Expecting money back from the IRS this tax season and you’re looking for a fast way to get cash, a tax refund loan could work for you. While a tax refund advance may be inexpensive if your tax forms are simple, most people won’t actually be able to get one for free.
If the term tax refund loan stirs up thoughts of predatory lending, that’s because they used to be. Today, these types of loans are another way for tax preparation stores to up their foot traffic — and they’re becoming increasingly popular.
This article focuses on:
- What is a Tax Refund Loan?
- How much does a tax refund advance cost?
- Where To Get A Tax Refund Loan
- Who Is Eligible For A Tax Refund Advance?
- Alternatives To Getting An Advance On Your Tax Refund
What is a Tax Refund Loan?
A tax refund loan is officially known as a refund anticipation loan (RAL). It is a loan that a lender makes based on the amount of your federal income tax refund. Lenders are often small financial institutions.
This may require a little research on your part to make sure the lender is reputable. Many tax filing services will also offer you a tax refund loan after you file with their service.
Tax refund loans typically only last a couple of weeks – just long enough for the IRS to process your tax refund. The loan that you receive from a lender will have the value of your anticipated refund minus any fees or interest charges.
You may receive the loan on a prepaid card, on a check or as an electronic deposit in your bank account. Some lenders only offer one of those methods while others may offer multiple options.
Once the IRS processes your refund, it will go directly to the lender. At this point, your loan is repaid and you made it through tax season.
The only other thing to keep in mind is that if your refund is smaller than your tax refund loan, you will still need to pay the loan back in full.
How Much Does A Tax Refund Loan Cost?
Tax refund advances often don’t come with interest or financing fees. But while you may not need to pay anything to get an advance, you will still need to pay to have your taxes filed through the company.
Expect to pay between $50 and $500 when filing your taxes in a store — though it can go much higher. The one exception is for those filing Form 1040EZ, the simplest of tax filings, which sometimes doesn’t require an in-store fee.
Call ahead to make sure this option is available to you.
Where to Get a Tax Refund Loan
H&R Block Refund Advance
Deadline to apply: Feb. 28 at participating locations.
Amount of the advance: You can apply for an advance of $500, $750, $1,250, or $3,000, depending on your eligibility.
How it works: After your return has been prepared and electronically filed at an H&R Block location, you can apply for the advance. You’re notified of the decision typically within hours after applying. Funds will be loaded onto an H&R Block Emerald Prepaid Mastercard.
Prepaid card details: H&R Block Emerald Prepaid Mastercard has a variety of fees, including $3 per ATM withdrawal. (Emerald cardholders can use the card without triggering fees.)
The Emerald Card allows a one-time, no-fee transfer of funds from your card account by check or automated clearinghouse (ACH) transfer.
Minimum tax refund amount: $300.
Early Refund Advance Loan amounts: $200, $300 or $500.
No Fee Refund Advance Loan amounts: $200, $500, $750, $1,000, $1,250 or $3,200.
Time to funding: Within minutes up to 24 hours if you choose to have the money loaded onto a prepaid debit card. One to five business days if you want the loan deposited into a bank account.
Requirements: For a refund advance with Jackson Hewitt, you must have your taxes prepared at a Jackson Hewitt office and bring pay stubs, W-2s, or other income verification, depending on the type of advance you get.
Tax preparation fee: Prices start at $48, but vary by the complexity of the returns.
Deadline: The Early Refund Advance is available from Dec. 16, 2019, to Jan. 19, 2020. The No Fee Refund Advance is available from Jan. 2, 2020, to Feb. 23, 2020.
Liberty Tax Easy Advance
Deadline to apply: Feb. 28 at participating locations.
Amount of the advance: In loan amounts of $500, $800, 1,300 $2,500, $3,000, $4,750 and $6,250, depending on your eligibility. A finance charge as high as 35.77 percent is charged on Easy Advances of $2,500 or more.
How it works: Have your tax return prepared at a Liberty Tax location. Your advance will arrive within 24 hours after your return has been accepted by the IRS (or 24 hours after filing, if you file before the tax season starts).
Funds can be loaded onto a NetSpend Liberty Tax Prepaid Mastercard or direct deposited into an existing account.
Prepaid card details: NetSpend Liberty Tax Prepaid Mastercard has a variety of fees, including $2.50 per ATM withdrawal.
TaxSlayer’s Refund Advance
Deadline to apply: Available mid-January. There is no specific deadline for the program’s end.
