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Interview With 'Smart Money's Lauren Young

Aired January 20, 2003 - 13:39   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


KYRA PHILLIPS, CNN ANCHOR: Now a great break for millions of taxpayers. Some of you will be able to file your tax returns online this year for free. The program is part of partnership between the IRS and a private consortium. With more on this free e-filing, Lauren Young with "Smart Money" magazine joins us live from New York -- hi, Lauren.
LAUREN YOUNG, "SMART MONEY": Hi, Kyra.

PHILLIPS: Now, it sounds sort of too good to be true, so let's hammer this all out. First of all, tell us exactly what Free File Alliance is.

YOUNG: Well, it's an alliance of a bunch of different software companies, and some of them you're going to know. H & R Block, the people who put out TurboTax. They have all gotten together to provide 60 percent of all the taxpayers out there, that was the idea, with free filing.

PHILLIPS: OK. So who can do this, and who can't? Let's start with who this is good for.

YOUNG: That's an excellent question. It's kind of odd who can, who can't. The IRS is really trying to go after people with lower incomes to get them to file online. So a lot of the software, a lot of the free programs -- there is, I think, 13 partners all together. They are for people who have an income of roughly $33,000 or less.

But, active military members can also file for free, as well as people who are over the age of 50, and people who have an income above $100,000. So there's lots of different stipulations, but it is definitely not for everyone.

PHILLIPS: All right. Who is it not for, for sure?

YOUNG: Definitely people in that middle income range, and I should say that if you're married to someone who does fall into one of these categories. For example, somebody who's in the military, you will also fit in that umbrella too, assuming that you file jointly.

You can go on the IRS Web site, it is IRS.gov and you can basically fill out a little questionnaire which will tell you if the free service is for you or not.

PHILLIPS: All right. We do have that. We have it here on the screen. IRS -- all right. How easy is this? What do you do? You just -- you log on, and kind of give us a step by step process here. YOUNG: It is really easy once you get online, once you find the Web site. And all you have to do -- usually, it's very similar to if you've used TurboTax software or TaxCut or any of the really popular ones out there. You basically fill out a little questionnaire in the beginning, and all that information is transferred. So it's not like you just sit down and you start filling out the paper form. They ask you questions which makes it a lot easier.

For example, do you have a W-2 form, how old are you, what's your Social Security number. And all that gets transferred onto the actual software. This is not going to be stored on your hard drive of your computer like it would be if you were using one of the software programs. It is going to be transferred over the Internet, over a secure line, but just keep in mind that you're not keeping the data, and there is going to be a password that is going to let you get in and out of the Web site.

PHILLIPS: All right. You mentioned secure line, but I think that's a tremendous concern for a lot of us, because this is all major information. All of our personal information -- I mean, how safe is this?

YOUNG: Well, 47 million people -- well, not 47 million people, but there were 47 million returns filed last year online. Now, a lot of those were done over the Internet, some of them were done by phone, but haven't heard of any problems there. These are very secure lines. The companies that you are going to be sharing the data with, they are not allowed to sell your information or to give it to anyone else. It is just between you, the software provider, and the IRS, and that's it. So that's the good news. It is very secure.

PHILLIPS: What about getting audited? If you do it this way, are your chances less that you may get audited?

YOUNG: That's a really good question. Actually, the statistics show that people who file electronically are less likely to be audited. Incidentally, if you file for an extension, you're also less likely to be audited. I don't understand quite why, but that's what the statistics show.

PHILLIPS: And do you get a faster -- does the check come to you a lot faster if you do it this way?

YOUNG: So much faster, and that is one of the reasons why the IRS wants people to do this is they can process your claim a lot faster. Also remember that it's going to be more accurate because you're not doing the math in your head, you are doing it on a computer. But if you typically -- if you file online, you will get your return -- I think it is within ten days if you do a direct deposit, and if you do it by paper, you're not going to see that refund back for probably about six weeks.

So definitely an incentive to file online.

