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A tax refund advance is a loan that you’ll repay from your actual tax refund. The amount you can borrow is limited (often around $3,500) and there may be eligibility requirements. If you’re in need of urgent cash, consider a tax refund advance as a way to bridge a short-term gap, but be aware of the potential fees and hurdles involved.
No one looks forward to tax time (except tax accountants) but you may be able to take advantage of this time of year to borrow money.
A tax refund advance, or tax refund loan, is a type of financing available during tax time that lets you borrow against your estimated tax refund.
If you file a paper tax return, you’ll typically need to wait six to eight weeks from the date the IRS receives your paperwork before getting your money. This can be three weeks or less when you file electronically.
However you prepare your tax return, waiting for your refund can put pressure on you when there are bills to pay, rent to cover, or other expenses piling up.
If you’re in urgent need of cash, a tax refund advance may be able to provide a portion of your tax return immediately after you file (in as little as 30 seconds).
But with fees to be aware of, and eligibility hoops that may not be obvious, is a tax refund advance right for you?
Read on as we break down how tax refund loans work, where you can get one, and what to remember before applying.
What is a tax refund advance?
A tax refund advance is a short-term loan that is based on your expected tax refund.
If eligible, you can access a portion of your tax money immediately, typically through a tax preparer like H&R Block or TurboTax. The refund is typically interest-free and there is no impact on your credit score (though the lender for your refund advance may review your credit report before making their decision).
There are two key features of a tax refund advance:
- Fast access to cash: Get your money quicker than waiting for the IRS to process your return.
- 0% interest: You typically don’t pay traditional interest rates, but there may be a one-time fee.*
*Some tax filing services don’t charge interest as long as you file your taxes with them – which will incur a one-off filing fee. High-interest tax refund loans do exist and you can end up with an annual percentage upwards of 35%.
| PROS | CONS |
|---|---|
| ✓ No credit chec | ✗ Comes with a tax filing fee |
| ✓ Most loans are interest-free | ✗ May need to open a separate account |
| ✓ Funding can be immediate | ✗ May come with hidden fees |
How do tax refund advances work?
You’ll submit an application for your refund advance when you file your tax return.
Most tax preparers partner with banks that lend you the funds. For example, Jackson Hewitt partners with Republic Bank & Trust Company.
Tax refund advances can be an alternative to traditional loans since there are fewer credit score requirements than a traditional unsecured loan (though banks may review your credit profile without affecting your credit score).
You won’t be able to borrow more than your expected tax return, so your advance will typically be repaid from your upcoming tax refund.
However, you may end up with a smaller refund than you expected since your exact amount of tax owing may change. If this happens, you’ll need to pay the difference between what you borrowed and what the IRS paid you.
When can you get a tax refund advance?
Tax advance refunds are usually offered from December through February.
Available amounts range from $100 to $6,500. In most cases, the loan amount is deducted from your tax refund once it’s issued.
Here’s a look at the available amounts from leading tax providers.
TurboTax: Apply for up to $4,000 with $0 loan fees, 0% APR and no impact on your credit score. You’ll need a Credit Karma checking account. If approved, you’ll typically receive your Refund Advance within 4 minutes of the IRS accepting your e-filed return.
H&R Block: Apply for up to $3,500 with $0 loan fees, 0% APR and no finance charges. To apply for a Refund Advance, you must file your taxes using H&R Block and pass the lender’s eligibility criteria (including a sufficient expected tax refund from the IRS).
Jackson Hewitt: Apply for up to $1,000 with a Money Today Guarantee that gives you your refund advance on a Jackson Hewitt prepaid card the same day as you’re approved. There are $0 upfront loan fees and 0% APR with your refund advance and finance charges coming from your tax refund.
| 🤓 Overdraft Apps Tip: Check with your individual tax provider for tax refund loan dates and availability. Start dates and loan repayment dates vary. |
How much does a tax refund advance cost?
The most popular tax advance refunds are free, though they make you jump through a hoop or two.
