm Kevin McCormally.