Depending on the lender, you may receive the balance of your tax refund via check, prepaid card, or transfer to your bank account. The tax preparer or lender has your tax refund deposited into a temporary bank account in your name, then deducts the loan balance, tax preparation fee, and any other applicable fees and interest charges from the account before turning the balance over to you. You repay your tax refund advance out of your tax refund. This makes shopping around for the best tax preparation fees and loan terms difficult, if not impossible. You may notice that you have to select your tax preparer and have your tax return prepared prior to finding out whether you’re approved for the loan and how much you can borrow. The tax preparer also sets up a temporary bank account in your name and instructs the IRS to deposit your refund into that account. If your loan application is approved, the tax preparation provider or lender issues your loan via paper check (which may involve an additional fee), a prepaid card, or a transfer to your regular bank account. Once your return is complete, the provider (or its partner lender) reviews your tax return, considers your income, credit, and refund amount, and decides whether to approve your loan. Let the preparer know you want to apply for a refund advance loan. You select a tax preparation provider - either by visiting a storefront near you or online - and agree to have the provider prepare and e-file your tax return. While the exact process of applying for an RAL varies by lender, it usually looks something like this: How do you apply for a tax refund advance loan? That fee varies by company and may depend on how complicated your tax return is. But you do have to agree to pay a fee to have your tax return prepared and e-filed. Many national tax preparation chains, including H&R Block and TurboTax, advertise refund advance loans with no finance charges, no loan fees, and a 0% APR. The cost of a refund advance loan varies by lender. How much does a tax refund advance loan cost? You’ll still need to submit a formal loan application when you file your return. Just keep in mind that a prequalification isn’t a guarantee that your loan will be approved. To prequalify, you’ll need to provide your Social Security number, last year’s refund amount, and your contact information. Some companies allow you to get prequalified online so you can get a better idea of whether you’ll be approved, and how much you might be allowed to borrow. Lenders may also consider your payment history with the IRS and whether you have any defaulted federal student loans, delinquent child support, tax liens, or other situations that could cause the IRS to withhold all or part of your tax refund. Have income from a Form W-2, 1099-R, Schedule C, or Schedule C-EZ.Agree to file your federal income tax return electronically. The application deadline for these loans is typically in late February. Tax refund advance loans are short-term loans - usually for a month or less - or until the IRS sends your full refund to your tax preparer.īusinesses that prepare and file tax returns are the most common places to find refund advance loans, but you might also find them advertised at car or boat dealerships, furniture and electronics stores, and other retailers. Instead, it allows you to take out a loan against a portion of your expected tax refund.
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