Are Advance Refund Loan Payments Worth It and How Much You Can Get

Be it the need to get your refund payment early for an impending obligation or to get ahead of long delays in IRS refund payments, many tax filers are opting to get paid early via a refund loan. Nowadays most large tax software providers offer an advance refund payment/loan option for returns they have validated and submitted to the IRS.

They are basically saying they are confident, based on the data you provided, that your refund estimate should be what the IRS will actually pay and as a result giving you an advance on that payment – normally within 24 hours- versus waiting for up to 21 days (or more) to be paid via the IRS.

But the question is, “Is it worth it?” and “What are the catches?”

Below is a summary of the options available from some of the larger players and items to be aware of, if you go forward with this option to get your refund payment faster.

Tax ProviderAdvance Refund AmountPayment Timeline
TurboTax$250 – $4,00099% receive of filers receive payment within a day. You can spend your funds anywhere Visa is accepted. (more details on TurboTax site)
H&R BlockUp to $3,500If approved, your advance refund loan will be available the day your filing is accepted, on an H&R Block Emerald Prepaid Mastercard. Get more details
Jackson HewittUp to $3,500Within 24 hours. No Fee Refund Advance will be available until February 20, 2022
Liberty Tax$500 to $6,250If approved, most loans are available in 24 hours or less. If direct deposit is selected

Some key points to note with most advance refund (loan) programs:

To qualify for a refund advance the return will have to be filed and accepted by the IRS. You will also need to file by a certain time – normally mid to end of February, depending on provider – to qualify for the advance refund option. Filing can be done online (e-filed) or in an office location if available.

Most or these advance refunds programs are underwritten by a bank or financial institution that these tax providers outsource the administration of these refund loans to. As a result you may be subject to more underwriting criteria which will be provided at the time of application (read the fine print!).

Also make sure you are not paying any loan fees and have a 0% APR on the advance payment – features all reputable providers now have. Getting your refund in advance should not look like a advance paycheck/payday loan scheme.

Before you hit the submit filing button, make sure you choose the refund advance option. You will be prompted to do this if you are due a refund, but double check. Otherwise you will just have to wait for the refund per the normal IRS refund processing schedule.

Your credit score should not be impacted by getting a refund advance loan. The underlying financial institution behind the payment bank may review your credit report as part of your application, but the review will not impact your credit score.

The refund advance is technically a loan; it is not your actual tax refund. While leading tax software providers do a very good job of estimating your refund (based on the information you provide), should your tax refund be lower than expected and lower than the refund loan you will be obligated to pay back the difference.

So read the terms and conditions of the refund loan carefully and what your obligations are if your refund amount is expected to be lower based on trends you have seen over the last few years. Cases where I have seen this happen are due to significant changes in income from freelancing, self-employment jobs, divorce or issues with both parents claiming dependent payments.

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