If you need cash while waiting for your income tax refund, some tax preparation services — including TurboTax, Jackson Hewitt and H&R Block — offer 0% interest tax refund loans.
Instead of having an interest rate and repayment terms, the tax preparation service lends you money and reclaims it via your return.
Tax refund loans, also called "refund advances," are a way to access your refund early; however, keep in mind that tax preparers charge fees for filing some tax returns. In paying a tax preparer just to get the advance, you’re paying to access your own money.
What are tax refund advance loans?
Tax refund advance loans are short-term loans of $200 to $4,000 you take out when you're already anticipating a refund from the IRS. The loan amount is deducted from your refund once it’s issued. In some cases, you can get the money loaded onto a prepaid card within 24 hours.
To be eligible for a tax refund loan, you must have your taxes prepared by the company offering the loan, and that might mean you’ll pay a tax preparation fee. There’s a minimum amount your expected refund can be to qualify, which varies by company, and you may get only part of your expected refund in advance.
Tax refund loans may appeal to early filers who claim the Earned Income Tax Credit or Additional Child Tax Credit.
Where to get tax refund loans
Intuit TurboTax’s refund advance loan is funded by First Century Bank.
Minimum federal tax refund amount: $500, but a higher refund amount makes you eligible for higher loan amounts.
Loan amounts: $250, $500, $750, $1,000, $1,500 or $2,000.
Time to funding: Within an hour of approval for the tax refund loan, you’ll get an email with instructions to set up a Turbo Card account so you can shop online. You’ll receive a physical card in the mail within five to 10 business days.
Keep the debit card, because TurboTax will load your remaining refund onto it when it arrives.
Requirements: There are a handful of requirements to be eligible for the TurboTax refund advance. Here are some of them:
You must file your taxes with TurboTax.
You can’t file an Illinois, North Carolina, Rhode Island or Vermont state tax return.
You must also be approved for the Turbo Visa Debit Card.
Tax preparation fees: TurboTax online products vary from free to $120.
Deadline: The refund advance loan is available until Feb. 8, 2021, or until funds are exhausted.
» MORE: NerdWallet’s review of TurboTax
Jackson Hewitt offers a couple of refund advance options. The Early Refund Advance Loan — which requires only proof of income and can be obtained before you receive your W-2 in January — and the No Fee Refund Loan have a 0% annual percentage rate. Both are issued by MetaBank.
Minimum federal tax refund amount: $500.
Early Refund Advance Loan amounts: $200, $300 or $700.
No Fee Refund Advance Loan amounts: $500, $750, $1,000, $1,250, $2,500 or $4,000.
Time to funding: Within minutes or 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. 14, 2020, to Jan. 17, 2021. The No Fee Refund Advance is available from Jan. 2, 2021, to Feb. 21, 2021.
» MORE: Compare best tax software
H&R Block’s refund advance loan is issued by MetaBank.
Minimum tax refund amount: $500.
Loan amounts: $250, $500, $750, $1,250 or $3,500.
Time to funding: Same day, in most cases. Money is loaded onto an H&R Block Emerald Prepaid MasterCard, from which you can make a one-time transfer of funds by check or ACH for no fee.
Requirements: You must have your taxes prepared at a participating H&R Block office and meet certain credit and other underwriting requirements.
Tax preparation fee: Fees start at $59 at most offices and vary depending on the complexity of the tax return.
Deadline: The refund advance is offered at participating H&R Block locations from Jan. 4, 2021, to Feb. 28, 2021.
How to qualify for a tax refund loan
Tax loans don’t usually have the same hard credit score requirements as unsecured loans because they’re not as risky.
Instead, qualification depends heavily on the amount of the refund you’re getting. The loans also require identity verification, a review of your status with the IRS and other debts you owe.
MetaBank issues tax refund loans for both H&R Block and Jackson Hewitt. Both tax preparers say the bank will review an applicant’s credit profile, but the review won’t affect your credit score.
H&R Block says borrowers can pre-qualify for the loan using their Social Security number, last year’s tax refund amount and personal contact information.
How much this ‘free’ loan costs
The main consideration with 0% interest tax refund loans is how much you’ll pay in tax preparation fees, which can range from nothing to hundreds of dollars, depending on the complexity of the return. Services completed at an H&R Block office, for example, start at $59 for a federal return.
Let’s say you’re charged a $59 fee to be eligible for a $500 tax refund loan that lasts until your refund arrives a month later. You could consider that fee equivalent to an annual percentage rate of 142% for the loan. (If you were going to pay for tax prep anyway, you might value the loan differently.)
Tax refund loan alternatives
You could get a lower rate on the same size loan elsewhere, and then use your refund to pay it off.
Payday alternative loans: Some credit unions offer their members payday alternative loans in amounts from $200 to $2,000, depending on the type of loan. These loans have a maximum APR of 28%, with application fees capped at $20.
Online loans: Some online lenders offer small personal loans starting at $1,000 and can fund a loan the same day as or next day after approval. Rates range from about 6% to 36%, and qualifications vary by lender. Consumers with high credit scores, income and little existing debt will qualify for the lowest rates.
0% APR credit cards: Consumers with good or excellent credit (690 or higher FICO) may qualify for a credit card that has a 0% promotional interest period. You pay no interest as long as the balance is paid in full during the promotional period, which typically lasts 12 to 18 months.
Lenders that offer small loans and fast funding
If you don’t expect to get a refund big enough to cover your needs or want more time to pay the funds back, consider getting a loan with an online lender that offers fast funding.
These lenders can fund a loan within a few business days and have minimum loan amounts between $1,000 and $2,000. Paying back a personal loan on time can help you build credit, but be sure you understand the risks before borrowing.
Minimum loan amount
Time to fund
Next business day
Next business day
Same day with branch visit
Next business day
at Best Egg
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