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CNN Sunday Morning
Interview with Vera Gibbons
Aired April 07, 2002 - 11:48 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.
WHITFIELD: Only one more weekend left to get your tax papers in order, and as you can see right here on cnnmoney.com tax countdown, there it is, there are eight days, 12 hours and about 12 minutes or so before the April 15th tax filing deadline, at least for some of us out there. We've got some tax filing questions for Vera Gibbons and she's with "Smart Money" Magazine and she joins us live from New York. Good morning.
VERA GIBBONS, SMART MONEY MAGAZINE: Hi, Fredricka.
WHITFIELD: All right, well the deadline is fast approaching and already I want to ask you about extensions. For those of us who want to file extensions, what do we need to know?
GIBBONS: Well, you can file an extension any number of ways, fill out Form 4868, mail it in. You can e-file Form 4868 using a software program, or you can call the IRS on their toll-free extension number and get yourself an extension. You'll have an additional four months to get those taxes in.
But remember, this is an extension of filing. It's not an extension of paying, and if you owe the government money, you're going to have to pay them your best estimate within 90 percent accuracy of what you think you owe by April 15th or you're going to be hit with all sorts of fees and penalties. The late fees are one-half of one percent per month, with a maximum penalty of 25 percent.
And then on top of that, you've got these interest fees running at six, seven percent. So either get your returns in by April 15th or file that extension by April 15th.
WHITFIELD: Oh my gosh, but what if you've estimated that you owe so much more than you can really afford. Can you right off the bat ask for some sort of deferred kind of payment plan or what do you do?
GIBBONS: The government's happy to take your money in any way, shape, or form.
WHITFIELD: Good.
GIBBONS: But if you can't pay, you can work out an installment agreement with them, filling out Form 9465. This is just a one-page form that you can actually download from the IRS' website. There's a one-time processing fee I think of $43, but if the IRS accepts your request, and they actually might not if they think that you can pay, but just don't want to.
WHITFIELD: Oh, boy.
GIBBONS: Then you are required to pay a certain set amount each month. It is in your benefit to pay off as much as you can, because you're going to get hit with compounded interest fees once again. So, that's one option.
But another option would be, if you can't pay, you know take out a home equity loan, take out a home equity line of credit. These are sort of alternatives to working out an installment plan, sort of a less expensive alternative, I should say.
WHITFIELD: So the interest is still going to be far less than what the IRS wants you to pay?
GIBBONS: Yes.
WHITFIELD: Oh boy. OK now, if you are, you know, doing your own taxes and you've got only now eight days, how much time do you really need to be setting aside realistically so you can try to map out your week on your preparations if you're doing it manually or if you're doing it on the computer?
GIBBONS: Well, you know, it takes the average taxpayer about 13 hours to do their taxes manually. With a software program, like Turbo Tax for example, it really would only take you a couple of hours, two to three hours and maybe even less than that if you've used one of these programs before.
WHITFIELD: Really.
GIBBONS: I will say there's lots of help available on the web, sites like irs.gov, hrblock.com, quicken.com, you mentioned money.com. These are plenty of great resources available; also, Taxes for Dummies, which is my personal favorite.
So technically you do have the time to get it done and there are resources out there, but if your financial situation has changed, if you bought or sold a home for example, if you retired, if you started a business, if you just want more time getting up to speed on all the new tax law changes, all 440 of them, of if you just need to get your paperwork together, you know, if you're going to come out ahead itemizing your deductions but can't seem to get all your receipts together, then go ahead and file that extension. You may as well.
WHITFIELD: Wow, and what happens if you live outside the U.S.? What kind of wiggle room do you have?
GIBBONS: You do have some wiggle room if you're working and living abroad. You've got some extension time there, same thing if you're in a designated war zone.
If you're a member of the U.S. Armed Forces for example, you get an extension there as well. Also, if you're filing your returns through (inaudible) Massachusetts processing center, you've got that extra day because April 15th does fall on Patriot's Day.
So there is a little bit of wiggle room, but for most of us it's April 15th and April 15th only. You've got to get that in there.
WHITFIELD: Not negotiable.
GIBBONS: And you've got until midnight.
WHITFIELD: Doggone it. All right, thanks a lot, Vera Gibbons, Smart Money Magazine, appreciate it very much.
GIBBONS: Thanks, Fredricka.
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