Early Tax Refund Advance

What is an refund advance?

A tax refund advance is offered by some tax preparation companies and financial institutions. It is a short-term loan that allows individuals to access a portion of their anticipated tax refund before the actual refund is processed by the IRS.

It’s essential to note that tax refund advances are not the same as getting the tax refund itself. They are essentially loans against the anticipated refund, and they often come with fees and interest charges. It is very important to understand the terms of an advance which are different amongst various tax preparers. Additionally, the approval for a tax refund advance is sometimes contingent on the taxpayer’s creditworthiness and the accuracy of the information provided.

How does a tax refund advance work?

Here’s how it generally works:

  1. Application: Taxpayers apply for a tax refund advance when they file their tax return. You do this this through a tax preparation service that offers such advances.
  2. Understand Repayment Terms: Different providers may have varying terms and conditions for repayment. It’s crucial to understand the specific terms of your tax refund advance, including any fees, interest rates, and repayment mechanisms.
  3. Approval: The tax preparation company reviews the taxpayer’s information and determines the amount of the advance they are eligible for based on their expected tax refund.
  4. Issuance of Advance: If approved, the taxpayer receives the advance in the form of short term loan. The loan can provide access to the funds within a short period, such as a few days.
  5. Repayment: When the taxpayer’s actual tax refund is processed it is used to repay the tax refund advance. If the refund is less than the advance, the taxpayer may need to cover the difference. If the refund is more than the advance, the taxpayer keeps the excess amount.

While tax refund advances can provide quick access to funds, individuals should carefully consider the associated costs and terms before choosing this option. It’s crucial to read the terms and conditions, including any fees and interest rates, to make an informed decision.

Advances may be disbursed via direct deposit to a bank account of your choice or various prepaid cards depending on the tax preparer.

How do you pay back a tax refund advance?

Paying back a tax refund advance is typically a straightforward process. Here are the general steps you may need to follow:

  1. Wait for the Refund: First, you need to wait for your actual tax refund to be processed and issued by the IRS. The tax refund advance is essentially a loan against this anticipated refund.
  2. Receive the Refund: Once your tax refund is processed, the IRS will issue your actual refund. This is the amount you are entitled to after considering your tax liabilities, credits, and deductions. The refund is initially sent to the 3rd party who processed your advance.
  3. Repayment: The financial institution that provided the tax refund advance will deduct the amount of the advance, along with any associated fees and interest charges, from your actual tax refund. The remaining balance (if any) will then be provided to you.
  4. Check the Details: Review the final amount you receive after the repayment of the tax refund advance. Ensure that it matches your expectations and that you understand any fees or interest charges deducted.
  5. Possible Overpayment or Underpayment: Depending on the actual amount of your tax refund compared to the advance, there might be a situation where you received more or less than expected. If you received more than the actual refund amount, you might need to return the excess to the tax preparation company or financial institution. If the refund is less than the advance, you might need to cover the difference.
  6. Contact the Provider: If you have any questions or concerns about the repayment process or if there are discrepancies in the amounts, it’s important to contact the tax preparation company or financial institution that provided the advance. They can provide clarification and assistance in resolving any issues.

College Investor provides a detailed review of tax refund advances to help you decide whether you should get a tax refund advance.

Who offers tax refund advances?

To get the most accurate and up-to-date information regarding which preparation service offer refund advances, we recommend checking directly on their official website

Jackson Hewitt

Jackson Hewitt is a tax preparation service that has historically offered tax refund advances. However, it’s important to note that the availability of specific financial products, such as tax refund advances, can change from year to year, and companies may update their offerings.

They offer two products: Early Refund Advance and No Fee Refund Advance. It’s important to note the differences.

The Jackson Hewitt advance is fairly simple. You can find the most details on their website.

Early Refund Advance

Many times Jackson Hewitt begins offering a “holiday loan” in early December that is based on your paystub or other income verification. This loan product is called an Early Refund Advance. It typically is available from December 11th through January 14th.

The Early Refund Advance Loan has a 35.53% Estimated Annual Percentage Rate based on a loan duration of 75 days. This equates to a 7.3 % finance charge of the loan amount. Outlined below are representative examples of available credit terms for the Early Refund Advance Loan.

Early Refund Advance Loan AmountEstimated APR Finance Charge
No Fee Refund Advance

There is another advance they provide call the No Fee Refund Advance. It is a 0% APR loan provided by Republic Bank & Trust Company. It is available at most Jackson Hewitt locations and clients can apply for a loan when they file taxes at Jackson Hewitt from January 2nd, 2024 through February 11th

Loan amounts are subject to change from season to season:

  • Early Refund Advance loan sizes are $100, $300, $500, and $1,000 for qualifying clients.
  • No Fee Refund Advance loan sizes are $250, $500, $750, $1,000, $1,500, $2,500, $3,500, $4,500, and $6,500 for qualifying clients.

Turbo Tax

When you file your tax return, Turbo Tax usually offers a tax refund advance. TurboTax, a popular tax preparation software, has offered a service called “TurboTax Refund Advance” in the past. However, it’s important to note that the availability of specific financial products can change from year to year, and companies may update their offerings.

The TurboTax advance is issued after your return is accepted by the IRS which is usually in late January. TurboTax works with CreditKarma to facilitate a no fee and no interest advance.

To find out if TurboTax currently offers a tax refund advance for the current tax season, we recommend checking directly with TurboTax or visiting their official website. You can look for information on their website’s services section or contact their customer support for the most up-to-date details.

Ask more questions or let us know if you received a tax refund advance in our live discussion.