Tax Refund Loans | The bank rate

Are you expecting a tax refund from the IRS? You may not have to wait for the IRS to process your return and send you a direct deposit or a check in the mail.

If the tax preparation service you use offers tax refund loans, you could get an interest-free advance on your money. These loans are easy to obtain and generally do not require a credit check. However, they may not be wise given that you may have to spend money to access funds that belong to you.

What is a tax-free loan?

Tax refund loans are available to taxpayers who have filed a federal tax return and are eligible for a refund. These loan products are generally for a fixed amount, between $200 and $6,000and offered between January and the end of February.

How Do Tax Free Loans Work?

When you file your return, you can apply for a tax refund loan if offered by the tax preparation service. If approved, funds are distributed by check or loaded onto a prepaid card. The time frame for financing depends on the lender and how you choose to receive the loan proceeds.

However, you will not repay the lender or company offering the loan. Instead, it will be taken from your refund before it is sent to you.

Where can you get tax refund loans?

H&R block

H&R Block’s Refund Advance Loan is offered to customers through MetaBank. You can apply without affecting your credit score and you won’t pay any fees or interest to the lender.

Minimum Federal Tax Refund Amount

$250

Tax preparation fees

Starts at $80 if filed with a tax professional (additional fees apply for state filings)

Amounts of prepayment advances

Not applicable

Amounts of loans without reimbursement of fees

$250, $500, $750, $1,250 and $3,500

Funding deadline

From the same day

Deadline

February 28, 2022

Terms

Be at least 18 years old and file your tax return electronically with a tax professional at an H&R Block office

Turbo tax by Intuit

The Intuit Turbo Tax Refund Advance is also a no-fee, no-interest loan product. It is offered by First Century Bank to filers who use Turbo Tax.

Minimum Federal Tax Refund Amount

$500

Tax preparation fees

No fees for simple federal and state income tax returns (valid until 03/31/2022)

Amounts of prepayment advances

Not applicable

Amounts of loans without reimbursement of fees

$250, $500, $750, $1,000, $1,500, $2,000, $2,500, $3,000, $3,500 and $4,000

Funding deadline

As little as one hour after acceptance of IRS electronic file

Deadline

February 15, 2022

Terms You must be at least 18 years old and not live in Connecticut, Illinois or North Carolina. You must file your federal return electronically with TurboTax and report your income on a Form W-2, Schedule C, Schedule CEZ, or 1099-R. You cannot file with IRS Forms 1040PR, 1040SS, 1040X, 1310, 4852, 4684, 4868, 8862, or 8888.

Jackson Hewitt

Jackson Hewitt offers two Refund Advance loan products, both underwritten by MetaBank. The prepayment advance loan is subject to an APR of 35.9%, or you can get a no-fee repayment advance loan without paying interest or fees.

Minimum Federal Tax Refund Amount

$500

Tax preparation fees

Not disclosed

Amounts of prepayment advances

$200, $500, $1,000

Amounts of loans without reimbursement of fees

$500, $750, $1,000, $1,500, $3,500

Funding deadline

In minutes for the Serve® prepaid debit card. Direct deposit takes 1-5 business days.

Deadline

February 20, 2022

Terms You must be at least 18 years old and file your return electronically with Jackson Hewitt or kiosks at Walmart stores. You must also have a satisfactory payment history with the IRS and other federal and state agencies (i.e. Child Support Enforcement, Department of Education)

Should I take out a tax-free loan?

It depends on your financial situation. You could get cash right away to deal with an unexpected financial emergency, pay off high-interest debt, make a big purchase, or use as you see fit.

Still, a tax refund loan could cost you a significant amount of money if the lender charges a fee, and you’ll essentially be paying to borrow your own money. And if your refund is delayed or denied if there are unresolved tax issues or you owe back taxes, you could end up with a lot of debt. So it may be better to wait for the IRS to process your refund.

Alternatives to the tax-free loan

If you’d rather explore other options, or you’re not getting a refund but need the money, these alternatives might be right for you:

  • Online Loans: Use an online loan marketplace to find personal loan products at competitive rates. Fixed personal loans are payable in equal monthly installments over a fixed period, usually between three and five years.
  • Short-term emergency loans: These loans act as payday alternatives and can give you quick cash without costing you a fortune in interest. Some lenders won’t check your credit when you apply, so you might get approved even if your credit score isn’t up to par.

These online lenders offer fast financing if you need cash now.

Lender

Amount of the loan

APR

Minimum credit score

Funding deadline

Before

$2,000 – $55,000

9.95% – 35.99%

580

As soon as one working day

LendingPoint

$2,000 – $36,500

9.99% – 35.99%

590

As soon as one working day

OneMain Financial

$1,500 – $20,000

18% – 35.99%

Unspecified

As soon as one day

Prosper

$2,000 – $40,000

7.95% – 35.99%

640

As soon as one working day

To improve

$1,000 – $50,000

5.94% – 35.97% (with automatic payment)

Unspecified

As soon as one day

About Mark A. Tomlin

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