What you Need to Know About Tax Refund Advances

There are a lot of people nowadays who file for an income tax refund. Only through late December 2019, there were 72% tax returns filed that actually generated a tax refund, out of 156 returns filed. But did you know that there’s such a thing as a tax refund advance? If you didn’t, this post will tell you everything you need to know about it and how to deal with your taxes, whether you are an independent contractor or not. 

What Is a Tax Refund Loan?

A tax refund advance is basically an amount of cash that you can take on a tax refund that you are expecting. It’s a short-term advance, and the amount of money is taken from your refund as soon as you get it. The best thing regarding tax refund advance is that you can receive it very quickly, in just about 24 hours or much earlier than that.

However, not all people are eligible for a tax refund loan. In order to be suitable for receiving this advance, you need to make sure the company that offers the loan is preparing your taxes. But to make that possible, you will also have to deal with a tax preparation fee, so make sure you have some cash saved. The minimum amount of the expected refund is not set in stone, as it’s different from a company to another. Just keep in mind that available amounts for tax refund loans can be between $200 and $3,500.

In general, taxpayers with a small or moderate-income who claim the credits will deal with immediate expenses by taking advantage of their refunds.

Why You Might Not Need a Tax Refund Loan

You may be someone who needs a loan that lasts more than a few weeks. If this is the case, then you will need something else, and not a tax refund loan. Not to mention that if you think you’ll be unable to repay the loan in full, you should refrain from trying to get one.

Best Tax Refund Loan Companies

There are a few very well-known companies that can offer you tax refund advance, so if you need one, then make sure to check them out.

H&R Block

One of the most known companies that offer tax refunds advance is H&R Block. Issued by Axos Bank, this company can offer loans between $250 and $3,500, with the minimum tax refund amount being $500. As for the tax preparation fee, most times, it is going to be $59. However, you can expect it to be higher, especially if you have a very complex tax return.

In order to get your loan from them, you need to make sure you go to a participating H&R Block office and have all your taxes ready. In addition, specific underwriting and credit requirements have to be met.

As for when the funding is being offered, it usually happens on the same day. There’s an H&R Block Emerald Prepaid MasterCard where the money will be loaded, after which you can transfer the whole amount by ACH or check. This process will require no fee.

Keep in mind that you will need to apply for your tax refund advance soon if you want one because the deadline is February 29, 2020. 

Intuit TurboTax

Intuit TurboTax also offers tax refund loans. First Century Bank is the one funding their refund advance loan.

With them, you have the option to take loan amounts between $250 and $2,000. Conversely, the minimum tax refund amount is $500. Nevertheless, loan amounts are going to be decided based on additional data, not only on your expected refund amount. This information could include tax information and personal information.

You will have to pay a tax preparation fee of $90 to make this work. In order to get a loan from them, you need to be approved for the Turbo Visa Debit Card. Other requirements include the fact that you need to file your taxes with TurboTax, and that you shouldn’t file a North Carolina, Illinois, Vermont or Rhode Island state tax return.

Your amount will be offered within two days of IRS acceptance of the tax return. It also happens after you’ve set up a Turbo Visa Debit Card account. You will receive a physical card in the mail, which usually takes between 5 or 10 business days to arrive. In the meantime, you can buy items online with your temporary card information.

In regard to the deadline, it is either until funds run out or until February 7, 2020.

Jackson Hewitt

Another very popular choice when it comes to tax refund advances is Jackson Hewitt. The coolest thing about the No Fee Refund Loan and the Early Refund Advantage Loan offered by them is that there is a 0% annual percentage rate for both. MetaBank issues Jackson Hewitt’s refund advances.

This company has a minimum tax refund amount of $300, while No Fee Refund Advance Loan amounts can be between $200 and $3,200 and Early Refund Advance Loan amounts can be between $200 and $500 only. There will be a preparation fee of $48, an amount that can vary depending on how complex your returns are.

There are a few requirements that you should be wary of before you seek a tax refund advance from Jackson Hewitt. For instance, you have to go to a Jackson Hewitt office and have your taxes ready, and you will also have to bring some sort of income verification, such as W-2s or pay stubs. It all depends on what advance you are going to get.

You will receive your funds either minutes later or up to 24 hours. It comes down to whether you want your cash deposited onto a prepaid debit card or not. If you want it in your bank account instead, then you will have to wait between one and five business days for this to happen.

The No Fee Refund Advance has availability between January 2, 2020, and February 23, 2020. Meanwhile, the Early Refund Advance availability has ended on January 19, 2020.  

How Much Does a Tax Refund Loan Cost?

Even though this loan is free, you will still have to deal with some costs for tax preparation. You may love the fact that you can get a 0% tax refund loan, yet you still need to make sure you have the cash needed for preparation. Depending on how complex the return is, your tax preparation fee may be up to a few hundreds of dollars.

For example, for a federal return, some services will expect $59 from you to prepare your taxes.

Tax Refund Loan Risks

A few concerns may arise when it comes to getting a tax refund loan. One problem may be getting a lower refund than you expect. If this happens, it means you may have borrowed more than the amount you received from the IRS, in which case you have to get money to repay the loan, aside from the interest and additional fees.

There is also the problem that comes with the cost of the tax refund loan. If you don’t get your IRS refund within a set amount of time, then you may have to deal with penalties. This could increase the overall costs for the interest.  

Alternatives to Refund Tax Loans

If you’re in real need of money, then you will be happy to know that you have other options, which means that you’re not forced to get refund tax loans. Here are some of the alternatives you have:

Personal Loans and Online Loans

These loans are great because they can be used for many things that you may be in need of. Luckily, there are a lot of lenders offering personal or online loans. You can get your funds very soon, even on the same day or the next one. There will be a rate between 6% and 36%, and you can get these loans starting at $1,000. You should just be aware that different lenders have different qualifications.

Credit Union Loans

Another amazing alternative is getting a credit union loan. All you have to do is shop around for a loan or go to the nearest credit union, and find out the requirements, as well as how much you can get to use for your personal needs. In general, there will be lower rates and fees for credit union loans, which makes them convenient when you think there will be fewer costs of borrowing.

0% APR Credit Cards

You also have the option of getting 0% APR credit cards, as long as you have good credit. This means that you can get a card that you can use and pay no interest for, but only as long as you pay the balance before the end of the promotional period.

Conclusion

Tax refund advances can be easily obtained if you know where to get them from, and as long as you have all your taxes ready. Now that you read this post, you should know what a tax refund advance involves. Check out Stilt if you need more information about the matter or about L1 visa taxes, H1B or OPT taxes and many other things.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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