Tax refund loans are a popular option for those who need quick cash before receiving their tax refund from the government. With so many loan options available, choosing the best tax refund loan for your needs can be challenging.
Want to learn more about what a tax refund loan is? Or thinking of getting one? Let’s discuss tax refund loans, how to get one, tips on managing loans, and the top advance loans in 2023.
Tax Refund Loan
A tax refund loan, also commonly referred to as a refund anticipation loan (RAL), is designed to provide you with short-term financial assistance. This type of loan is typically repaid through your upcoming IRS tax refund, which means you can access the funds you need now and then pay back the loan once you receive your refund. Essentially, tax refund loans allows you to borrow money against your anticipated tax refund, which can be useful if you need cash quickly and want to ensure your refund arrives.
Taking tax refund loans has several pros and cons, which one should consider carefully before taking the one to ensure they make the best decisions. Thus, let’s examine a few pros and cons of taking one.
Pros of Taking Tax Refund Loans
- Tax refund loans give quick access to cash. The process is usually much faster than waiting for the IRS to process and send a refund.
- Many tax refund loans have no upfront fees or interest charges; Hence, you don’t have to worry about paying fees upfront.
- The borrower’s anticipated refund typically serves as security for tax refund loans, so lenders might not demand a credit check. This can make them a good option for borrowers with poor credit.
- The application process for tax refund loans is often simple, and one can complete it online or in person. Some lenders may not require extensive documentation or income verification.
Cons of Taking Tax Refund Loans
- Some tax refund loans may have high-interest rates or fees, especially if the borrower has poor credit. Therefore, it’s essential to carefully review the terms and costs of the loan before accepting it.
- The borrower might owe more on the loan than they receive in their refund if their anticipated refund is less than expected or the IRS withholds it for any reason.
- Tax refund loans are typically capped at a certain amount, which may not be enough to cover all of the borrower’s financial needs.
- Tax refund loans may only be available during certain times of the year, such as tax season, and may take longer to process than advertised.
Process of Getting Tax Refund Loans
Getting tax refund loans is usually simple and can be completed online.
- Check eligibility Status: To apply for tax refund loans, you must meet certain eligibility requirements and provide appropriate identification.
- Choose a tax preparation company: Several companies offer tax refund loans, including Jackson Hewitt, H&R Block, and TurboTax.
- File your taxes: To get tax refund loans, you need to have your taxes prepared by the company offering the loan.
- Apply for a tax refund loan: Apply for a tax refund loan; after you file your tax return with a tax preparer.
- Receive the loan: Once your application receives approval, you can typically access the loan amount quickly on a prepaid card.
- Repay the loan: The tax preparer will deduct the loan amount and interest from your refund when the IRS releases it.
Advance Tax Refund Loan
An advance tax refund loan is a type of loan where a taxpayer borrows against their expected tax refund for the current year. The loan provider typically charges a fee or interest rate for this service.
Things you should know if you are considering a refund loan:
- Determine if you are eligible for a tax refund: Before applying for an advance tax refund loan, you need to determine if you are eligible for a tax refund for the current year.
- Understand your refund status: When you submit your tax return, it will go through several processing steps. A simple return will process faster, but returns requesting certain credits that are an attractive target for fraud will require additional review.
- Check the status of your tax refund: You can check the status of your tax refund online on the IRS website or on the phone.
- Consider the risks and costs: Tax refund loans can be expensive due to the fees and interest rates charged by the provider. Additionally, if your tax refund is lesser or delays, you may have difficulty repaying loans.
- Explore alternatives: If you need money before your tax refund arrives, other options that are less expensive than advance tax refund loans may be available.
- Seek professional advice: If you are unsure whether an advance tax refund loan is right for you, consider seeking advice from a tax professional or financial advisor.
Tax Refund Loan Online
Several online lenders provide such loans if you are looking for a tax refund loan. Here is a list of where to get the best advance tax refund loans.
#1. TaxNet Financial Inc.
They offer refund anticipation and holiday tax loans. To apply for the loan, you must complete an easy tax interview and select your tax refund preferences. Taxpayers can approve the tax refund amount, provide a direct deposit account, and then receive tax refund anticipation loans and holiday tax loans directly deposited to their selected account per agreement.
#2. Income Tax Advances
They are an online lender that provides safe and secure refund anticipation loans to consumers who have their paycheck direct deposited into a checking or savings account. The lender bases the refund anticipation loan on your income, so you are never required to supply a copy of your income tax return. You can apply even before you file your taxes.
#3. Tax Advance
Tax Advance offers fast, safe, and secure refund anticipation loans via direct deposit to a checking, savings, or prepaid account. Also, tax advance loans are based on your refund, so there is no credit check or upfront fees. All tax advances are $1,278 less tax preparation fees and a $0 finance fee; even if there is a delay with your actual IRS refund.
#4. Liberty Tax
Liberty Tax offers an easy advance loan available to eligible taxpayers and secured by their tax refund. Loan amounts range from $500 to $6,250, and a finance charge applies.
#5. H&R Block
The Pathward, N.A., Member FDIC-issued refund advance loan that H&R offers is available in amounts ranging from $250 to $3,500. The loan is repaid automatically from your refund, with no finance charges or fees.
#6. ATC Income Tax
They offer an EasyMoney Tax Refund Loan that can provide up to $6,000 in minutes. Your tax refund secures the loan and is subject to underwriting and approval.
Turbo Tax Refund Loan
Turbo Tax Refund Advance is a loan secured by your tax return. It allows you to receive up to half of your expected federal refund after the IRS accepts your return instead of waiting for the IRS to process it. The loan amount can range from $250 to $4,000. This program is available to select TurboTax customers who file their tax returns using the software.
