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.
Instead of having an interest rate and repayment terms, the tax preparation service lends you money and reclaims it via your return.
What are tax refund loans?
Tax refund loans are essentially short-term advances on a tax refund you expect to get. The loan amount is deducted from your refund after it’s issued. Available amounts range from $200 to $3,500. In some cases, you can get the money within 24 hours.
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. There’s a minimum amount your expected refund can be, 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.
Where to get tax refund loans
Jackson Hewitt’s refund advances are issued by MetaBank. Both the Early Refund Advance Loan — which doesn’t require you to produce a W-2 — and the No Fee Refund Loan have a 0% annual percentage rate.
Minimum tax refund amount: $300.
Early Refund Advance Loan amounts: $200, $300 or $500.
No Fee Refund Advance Loan amounts: $200, $500, $750, $1,000, $1,250 or $3,200.
Time to funding: Within minutes 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. 16, 2019, to Jan. 19, 2020. The No Fee Refund Advance is available from Jan. 2, 2020, to Feb. 23, 2020.
H&R Block’s refund advance loan is issued by Axos Bank.
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, 2020, to Feb. 29, 2020.
Intuit TurboTax’s refund advance loan is funded by First Century Bank.
Minimum tax refund amount: $500, but loan amounts are based on your expected refund amount and other data, like personal and tax information.
Loan amounts: $250, $500, $750, $1,000, $1,500 or $2,000.
Time to funding: Within two days of IRS acceptance of your tax return and once you set up a Turbo Visa Debit 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: 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, Rhode Island, North Carolina 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 $90.
Deadline: Intuit’s refund advance is available until Feb. 7, 2020, or until funds run out.
» 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 $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, 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.
Lenders that offer small loans and fast funding
If you don’t expect to get a refund or need more time to pay a loan 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.
|Lender||Min. Loan Amount||Time to Fund||Get Started|
|Upstart||$1,000||Next business day||
|OneMain||$1,500||Same day with branch visit||
|Best Egg||$2,000||Next business day||at Best Egg|
|Rocket Loans||$2,000||Same day, in some cases||
at Rocket Loans