Tax Refund Loans: Get Cash While You Wait for Your Tax Refund

If you need some cash fast or want to get your tax refund sooner while you’re waiting for your income tax refund, some tax preparation services – including TurboTax, Jackson Hewitt and H&R Block – offer tax refund loans at 0% interest so you can get a portion of your refund much faster. Instead of an interest rate and repayment terms, the tax preparer lends you money and recovers it through your tax return. Tax refund loans, also called “refund advances,” are a way to have part of your refund available sooner.

Tax Refund Advance Loans

What Are Tax Refund Advance Loans?
Tax refund advance loans are short-term loans of $250 to $4,000 that you take out when you are already anticipating a refund from the IRS. The amount borrowed is deducted from your refund as soon as it is paid. In some cases, you can have the money put on a prepaid card within 24 hours. To qualify for a tax refund loan, you must have your taxes prepared by the company offering the loan, and that may mean paying tax preparation fees.

There is a minimum amount that your expected refund can be to qualify, which varies from company to company, and you may only get a portion of your expected refund prepaid. Tax refund loans may be attractive to early filers who claim the Earned Income Tax Credit or the Additional Child Tax Credit.

Refund Advance Eligibility
Here are some of the eligibility requirements to qualify for a Refund Advance loan:

  • You’re 18 or older
  • You’re not a resident of North Carolina, Connecticut, or Illinois
  • You’re e-filing your federal tax return with TurboTax
  • Your physical address is listed on your tax return. Your address must be located in one of the eligible states and can’t be a PO box or prison address
  • You’re not filing one of these tax forms: 1310, 1040SS, 1040PR, 1040X, 8888, or 8862
  • You aren’t filing on behalf of a deceased taxpayer
  • You must report income on a Form W-2, 1099-R , Sched C, or Sched CEZ

How Much Refund Advance Can I Get?

Expected Federal Refund Amount Maximum Refund Advance Amount
$500 – $999 $250
$1000 – $1499 $500
$1500 – $1999 $750
$2000 – $2999 $1000
$3000 – $3999 $1500
$4000 – $4999 $2000
$5000 – $5999 $2500
$6000 – $6999 $3000
$7000 – $7999 $3500
$8000 and above $4000

However, there are some drawbacks to consider:

1. Your tax refund may be lower than you expect.
Your advance tax refund is based on your expected refund. However, keep in mind that the IRS may disallow certain deductions or find errors that lower the amount of your refund. If your refund turns out to be less than you expected, you will have to repay the difference to the lender.

2. You usually cannot access your full refund.
Most tax preparation companies will only let you borrow a portion of your expected refund. For example, if your expected refund is $3,000, you may only qualify for a $1,500 loan.

3. There are usually fees associated with filing your tax return.
Although tax refund advances are often advertised as loans with 0% interest and no fees, that doesn’t mean the loan is free. Tax preparation companies usually charge a fee to file your return, which you must pay to qualify for a tax refund advance. Fees often start at $30 to $40 for a federal tax return (depending on the company), with additional fees if you need to file a state return or have a complex return. If you don’t pay these fees up front and choose to deduct them from your return later, you may have to pay another fee to get a tax refund advance loan.

4. There may be fees associated with charging your refund to a debit card.
Many companies will put your refund advance on a debit card. However, these cards may incur additional fees, such as for withdrawals from ATMs or tellers or account inactivity.

Keep in mind that tax preparers charge fees for filing some tax returns. If you pay a tax preparer to get the advance, you are paying to have access to your own money.