Once you’ve filed your federal income taxes, you have time to wait until your refund comes from the IRS.
Of course, it takes some time, usually about a month.
In case you have immediate expenditures that need to be covered and you don’t want to take out a personal loan, it may be a smart decision to consider tax refund cash advance emergency loans.
Let’s cover the basics of tax refund cash advance emergency loans 2023, their main features, as well as the pros and cons to help you make the right decision.
Can I Get a Loan Against My Tax Refund?
There is a possibility to request an emergency loan in case tax experts, a special preparation service or another third party lender prepares your earned income tax credit return. This way, consumers are able to apply for a so-called tax refund loan.
Some people suggest this is a more convenient way of getting additional cash as it doesn’t require the same application process as with regular loans. Besides, it is supposed that the tax refund advance loan comes with no fees, interest rates, and extra fees.
The reality is different, however. There may be expenses associated with this solution that you will be required to pay. For example, tax preparation providers may require ATM fees, a tax preparation fee, etc.
Also, the real refund loan amounts may turn out to be smaller than you’ve anticipated, so it may lead to unforeseen consequences. A borrower will have to pay more through a tax refund loan online.
Here is what you need to keep in mind before you choose to e-file your tax return.
How Does a Tax Refund Loan Work?
Tax refund advance is a widespread lending option for consumers who want to avoid a common time-consuming loan application process in conventional finance-related institutions but still need a helping hand with their finances.
It is a short-term loan with the minimum risks for both tax preparer and the borrower. An instant the tax refund loan is considered to be a secured lending solution as it is given against collateral in the form of your refund.
Sometimes this loan has a no-fee sign, but it’s not always true. Before taking a tax refund loan, you must pay attention to the terms before as you may need to pay associated fees.
Income tax refund loans are suitable to cover various types of expenses for a short time. They aren’t used for a longer term as you need to repay the debt in full once you receive the refund.
Preparation services cooperate with banks and other finance-related services to provide such lending options to consumers.
Tax loans can be obtained on a prepaid debit card or as a deposit into a client’s checking account. Remember that any loan fees associated with this solution will be deducted from your account as soon as you get a refund from the IRS.
Read Also: Are Personal Loans Taxable?
How Can I Get a Loan On My Tax Refund?
Many people are willing to take out tax refund loans now as it’s one of the most attractive lending options with fewer risks for both consumers and lenders. In other words, this option allows clients to receive fast financing that is the same sum the government owes them. Hence, there is less risk of default or non-payment as this sum won’t be taken from your monthly income.
Another refund option benefit is that you will still get borrowed money later, typically within a month. This is already your cash but you need to wait to be able to use it. You can acquire this money without having to wait if you need it straight away. As long as a consumer expects an income tax refund, a 2500 dollar loan can help you cover all the unforeseen costs.
Pay attention to the terms and conditions of tax refund advance loans. You can’t apply for a refund advance all year round. To get a loan you must follow the tax season. Tax preparation becomes available at the end of the year. For example, H&R Block offers tax loans from Jan. 3 – Feb. 28, 2023.
What’s more, in most cases, you won’t be able to borrow a tax refund loan amount you are entitled to. The reason for that is that neither your tax preparation company nor you know exactly how much refund you will get. So, if the sum happens to be smaller than the expected refund you’ve taken out in the form of a loan for a tax refund, you will have to pay the difference.
What Are The Requirements to Qualify For a Tax Refund?
You should check the eligibility requirements to get tax refund cash advance emergency loans 2023. Refund advance is available for people who overpaid their taxes the year before.
To get tax refund advance loans that are provided by First Century Bank, you must receive a federal tax refund of more than $500.
Even though a tax advance loan comes with 0% APR and no interest rate, a borrower must meet some eligibility criteria.
You should understand that each service provider can set its requirements, but there are basic demands each candidate for no-fee refund advance loans must meet. A state law is the main source of requirements for you to consider.
To get the funds you must:
- be at least 18 years old;
- have a US physical residence;
- not be a resident of Connecticut, Illinois, or North Carolina;
- apply for a tax refund amount of more than $500;
- complete W-2 form correctly;
- open a Credit Karma Money account
A tax preparer is unlikely to conduct harsh credit checks to see your credit report. You should understand that tax prep services are not for you if you are in debt.
If you are unsure whether you are entitled to a tax loan, you can check your status on the IRS’s tool named ‘Where’s My Refund?’. It will show the status of your recently filed tax returns within the past two years.