The turbo tax refund advance program is offered at no interest and with no loan fees, credit score impact, or APR. You must use TurboTax to e-file your federal tax return to be eligible.
Turbo tax refund advance loan may be worth it if you need cash now and cannot wait to receive your tax refund. Turbo tax offers its refund advance loan program to customers who complete their returns on their own as well as those who use expert assistance. This flexibility allows you to get the advance on your refund without paying additional fees or interest for the advance deposit. However, if you don’t meet the Turbo tax requirements or prefer using different tax software, there are alternatives to a refund advance loan.
Tax Refund Loan H&R Block
The Refund Advance loan from H&R Block is a no-interest loan of up to $3,500, repaid from your tax refund. It allows you to receive money the same day you file your tax return, which can be used for bills or unexpected expenses. The tax refund advance loan proceeds are placed on an H&R Block Emerald Prepaid Mastercard®. Five loan amounts are available: $250, $500, $750, $1,250, and $3,500. You’ll repay the loan by check, direct deposit, or with your prepaid debit card when you receive your refund from the IRS.
The H&R block tax Refund Advance loan charges no interest or fees, with an APR of 0%. However, there is a tax preparation fee to file your taxes with an H&R Block tax pro, starting at $69 for federal income taxes, plus an additional fee for state taxes. To qualify for a tax refund advance, you must meet H&R Block’s underwriting requirements and the bank’s requirements H&R Block partners with Pathward, so a soft credit check is performed when you apply.
Additionally, H&R Block offers a Maximum Refund Guarantee, which states that if you get an offer from another tax refund loan provider for a larger amount, H&R Block will prepare your tax return for free. However, this offer requires you to work with an H&R block tax pro, and if you need an advance loan over $3,500, consider applying for another tax refund advance instead.
What is the Fastest Way to Get Your Tax Refund?
The fastest way to get your tax refund is by using direct deposit and filing electronically. Here are tips for speeding up your tax refund process:
- Plan Your Tax Return Filing Early: Gather all the necessary information for filling out your tax forms and decide whether to file independently or hire a tax preparation service or accountant.
- File your tax return electronically: Choose electronic filing (e-filing) instead of mailing your return. Taxpayers can expect to receive their refund within 21 days when using e-filing.
- Use direct deposit: Opt for direct deposit when you file your taxes so the money goes directly into your bank account. This is faster than receiving a check by mail and saves the IRS money on processing paper checks.
- Set up direct deposit: You can set up direct deposit by selecting it as your refund method through your tax software and inputting your account and routing numbers. Alternatively, you can tell your tax preparer that you want direct deposit.
- Spread your tax refund across multiple accounts: If you prefer, you can spread your tax refund across as many as three accounts by filing IRS Form 8888.
- Ensure your tax return is mistake-free: Make sure your tax return is filled out accurately, as mistakes can cause delays in processing.
- Track your refund: Keep track of your refund on the IRS website and contact the agency if you haven’t received your refund within three weeks.
How Long Does it Take to Get a Tax Refund Loan?
The IRS processes paper returns and issues refunds in about six to eight weeks. If you e-file and choose to receive your refund via direct deposit, you can have your refund in your account in less than three weeks.
How Long Does it Take for IRS to Approve Refund after it is Accepted?
It typically takes the IRS around 21 days to approve and issue your refund after it has accepted your tax return. However, processing times can vary depending on the information submitted on your tax return and other factors such as errors, incomplete returns, or fraud.
How to Get a $10,000 Tax Refund?
To get a $10,000 tax refund, you can consider the following approaches:
- Embrace tax deductions: Several overlooked deductions can significantly affect your tax refund.
- Earned Income Tax Credit (EITC): If you are eligible for the EITC, you can receive a tax refund even if you didn’t pay any taxes during the year.
- Maximize tax credits: You may need to be eligible for multiple tax credits, such as the EITC and other state-specific tax credits.
- Adjust your tax withholding: If you have been overpaying your taxes during the year, you can adjust your tax withholding to receive more money in your paychecks.
- Contribute to retirement accounts: Contributing to retirement accounts like a 401(k) or IRA can lower your taxable income, potentially increasing your tax refund.
How is a Tax Refund Loan Different from a Payday Loan?
A tax refund and a payday loan are both short-term, unsecured loans meant to be repaid when the borrower receives their next paycheck or tax refund. However, there are some differences between the two:
#1. Loan Amount
A tax refund loan is based on the anticipated tax refund, while a payday loan is based on a percentage of the borrower’s income. Payday loan lenders usually keep the loan amounts small to ensure the borrower can repay the loan on time and in full.
#2. Interest Rates and Fees
Tax refund loans typically cost less than payday loans, but they still come with fees and, in some cases, interest charges. On the other hand, payday loans have higher interest rates and can lead to large debts if borrowed repeatedly.
#3. Loan Repayment
Both loans are due in full when the borrower receives their next paycheck or tax refund. However, payday loans can be borrowed repeatedly and weekly, leading to large debt due to interest rates.
#4. Alternative Options
Suppose a borrower cannot obtain a tax refund or payday loan. In that case, they can consider other options, such as a payday advance loan (PAL) from a credit union, a 0% APR credit card, or a personal loan with more reasonable interest rates and repayment terms.
Does Walmart Do Tax Advance Loans?
Walmart does not offer tax advance loans itself. However, some Jackson Hewitt locations are within Walmart stores, and Jackson Hewitt provides advance loans to its customers.
Can I Get a Loan on My Tax Refund Now?
Yes, you can get a loan on your tax refund, also known as a refund anticipation loan (RAL). Typically, tax preparation companies work with third parties like banks to offer these loans, which use your anticipated federal income tax refund as collateral. However, loan amounts, requirements, costs, and terms vary depending on the lender, the amount of tax refund you expect, the tax preparation company, and your overall credit and financial health.
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