Zombie Economics: Tax Refund/Penalty Advice

      Whether you're paying out or expecting a tax refund this year, Rick Emerson, author of Zombie Economics, joined us today with some helpful tips.

      For more information, check out the Zombie Economics Website.

      Q: I'm getting a refund this year - how long does it take to arrive?
      A: If you filed online, 10-21 days. If you filed via regular mail, about six weeks.
      Filing your taxes electronically has become more than a matter of convenience - it can actually cut your refund-wait time by 75%. And, if you filed online, the IRS provides a website for tracking the status of your refund, so you can get a better estimate of its arrival date. Go to, and in the search box, type "where's my refund?", and you'll be taken to a page which will tell you exactly that.

      Q: What's the smartest way to use the money from my refund?
      A: Treat it as an extra paycheck...not as a "bonus".

      Remember, that refund money originally came out of your paycheck - it's part of the total, round number that you think of as your yearly income. Use this extra paycheck to increase (or jump start) your financial stability. A good rule of thumb: immediately put 10% of that refund in savings. If you're drowning in credit-card debt, put the rest of your refund -as much as possible- toward the card with the highest interest rate. If you've been making financial progress this year, feel free to put part of your refund toward a cash purchase - something you're saving up for.
      Remember: with a refund, you're not spending the government's're spending you're money. Act accordingly.

      Q: I owe money (or think I'll owe money) to the IRS. What do I do now?
      A: File on time, no matter what...and if you can't pay it all, pay what you can.
      We cannot say this loud enough or long enough: it is crucial that you file your taxes on time, even if you think you'll end up owing. The penalties for not filing are much, much higher than the penalties for non-payment. In other words: it's better to owe money than to make the IRS come looking for you.
      If you owe the IRS more than you have, pay what you can right away - this shows good faith, and can help cover penalties and interest. Then, contact the IRS to set up an installment plan.

      Q: Should I just pay the whole tax bill on my credit card?
      A: Probably not; paying the IRS directly is much usually much cheaper (this year, at least.)
      In past years, taxpayers were often advised to pay off their taxes with a credit card to avoid heavy fines and penalties. At the moment, however, IRS installment plans cost relatively little...about six percent per year. A typical credit card, though, is around 15%, and has added charges and fees on top of that.
      As always, check the specifics of your situation at, and no matter what your plan for payment, pay it off as soon as you can, and get back in the black.