If you’re like me, tax season can’t come soon enough. Either you are preparing for a refund or you are organized and ready to leave the tax season behind.
If you’re ready to get a refund for the tax season, then you’ve probably heard of early tax refund loans. If you have been considering whether or not to take out a prepayment loan, here are some things you should know.
Note: Our main thought on these loans and products is NO. But we’re not your mom either, so at least do some research on what you need to know before adopting her.
Before you read any further, take a look at our tax refund calendar so you know when you can expect your refund. It may make more sense to wait than take out a loan. Now let’s move on to the subject of tax refund loans.
What is an early tax refund prepayment loan?
An early tax refund loan is a loan that you get from a tax preparation service instead of waiting for your refund. These loans can be granted as early as the day your tax return is accepted by the IRS. (That’s about 3 weeks earlier than waiting for the IRS to refund you.) Typically, you will be deducted tax preparation fees and other loan-taking fees may apply.
These loans are popular as they can help taxpayers get their refunds early on. Prepayment credits are usually made with a special debit card, check, or direct debit.
Note: Be very careful when receiving a debit or gift card. If you enter the wrong information or email address, your refund could be “lost” and getting your money back could be almost impossible.
When your actual tax refund is available, the check will be sent to the tax preparer who granted you the loan, which will automatically repay your prepayment loan.
Read the pros and cons of tax refund loans here >>
Can You Get a Prepayment Loan If You Have Bad Credit?
Good question and the answer is: it depends. There are some companies that claim to offer prepayment loans with no credit checks (such as Jackson Hewitt), others require credit checks, and some may charge higher fees if you have poor credit.
If you are planning on taking out an advance loan, the best thing to do is to just call ahead and ask the tax preparation provider you want to go to for the details.
You can also opt for a personal loan. Check out Credible here:
Who offers prepayment loans with repayment?
Thanks to prepayment loan regulations in recent years, many of the companies that previously offered prepayment loans have stopped doing so. This is good for consumers because the expensive loans that fell victim to low-income families are now obsolete.
However, there are some companies that still offer advance loans, even though they look very different from the expensive ones in the past.
These are the most popular:
TurboTax advance reimbursement
TurboTax advance reimbursement can give you up to $ 3,000 in less than a day! They estimate that most loans close within 3 hours of the IRS accepting the tax return. Even better, you get the advance with $ 0 loan fees and 0% APR.
The Refund Advance is available in amounts of $ 250, $ 500, $ 750, $ 1,000, $ 1,500, $ 2,000, $ 2,500, and $ 3,000. The amount that you can receive is approximately 50% of your estimated tax return amount.
Your loan is available on a Turbo® Visa® debit card from Green Dot Bank. You can get an online confirmation and use the online balance immediately.
Read our full TurboTax report here.
H&R Block Emerald Advance
H&R Block Emerald Advance – H&R Block appears to have turned its back on traditional prepayment loans and is now offering the Emerald Advance as early as November each year.
The Emerald Advance is a line of credit of up to $ 1,000 that is issued before the holiday season and must be paid back by February 15NS the following year. As long as the loan is repaid by February 15, borrowers may be able to keep their line of credit for year-round.
It is important to note that the H&R Block Emerald Advance is much riskier than a traditional prepayment loan since it is a line of credit with interest and NOT a one-time loan backed by your tax refund.
Here’s what else you need to know about the Emerald Advance:
- $ 45 annual fee for opening an account
- 36% APR <<
- Monthly minimum payment of $ 25 or 4% of your balance (whichever is greater)
- $ 7.50 late payment fee
- $ 20 repayment fee
Jackson Hewitt is offering up to $ 700 with an early tax refund loan. All you need is a pay slip or proof of income, and you can qualify for up to $ 700 at participating locations.
To find out if you can prequalify now. 0% APR loan from MetaBank®. Conditions apply. Then from December 16, go to a participating location with your pay slip or other proof of income. Once approved, you can get your tax refund advance for free on a prepaid debit card.
Freedom tax – Liberty Tax offers simple advance loans of $ 500 to $ 1,300 for qualifying taxpayers. These loans are backed by your tax refund and are available in the form of an office-printed check, prepaid MasterCard, or direct deposit.
Check out our full Liberty Tax Review here.
Alternatives to repaying prepayment loans
Have you ever thought about simply taking out a personal loan? I know this might sound a little weird, but you might get more money, better interest rates, and better business all around.
A personal loan can be a great way to pay off high-interest credit card debt, consolidate multiple loans, get your car or home repaired, and much more. The helpful feature of these loans is that you have a set payback period – instead of paying your taxes and then waiting for repayment.
We recommend buying a personal loan from Credible. Credible is a comparison site that lets you see what different options you could qualify for online in just 2 minutes. You can borrow between $ 1,000 and $ 50,000 at just 3.99% APR (with autopay). That’s a lot (especially when you look at something like Emerald Advance).
Check out Credible and see if it makes sense to you here.
What can you do to expedite your tax refund?
If you insist on obtaining a pre-tax tax refund loan, please do your due diligence. Go for the no-fee loans up to $ 1,300 and by all means stay away from the lines of credit and any other credit that has fees and high interest rates.
If for some reason you can’t get a free prepayment loan, it’s much better to just wait for your tax refund. If you want to expedite this tax refund, here’s what you should do:
File early – You can start filing your taxes as early as January 1stNS However, we don’t expect the IRS to begin accepting tax returns until January 25, 2022. You can use a tax preparation service or file online via one of those places.
Don’t forget about the delay for EITC and ACTC – If you are filing the Earnings Tax Credit or Child Supplementary Tax Credit, your return will automatically be held for processing until February 15, so you probably won’t get your return until late February or early March.
Have all of your information together – Before submitting, make sure you have everything you need. Impatience could cause a mistake on your part and delay your tax refund. Here is a list of the items you need to submit.
File electronically – Filing electronically is much faster than filing a paper return and should result in a faster refund. Remember, if you are filing by mail, you will need to send your return in (takes about a week) and the IRS will have to enter it into the system manually (takes about 3-4 weeks). Filing by mail will typically add 12 weeks to your original 21 days if you are submitting electronically.
Use direct deposit – Direct deposit is the fastest way to get your tax refund. If you choose to send a check, you are only adding to the time to receive your refund. The IRS needs to send your information to the check printers and then send it to you. This process will extend your refund by at least a week.
Tax refunds are usually issued within 21 days of your tax return being accepted, which means you can receive your refund via direct bank transfer as early as February 20th. However, due to a new tax law, your refund may not appear until a few weeks later.
If possible, wait for your tax refund to be received from the IRS. If you desperately need your refund early on, opt for a toll-free loan and stay away from the lines of credit.
Are you using a prepayment loan? If so, who are you most interested in dealing with?