TurboTax is one of the most popular options and is totally free but you’ll need to set up an account with Credit Karma (both are part of the Intuit family).
H&R Block has a similar deal. The tax advance refund is free but you’ll need to choose from two ways to access your funds – Spruce (a mobile banking app with a spending and savings account plus a debit card) or an H&R Block Emerald Card (ready-to-use prepaid debit card).
With well-known options like TurboTax and H&R Block, a tax refund advance can look appealing on paper with zero interest and potentially thousands of dollars in your refund accessible early.
But beware other options that may come with hidden costs.
Some lenders claim they offer tax refund advances but are really just traditional short-term cash advances or personal loans that come with high fees and interest. These are loans that are available while you wait for your tax advance, not drawn from your tax advance.
It’s also worth factoring in your tax filing fee. For example, let’s say you have a $500 tax refund advance against your future tax return. If you pay a $89 fee to your accountant, that’s the equivalent of a 217% annual percentage rate!
While a tax advance can be a way to get quick cash, it may be cheaper to prepare and file your Federal tax return yourself and wait for the IRS to send your refund directly to you.
How long does it take to get a tax loan advance paid out?
If you’re approved, you’ll usually be able to access your money immediately (in as little as 30 seconds in some cases).
Your tax advance return may be sent to a checking account provided with your tax prepared, on a prepaid card, or deposited into your own bank account. For example, early refund advances through Jackson Hewitt are loaded onto a prepaid card the same day (or you walk away with $50 as compensation).
There’s nothing you need to do once you’ve been approved. Your tax preparer will automatically deduct the loan amount (plus interest) once the IRS releases your funds.
Are tax advance refunds a scam?
Tax advance refunds aren’t a scam, but they can come with hidden hurdles that can leave you with less money than you expected – or none at all!
A quick search online shows plenty of people feeling frustrated or misled about the availability or terms of their tax refund advance.
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The primary concern is whether you’ll be approved or not but still having to pay for tax preparation fees or having to pay account transfer fees to move your tax advance from one account to another. With a daily transfer limit, you may have to pay fees multiple times to access all of your advance.
Other complaints said they’d been approved and directed to set up a new bank account only to find out they have been denied, but now have a new bank account they probably don’t need (or want).
Cash advance app alternatives to a tax refund loan
No cost tax refund advances are only available for a brief period each year. For example, H&R Block only offers them through February. If you’re outside the eligibility window, don’t want to deal with the hassle of requesting a loan through your tax refund, or you want a more flexible solution…
Cash advance apps may be a better option.
There are plenty of cash advance apps to choose from (with more popping up each year), so always compare options before making a final choice.
Remember to consider the app’s fees, maximum advance, and other features to help you manage your money — like overdraft protection or early access to your full paycheck.
Here are a few popular options:
- Albert: Access up to $250 with instant overdraft coverage and speak to real financial “geniuses” to help answer your burning money questions plus (no credit check).
- Brigit: Get fast cash with Brigit with up to $250 in advances plus tools to help build your credit, save money and even earn money (no credit check).
- Cleo: Grab a cash advance up to $250 from the AI-powered app that makes managing your money fun for once (we highly recommend the Roast Me feature for excellent memes).
- Dave: The OG cash advance app, Dave offers up to $500 in minutes (seriously!) with goal saving tools and the ability to earn money in the app (which explains why over 6 million members use the app).
- Empower: Get a cash advance up to $300 or open a line of credit ($200 to $400) to help build your credit score. All credit scores are welcome so you can get on top – and stay on top – of your money.
- MoneyLion: Enjoy 0% APR cash advances up to $500 (and the ability to increase this to $1,000) by opening a RoarMoney account. Save, borrow, bank or build credit – it’s all in the MoneyLion app.
- Klover: Cash advances up to $225 and budgeting tools are rolled into one app with the ability to access your wages up to two weeks early with zero interest fees and zero late fees.
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