Where to Get a Loan On My Tax Refund?
Consumers have a chance to obtain loans for a tax refund from various preparation companies. Below we are going to talk more about H&R Block, Liberty Tax, Jackson Hewitt, and Turbo Tax refund loans.
There is an opportunity to visit physical locations or apply for tax professional help on the web from the comfort of your office or home. Some people prepare their taxes and file them without the help of preparers. In this case, you can enjoy the benefits of online tax refund loans from TaxAct or TurboTax.
How to Apply For Tax Refund Loans
To get a tax refund, you can choose between multiple options. Tax filing is possible via the help of tax professionals or by yourself. Unlike traditional loans, tax refunds are difficult to predict and rely on.
It is your preparator who must prepare your taxes. For the tax preparation, you will be charged tax preparation fees. For example, H&R block`s prices start at $80 and may include additional state filing fees.
At first, you may think that the fee refund advance loan is difficult to get. However, the loan application process takes just a few steps. Let’s look closer at each of them in detail.
Choose Tax Refund Loan Company
The quality of a tax preparation defines your chances of getting refund advances. It works so because such loans are not available unless your preparer finds out that the IRS owes you a refund.
That is why it is pivotal to find a good preparer. While looking for the most suitable provider of tax refund services, read offered loans and conditions. Each of them defines different minimum federal tax refunds and loan amounts, deadlines, etc. What’s more, if you don’t meet the underwritten criteria of the chosen company, you won’t get funds.
You should think about finding a tax preparer only if you have paid taxes during the following year and don’t have debts. While choosing a preparer, pay attention to the company’s customer feedback and overall rates.
Decide on Amount
As mentioned above, the tax return loan amount is impossible to define precisely. It depends on the size of your federal refund and your tax information, along with other factors. You won’t get a maximum refund advance if you don’t meet these criteria.
The providers of such services set certain loan amounts, such as $250, $500, $750, $1,250, or $3,500. You must repay the difference later if you apply for a higher amount than you deserve. That is why it is better to use a tax preparation service. Remember that the refund cash advance loan is available between January and February.
Submit Tax Return to the Organisation
To apply for a tax advance, a borrower has to complete tax filing. If you deal with a tax preparer, you will get professional assistance. The providers of tax returns usually cooperate with banks. This loan type requires the borrower’s identity verification and tax return inputs, and history reviews.
In most cases, tax advances have no finance charges or interest fees. The final decision as to the loan approval rests with a bank. A financial institution will check your request form based on standard underwriting criteria. If you qualify, you will get a notification.
Receive the Loan
If your application is approved, you can get your tax refund advance on the same day. Some lenders offer money within a few minutes. You must repay the borrowed sum after the IRS delivers your refund. According to the IRS, it issues most refunds in less than 21 days. Consequently, you must pay back the debt within a month.
Borrowers receive cash as a direct deposit on the prepaid card. If you apply to the H&R block office, the funds will be loaded onto an H&R Block Emerald Prepaid Mastercard.
How to Find The Most Efficient Way to Get Tax Refund Loan
If you want to get a tax refund, think about how much time you are ready to spend on the tax prep process. If you are ready to do it yourself, you can make use of the IRS program called direct deposit.
Among other things, you can use mobile apps to get funds. Some online platforms offer direct deposit of cash. In case you lack time, you can apply to tax preparers.
They provide financial help in calculating the loan amount and dealing with banks. In such a way, you can pay a tax preparation fee which may vary from $50 to $140, and forget about exhausting financial processes.
Top-Rated Early Tax Refund Loan Services
Tax Refund Advance Loan from TurboTax
The minimum Turbo Tax refund loan is $500 with a maximum of $2,000. Consumers get the cash within two days of IRS acceptance via a direct deposit. It is required to open a Turbo Visa Debit Card, where the cash is deposited. To be eligible for this option:
- you should e-file your taxes with this service
- you should receive the above-mentioned debit card
- be ready to pay $90 as a preparation fee
- Tax Refund Loans from Jackson Hewitt
The minimum amount issued here is $300. If you request $500, $750, $1,000, $1,250, or $3,200 you won’t need to pay a fee. Cash can be deposited within just 24 hours directly to your prepaid debit card.
Also, if you are willing to get it into your prepaid card, you should wait between one and five business days. Make sure you submit all the documents as well as W-2 forms depending on the amount you request.
