Tax Refund Loans: Get an Advance in 2024

When you file your taxes, you’ll receive a refund for any taxes you overpaid throughout the year. If you expect a tax refund but don’t want to wait long for the funds, a tax refund loan may be worth exploring.

With a tax refund loan, you can receive your tax refund early, regardless of your credit score. You won’t have to wait for the IRS to process your return and deposit the funds to your bank account or send a check in the mail. Here’s what you need to know about tax refund loans.

Vault’s Viewpoint on Tax Refund Loans

• Tax refund loans are small, short-term loans you repay with a portion of your upcoming tax refund.
• With a tax refund loan, you can receive your refund early, within days, rather than weeks or months.
• A tax refund loan may charge interest, a tax preparation fee and other fees.

What Are Tax Refund Loans?

Tax refund loans are short-term loans you pay back through your tax refund from the IRS. They can also be known as tax refund advance loans, tax return loans and tax loans. Select tax preparation companies typically offer these loans from December through February for anywhere between $1,000 to $6,500.

You may be able to collect the funds within 24 hours via a prepaid card or within a few days through direct deposit. As with other types of loans, the interest and fees you pay will depend on the specific provider and loan you choose.

How Do Tax Refund Loans Work?

To qualify for a tax refund loan, you’ll need to work with a tax preparer that offers it. After the preparer confirms the IRS will owe you a refund and you fill out an application online or in person, they may open a temporary bank account and direct your tax refund there. Then, they’ll distribute your funds, typically via a prepaid debit card or direct deposit.

Once the IRS deposits your tax refund into the temporary account, your tax preparer will deduct any fees (usually between $30 to $50) as well as their tax preparation fee. You’ll receive any remaining funds and they’ll close the account. If your refund is smaller or arrives later than anticipated, you might owe a balance.

Pros and Cons of Tax Refund Loans

Before you move forward with a tax refund loan, be sure to consider the benefits and drawbacks, including:

Pros

• Access to quick cash: If you need your tax refund as soon as possible, a tax refund can help you out. You won’t have to wait weeks or months for the IRS to distribute it to you.
• No credit check: In most cases, you may receive a tax refund loan without a credit check. This is helpful if you have no credit or bad credit and struggle to qualify for other types of loans.
• Don’t need to plan for repayments: Unlike most loans, you won’t have to budget for loan payments. Typically, your loan will be paid off in full with the money the IRS deposits at a later time.

Cons

• Can be expensive: While tax refund loans tend to be cheaper than payday loans and other risky products, their costs can still add up. You’ll have to pay fees determined by your tax preparer.
• Possible repayment: If the IRS denies or reduces your tax return, you’ll be forced to repay the borrowed money. A surprise repayment can take a toll on your budget.
• Not available everywhere: Tax refund loans are less common than other types of loans, so you may have to shop around or even switch tax preparers.

Where to Get Tax Refund Loans

If you’d like early access to your tax refund, you may want to work with these tax preparers.

Jackson Hewitt

Jackson Hewitt offers two types of refund loans: the Early Refund Advance loan and No Fee Refund Advance loan.

H&R Block

At H&R Block, you can opt for the Emerald Advance loan or the H&R Block’s Refund Advance loan. While the Emerald Advance loan comes with interest and fees, the H&R Block’s Refund Advance requires you to file your taxes with H&R Block.

Intuit TurboTax

Funded by First Century Bank, the Intuit TurboTax interest-free Refund Advance loan is up to 50% of your tax refund amount. You can apply online but will be required to open a checking account with Credit Karma Money™ to access the funds.

Is a Tax Refund Loan a Good Idea?

In some situations, a tax refund loan may be worth pursuing. For example, you may need fast cash for an emergency expense. But if you prefer to do your own taxes instead of utilizing a tax preparer and you can afford to wait for your refund, you may want to hold off on a tax refund loan. It may not be worth it to spend the extra money just to get your tax refund a bit earlier. Also, a personal loan may make more sense if you need more cash than your anticipated return.

What are Some Alternatives to Tax Refund Loans?

Depending on your situation, you may be better off with another financing product. Here are several alternatives to tax refund loans that can also provide you with fast cash:

• Personal loans: Offered by banks, credit unions, and online lenders, personal loans can allow you to borrow between $1,000 to $50,000 or even more and repay the money with interest over a term ranging from two and seven years. Some lenders offer fast funding so you may collect the funds the same day you get approved, within 24 hours, or in a few business days.
• 0% APR credit cards: If you have good or excellent credit and qualify for a credit card with a 0% APR credit card. As long as you can pay off your balance before the promotional period comes to an end, you can avoid interest fees.
• Payday advance apps: Loan apps usually allow you to borrow a few hundred dollars and repay the money when you receive your next paycheck. While you might not have to pay interest, some loans charge other fees or optional tips.
• Payday alternative loans: Available at some credit unions, payday alternative loans range from $200 to $2,000. They typically have a maximum APR of 28%, which is much lower than the triple-digit APRs you’ll likely find on many payday loans.
• Friends and family: If you’re in a financial pinch, you may want to reach out to a close friend or family member for money. Just be sure to pay back the loan as you agreed to or you may damage your relationship.