TODAY | April 15, 2013
>> it is tax day as we've been saying and the irs estimates as many as 40% of americans wait until the very last minute to file, if that is you, we have some helpful advice this morning, carmen wong-ulrich is a cnbc personal finance expert. good morning.
>> good morning.
>> for those who haven't filed should they be in full-on pan ick?
>> you got to do something today, you have to do something. if you can't file your full tax form you can file an extension, that's form 4868. i do it every year.
>> you can do it online as well and it gives you some time, about six months until october 15th to file, then do it as soon as you can but be careful if you owe money you can have an extension to file but you don't have an extension to pay.
>> you have to pay today anyway.
>> what you can expect to pay, at least in the 90% range. if you don't file there's a failure to file penalty of 5% of what you owe every month, then if you don't pay, there's 0.5% every single month and 60 days late $135 so obviously it pays to pay.
>> and if you do file for an extension until the october 15th extension deadline, is there any penalty for that time?
>> no, you have to pay today. you have to pay something. if you can't pay the full amount get this, don't charge this on your credit card . i know there's the temptation of i'll put it on a card and pay it off eventually. you'll pay interest on that card and a processing fee of around 2%. the irs is probably the lowest cost lender around. you can call them up today and find out for a payment plan that makes sense for you and only pay around 3% in interest.
>> so they will come one some sort of payment plan for but.
>> yes. if you avoid them the gloves are off. you're in trouble.
>> make sure you place the call to the irs if you need some help paying. how about if you file an extension, does it make it more likely that you may get audited? are you sort of setting out a red flag ?
>> not necessarily.
>> to the irs , okay.
>> that's not what's going to get you in trouble. here's a couple things that will make them look at you more. one is don't forget that folks report that they are paying you, so there's two parts of the equati equation. i paid her this. if you don't report that income and it doesn't match up or the numbers don't match that could trigger an audit. if you make over $200,000, your odds go up. if you make over $1 million your odds go way up and if you're a small business owner or freelancer because there is so much room to make little mistakes or to cheat a little bit with deductions and the irs knows how much someone in your position say whether it's your job, line of work, your business deducts most often so if you have something wild and crazy, spent thousands of dollars entertaining clients when you really work from home they'll know.
>> be careful with those deductions and also you say be careful with if you round up too much that's a red flag .
>> or if you round down. say you owe 5125 and you put 5,000 that's a big red flag because that means you're kind of fudging things so make sure your numbers match and add correctly. the irs says the number one mistake people make, they don't add right.
>> what are the odds that somebody really gets audited, the average person?
>> the average person it's like 1%. it's 1% but it goes way, way, way up and strangely enough way up if you adopt. odds are over 60% but if you have more than $1 million or business that makes more than $10 million your odds are closer to a quarter or 30%.
>> keep track of your records always, have the paperwork handy.
>> be neat and if you file online electronically there's less room for error. if you're a paper filer, there's a lot more room to make mistakes.
>> is it too late to hire a tax professional today? i imagine they're swamped.
>> they're zombies today. today is a bad day to call up someone and say can you do my taxes. you could call someone and say could you do an extension if you can't do it yourself. file the extension and take the time between now and october to call your friends and family, interview a couple of accountants and see who works with people like you. you want someone who is familiar and understand you and want this to be your relationship like your primary care physician someone with you all the time, makes things a lot easier.
>> especially in certain trades it's important to have that person be right there with you.
>> very much they got to know.
>> carmen wong ulrich thank you so much.