PHILLIPS: All right. Lauren Young with "Smart Money" magazine. Thanks a lot, Lauren. YOUNG: Thank you, Kyra.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired January 20, 2003 - 13:39   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Now a great break for millions of taxpayers. Some of you will be able to file your tax returns online this year for free. The program is part of partnership between the IRS and a private consortium. With more on this free e-filing, Lauren Young with "Smart Money" magazine joins us live from New York -- hi, Lauren.
LAUREN YOUNG, "SMART MONEY": Hi, Kyra.

PHILLIPS: Now, it sounds sort of too good to be true, so let's hammer this all out. First of all, tell us exactly what Free File Alliance is.

YOUNG: Well, it's an alliance of a bunch of different software companies, and some of them you're going to know. H & R Block, the people who put out TurboTax. They have all gotten together to provide 60 percent of all the taxpayers out there, that was the idea, with free filing.

PHILLIPS: OK. So who can do this, and who can't? Let's start with who this is good for.

YOUNG: That's an excellent question. It's kind of odd who can, who can't. The IRS is really trying to go after people with lower incomes to get them to file online. So a lot of the software, a lot of the free programs -- there is, I think, 13 partners all together. They are for people who have an income of roughly $33,000 or less.

But, active military members can also file for free, as well as people who are over the age of 50, and people who have an income above $100,000. So there's lots of different stipulations, but it is definitely not for everyone.

PHILLIPS: All right. Who is it not for, for sure?

YOUNG: Definitely people in that middle income range, and I should say that if you're married to someone who does fall into one of these categories. For example, somebody who's in the military, you will also fit in that umbrella too, assuming that you file jointly.

You can go on the IRS Web site, it is IRS.gov and you can basically fill out a little questionnaire which will tell you if the free service is for you or not.

PHILLIPS: All right. We do have that. We have it here on the screen. IRS -- all right. How easy is this? What do you do? You just -- you log on, and kind of give us a step by step process here. YOUNG: It is really easy once you get online, once you find the Web site. And all you have to do -- usually, it's very similar to if you've used TurboTax software or TaxCut or any of the really popular ones out there. You basically fill out a little questionnaire in the beginning, and all that information is transferred. So it's not like you just sit down and you start filling out the paper form. They ask you questions which makes it a lot easier.

For example, do you have a W-2 form, how old are you, what's your Social Security number. And all that gets transferred onto the actual software. This is not going to be stored on your hard drive of your computer like it would be if you were using one of the software programs. It is going to be transferred over the Internet, over a secure line, but just keep in mind that you're not keeping the data, and there is going to be a password that is going to let you get in and out of the Web site.

PHILLIPS: All right. You mentioned secure line, but I think that's a tremendous concern for a lot of us, because this is all major information. All of our personal information -- I mean, how safe is this?

YOUNG: Well, 47 million people -- well, not 47 million people, but there were 47 million returns filed last year online. Now, a lot of those were done over the Internet, some of them were done by phone, but haven't heard of any problems there. These are very secure lines. The companies that you are going to be sharing the data with, they are not allowed to sell your information or to give it to anyone else. It is just between you, the software provider, and the IRS, and that's it. So that's the good news. It is very secure.

PHILLIPS: What about getting audited? If you do it this way, are your chances less that you may get audited?

YOUNG: That's a really good question. Actually, the statistics show that people who file electronically are less likely to be audited. Incidentally, if you file for an extension, you're also less likely to be audited. I don't understand quite why, but that's what the statistics show.

PHILLIPS: And do you get a faster -- does the check come to you a lot faster if you do it this way?

YOUNG: So much faster, and that is one of the reasons why the IRS wants people to do this is they can process your claim a lot faster. Also remember that it's going to be more accurate because you're not doing the math in your head, you are doing it on a computer. But if you typically -- if you file online, you will get your return -- I think it is within ten days if you do a direct deposit, and if you do it by paper, you're not going to see that refund back for probably about six weeks.

So definitely an incentive to file online.

PHILLIPS: All right. Lauren Young with "Smart Money" magazine. Thanks a lot, Lauren. YOUNG: Thank you, Kyra.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com