Liberty Tax Refund Anticipation Loan
The amounts of early tax refund anticipation loans are available at $500, $800, $1,300, $2,500, $3,000, $4,750, $6,250. The funds can be deposited within 24 hours which is convenient and quick.
One of the basic requirements is to file your taxes with this service. By using the “Tax Estimator” on the company’s website you may define how much you can get back and find whether you are qualified to apply for a fast tax refund anticipation loan from this service.
H&R Block Loan on Tax Refund
The minimum amount of a loan against a tax refund from H&R Block is $500. In most cases, a consumer will be able to receive a same day tax refund loan, which is the fastest option.
You must have your taxes prepared and filed with the H&R block services. Keep in mind that a fee to get a tax refund loan starts at $59.
Why Would a Person Get Denied for a Loan Out Their Tax Refund?
If you apply for an online tax refund advance loan but receive a rejection, it may be because of one of these reasons:
- Your credit score is poor. Although it is not a typical lending solution, it still presents a loan type and the creditor has the right to review other criteria apart from your income tax refund itself. You should have a sufficient sum to be able to repay the debt once fees and interest rates are deducted. As there are no longer special indicators to tell if any portion of refund goes for offset, lenders may want to review your credit profile and reject if the credit rating is too low.
- Failure to provide all papers. Another common reason is a failure to submit all the necessary documents. Having no receipt of forms W-2, W-2G, as well as 1099-R, may lead to rejection.
- You earn too much. It may be surprising but you may be declined if you’ve made too much cash as the number of loans against tax refund is restricted and often doesn’t exceed $3,500. Thus, if your income is too high, you won’t be able to qualify for the credits.
- Changing personal circumstances. Life is unpredictable and circumstances may change all of a sudden even if your profit is the same – you might get married, lose your position, have a baby, move to another place, etc. In this case, the whole picture changes and so does the ability to qualify for tax refund loans online.
To sum up, getting a loan against your tax refund is a popular solution for the situations when you need to fulfill immediate cash needs and don’t want to wait.
Pay attention to the terms, review the rates and potential charges for this service before you sign any papers. Accept this solution only if the benefits outweigh waiting for your money to come to you in full within a month.
Alternatives to Tax Refund Loans
Luckily, United States residents have various loan options. If you can’t qualify for a no-fee refund advance loan, think about other ways to access funds.
As mentioned, a tax refund loan is available only at the end of the year. What’s more, a borrower can’t get a tax loan unless the tax preparer finds out that the IRS owes him or her state returns. It makes an income tax loan difficult to predict and rely on.
In some cases, it is better to consider another small loan amount option with instant approval. Below you will find the most popular alternatives. So, let’s get started!
Paydays are short-term loans with instant approval. A borrower gets money within one business day via direct deposit.
The payback term of a payday may vary from 14 to 30 days. A borrower must repay debt from the next payday.
A payday loan cost may be high when compared with other options. This loan type is marked by high-interest charges. It happens so because most payday lenders don’t conduct credit checks.
This loan option may be a great alternative to an income tax credit if you can’t meet credit score requirements. Payday providers won’t pay attention to your credit history and score. Just prove you have a regular source of income and receive money on a valid card account.
Small Personal Loans
Such loans are offered by credit unions, banks, and online lenders. It allows you to get funds for multiple purposes, including home renovations, vacations, etc.
Small personal loans may be secured or unsecured. The first one uses the borrower’s property as collateral. As a borrower, you can opt for the most suitable loan solution as well as its terms and conditions. Personal loans allow you to borrow greater loan amounts than refund advances and paydays.
The main advantage of applying for a small personal loan is the ability to repay your debt in regular and equal monthly installments. It will make your life more predictable.
If you are looking for instant funds without exhausting the loan approval process, you can borrow mine from your credit cards.
Such loans allow borrowers to break the credit limit to get money within minutes. The loan amount is usually small, and the repayment period is short.
Loan conditions may differ considerably from one card issuer to another. If you have good credit, you may be eligible for a zero-interest credit card. Some cards also offer an introductory APR loan of 1.1%. This grace period is a good opportunity to try a credit card loan.
Sources Used in Research for the Article:
- USA Gov, Tax refunds, https://www.usa.gov/tax-refunds
- Tax Foundation, Tax Refund, https://taxfoundation.org/taxedu/glossary/tax-refund/
- Guide to filing your taxes, Consumer Financial Protection Bureau, https://www.consumerfinance.gov/consumer-tools/guide-to-filing-your-taxes/