Amount of the advance: You can apply for an advance of $500 or $1,000. You must use TaxSlayer Classic, Premium, or Ultimate for tax preparation, among other eligibility requirements.
How it works: Apply for TaxSlayer’s Refund Advance online when you complete and electronically file your return with TaxSlayer. Once the IRS accepts your return, it generally takes 24 hours to get approved for the loan.
The refund advance is then loaded onto a new TaxSlayer Prepaid Visa Card. (TaxSlayer says it applies for that card for you, sending your personal information—including Social Security number—to Green Dot Bank, the card issuer.)
Prepaid card details: The TaxSlayer Prepaid Visa card has a variety of fees.
TurboTax Refund Advance
Deadline to apply: Feb. 15; date is subject to change.
Amount of the advance: You can apply for an advance of $250, $500, $750 to $1,000. Your expected refund must be at least $1,000. Among other eligibility requirements, you can’t live in or file a return in Illinois, North Carolina, or Vermont.
How it works: Apply for the Refund Advance after completing your taxes with TurboTax. If you’re approved for the advance, it will be loaded onto a virtual Turbo Prepaid Visa card within 48 hours of the IRS accepting your electronically filed return.
An email will explain how to set up the virtual card; you then can use it online wherever it’s accepted. A physical card typically arrives within 5 to 10 business days.
Prepaid card details: The Turbo Prepaid Visa card has out-of-network ATM withdrawal fees and retailer reload fees.
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Who is Eligible For A Tax Refund Loan?
It varies by provider, though many have standard eligibility requirements that include factors such as your creditworthiness, income, and past financial history.
But the two most important factors to qualify are:
- Have your taxes prepared in person. You can only get a tax refund advance from the company that’s also doing your taxes — and most require you to visit a tax adviser in person.
- The one exception is Intuit TurboTax, which allows you to e-file your taxes and apply for an advance fully online.
- Know how much you’re getting. You can typically look up your estimated refund when applying through one of these services.
Alternatives to Getting an Advance on Your Tax Refund Loan
The fees for filing your taxes in person can be expensive. If your refund isn’t big enough to justify the costs, consider using a free online service and opting for one of these financing options instead:
- Pay advance app. Depending on your income, you may be able to get an advance through a pay advance app. While you may need to pay a fee, it is typically much less expensive than paying the tax filing fee if you have a complicated return.
- Personal loan. If you have one big expense you’re hoping to cover with your tax return, it could be worth it to take out a personal loan for $5,000. Look for a loan that doesn’t come with prepayment fees so that you can pay it off as soon as you get your refund.
- Credit card. Use your credit card to cover day-to-day expenses and then apply your refund to pay off as much of your card’s balance as you can. It could be a bit more expensive than a personal loan, but it might be cheaper than a tax refund loan.
- Direct deposit for your refund. You won’t get your refund months in advance, but you can get your tax refund a bit faster if you ask for a direct deposit instead of a physical check when filing your taxes.
- Short-term loan. Payday loans come with more risk. But if you can afford to make payments on time and can’t qualify for another option, a short-term loan that you pay back within a few weeks or months might be able to help you during an emergency.
1. How long will it take to get my refund after filing my taxes?
For most people, it takes about 21 days to get a tax refund. It could take longer if you file for a tax credit, like the Earned Income Tax Credit or Additional Child Tax Credit.
2. Can I get a tax refund advance in March?
Probably not — most tax refund advances stop being available at the end of February. However, keep in mind that if you e-file your taxes, you can receive your refund in as little as 11 days.
3.How much does the average tax preparer charge?
The average tax preparation charge to submit a 1040 and state return with no itemized deductions was $176 in 2017, according to a survey by the National Society of Accountants. The average cost for the most common type of tax return — the 1040 with Schedule A — and a state return was $273, however.
4. What can I do if my tax preparer makes a mistake?
First, pay whatever penalties you’re charged by the IRS. Then contact your tax preparer to discuss the situation, file an amended return and ask for reimbursement of your penalties.
If you rely on your tax refund to cover personal expenses, need it to offset the cost of the holidays or have an emergency that you don’t have the funds to pay for, getting a tax refund loan could be a safer alternative to other types of short-term financing.
But tax refund loans aren’t free. If you weren’t planning on having your taxes filed by an in-store professional, you could be shelling out an additional $150 to $300 for this service depending on the complexity of your taxes.
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