It’s tax time, when W-2s are in the mailbox and the smell of refund checks is in the air. If you need your refund check sooner rather than later or don’t want to wait for the IRS to process your return, you may be wondering, “Can I get a loan against my tax refund?” You just might be able to get a tax refund advance loan.
If you qualify, you may be able to get up to half of your refund early or borrow the full amount of the refund to purchase a big-ticket item like a car. Understanding how these loans work can help you decide if it’s the right option for you.
What Is a Tax Refund Advance Loan?
A tax refund advance loan is a short-term loan issued by banks and non-bank lenders. These loans are secured by the borrower’s anticipated tax refund. For that reason, the loan amount doesn’t exceed the amount of the refund.
How Do Tax Refund Advance Loans Work?
When a lender offers a tax refund advance loan, it agrees to give you a loan worth all or part of your tax refund. Since the loan is secured by the tax refund, the lender expects you to file your taxes using its tax preparation software or services to ensure the form is completed correctly. This lets the lender verify the amount of your refund and ensure that the IRS accepts your return.
As soon as the IRS accepts your return, the lender gives you the advance. This may be through direct deposit in a specific type of checking or savings account, a prepaid debit card or a down payment on a car or piece of furniture. When the IRS issues your refund, the lender accepts the refund as payment for the loan and gives you the balance due to you, minus fees and interest.
Who Can Get a Tax Refund Advance Loan?
Eligibility requirements vary depending on the lender, and most taxpayers who expect to receive a tax refund can qualify for a refund advance loan regardless of their credit score.
For example, Intuit TurboTax offers its Refund Advance program to taxpayers who are at least 18 years old, have a Social Security number, file using certain forms and expect a refund of at least $500 — but it’s not available to individuals who use a post office or prison address.
Where To Get a Tax Refund Advance Loan
The most common place to get a tax refund advance loan is through a tax preparation company. The following programs have closed for the 2023 season, but keep them in mind for next year.
|Tax Preparation Company||Loan Amount||Fees and Interest|
|Intuit TurboTax||Up to 50% of your anticipated refund||None|
|Liberty Tax||$500-$6,250||Disclosed during consultation|
|Jackson Hewitt||– No Fee Refund Advance: up to $3,500
– Early Refund Advance: $500-$1,100
|– None for No Fee Refund Advance
– 34.22% APR for Early Refund Advance
Intuit TurboTax offers a Refund Advance of up to 50% of your anticipated refund. You must use TurboTax to e-file your return, and you’ll also have to open a Credit Karma Money checking account — that’s where your funds are deposited once the IRS accepts your return.
The funds could be available to you within a minute via the Credit Karma Money virtual debit card. TurboTax doesn’t charge a fee for this service.
Like TurboTax, H&R Block closes its Refund Advance program before tax season ends — Feb. 28, in 2023. The loans are available in specific amounts ranging from $250 to $3,500.
Pathward is the lender for H&R Block Refund Advance loans. You apply with Pathward after you’ve e-filed your return. If your application is approved, you can receive the funds the same day on an H&R Block Emerald Prepaid Mastercard.
Liberty Tax Easy Advance loans, which closed for the current tax season on Feb. 28, are offered by Republic Bank & Trust in amounts ranging from $500 to $6,250. You must have your taxes prepared in-person to qualify.
The funds, less a finance charge, are ready within 24 hours after the IRS accepts the return.
Jackson Hewitt offers two programs at participating locations: Early Refund Advance, which was available through Jan. 15, and No Fee Refund Advance, which was available through Feb. 19. While the No Fee Refund Advance also has no interest charge, this year’s Early Refund Advance borrowers have a pricey 34.22% annual percentage rate.
Other Options for Refund Advance Loans
Car dealerships, furniture stores and other retailers sometimes offer customers refund-anticipation loans against their refunds as an enticement to make a purchase without having to wait weeks for their IRS checks or direct deposits. You’ll have to have your taxes prepared by the retailer to qualify.
Some of these offers might be good deals, but the Wisconsin Department of Agriculture, Trade and Consumer Protection warns that refund-anticipation loans can be risky. You’re on the hook for the full loan amount even if your tax refund falls short — and interest rates can run as high as 700%.
Pros and Cons of Tax Refund Advance Loans
Refund advance loans are convenient, but they’re not right for everyone.
- Some refund advance loans are interest-free.
- Tax preparation fees are deducted from the refund.
- These loans typically do not require a hard credit pull that can affect your credit score.
- You can receive a loan against your tax refund in minutes, depending on the program terms set by the lender.
- Some lenders charge fees and interest.
- You have to file your tax return early.
- You must use the lender’s tax preparation software or service.
- You have to pay for the tax preparation even if you don’t get a refund.
Are Tax Refund Loans Worth It?
If you need your tax refund immediately and can’t wait a few weeks for the IRS to process your return, a tax refund loan may be worth it. If your preferred tax preparation company offers this type of program, check it out. You’d spend the money with them anyway, so it might be worth getting a loan against your refund so you have access to the money before your refund arrives.
But before you agree to the loan, make sure you know how much it will cost you. Look for a program with a 0% APR loan and a minimal tax preparation fee.
When It’s Not Worth It
If you anticipate a small tax refund or have to pay a substantial fee for the services, an advance may not be worth the cost. For example, the company may charge you $500 to file your tax return and will deduct the fee from your $1,500 refund. This leaves you with $1,000 even if the company doesn’t charge you interest. You’re giving up one-third of your refund for the convenience of having your money sooner rather than later.
The IRS issues most refunds in less than 21 days. If you’re willing to wait, you’ll have more money in your pocket.
Similarly, if you have a type of tax software you like to use or want to work with a specific tax preparer, you may want to skip the refund advance loan. You’ll have the flexibility you want and may not be missing out on anything.
Bottom line? Make sure you really need the cash before pursuing a tax refund advance, and check rates and terms carefully before you accept the loan.
FAQHere are the answers to some common questions about tax refunds.
- Can I get a refund advance if I already filed?
- If you've already filed your taxes, it's too late to qualify for a refund advance loan.
- Most lenders require you to use their tax preparation service or software to qualify for a refund advance loan. Since the loan is secured by the expected refund amount, the lender wants to know that your taxes were filed correctly and accepted by the IRS before dispersing the loan.
- How can I get my tax refund ASAP?
- The fastest way to get your tax refund is through a refund advance loan. Depending on the loan provider you choose, you can receive all or part of your refund minutes after the IRS accepts the return.
- However, 9 out of 10 taxpayers receive their refund less than a month after filing when they file electronically and set up a direct deposit, so the terms of a refund advance loan may not be worth it. Simply filing early is the next best option to receive your tax refund quickly.
Daria Uhlig contributed to the reporting for this article.
Information is accurate as of March 27, 2023, and is subject to change.