If you need cash now while waiting for your income tax refund, some tax preparation services — including Jackson Hewitt, H&R Block and TurboTax — offer 0% interest tax refund loans, which are essentially short-term advances ranging from $200 to $3,500.
How do tax refund loans work?
In some cases, you can get the money within 24 hours. The loan is secured by your expected tax refund, and the loan amount is deducted from your refund after it’s issued.
To be eligible, you must have your taxes prepared by the company offering the loan.
To be eligible, you must have your taxes prepared by the company offering the loan, and that might mean you’ll pay a tax preparation fee. You must be due a refund of at least a certain amount, which varies by company.
Tax refund loans, also called “refund advances,” may appeal to early filers who claim the Earned Income Tax Credit or Additional Child Tax Credit. Many low- or moderate-income taxpayers who claim the credits count on their refunds for immediate expenses, but refunds for those early filers likely won’t hit bank accounts and debit cards until Feb. 27 at the earliest.
Tax refund loan options
Jackson Hewitt’s no-fee refund advance is issued by MetaBank.
Minimum tax refund amount: $300
Loan amounts: $200, $500, $750, $1,000, $1,500 or $3,500
Time to funding: Within minutes up to 24 hours if you choose to have the money loaded onto a prepaid debit card; if you want the loan deposited directly to a bank account, it will take one to five business days.
Requirements: You must have your taxes prepared at a Jackson Hewitt office and bring pay stubs or other income verification.
Tax preparation fee: Jackson Hewitt declined to state.
Deadline: The refund advance program ends Feb. 24.
H&R Block’s refund advance loan is issued by Axos Bank.
Minimum tax refund amount: $1,000
Loan amounts: $500, $750, $1,250 or $3,000
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 an H&R Block office.
Tax preparation fee: Fees start at $59 and vary depending on the complexity of the tax return.
Deadline: The refund advance is offered at participating H&R Block locations until Feb. 28.
Intuit TurboTax’s refund advance loan is funded by First Century Bank.
Minimum tax refund amount: $1,000
Loan amounts: $250, $500, $750 or $1,000
Time to funding: Within two days of IRS acceptance of your tax return and once you set up a Turbo Prepaid Visa card account. You can use temporary card information to purchase items online; a physical card is sent by mail within five to 10 business days.
Requirements: Your state refund must not be filed in Illinois, North Carolina or Vermont. You must also be approved for the Turbo Prepaid Visa card, among other requirements.
Tax preparation fees: From free to $89.99 for self-employed returns.
Deadline: Intuit’s refund advance is available until Feb. 15.
» MORE: NerdWallet’s review of TurboTax
This ‘free’ loan can still cost you
The main consideration with 0% 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 144% for the loan. (However, if you were going to pay for tax prep anyway, you might value the loan differently.)
Tax refund loan alternatives
There are other options for borrowing when you need cash. Aim to use your tax refund to pay off the balance of the loan.
Payday alternative loans: Many credit unions offer their members payday alternative loans in amounts from $200 to $1,000. 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, with funding the same or next day. Rates range from about 6% to 36% and qualifications vary by lender.
0% APR credit cards: Consumers with good credit 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 before the promotional period ends.