Tax Refund Cash Advance Loan: Definition, How it Works, and Qualifications

Tax Refund Cash Advance Loan: Definition, How it Works, and Qualifications

A tax refund loan, also known as a refund advance loan or a refund anticipation loan, is a secured loan that allows borrowing money against a future tax return. It indicates that a piece of property guarantees the loan. Although refund anticipation loans are sometimes advertised as having “no fees,” borrowers know there are typically extra charges involved with taking out one of these loans. Tax refund cash advance emergency loans 2023 are a great option for those who need quick cash and have a tax return coming.

Tax-refund loans are often short-term loans that must be returned in full after the borrower receives the anticipated tax refund. Banks usually work hand in hand with tax preparation services. The loan against future tax refunds is issued as a deposit into a bank account or prepaid debit card. The IRS deposits the refund into that bank account or prepaid debit card. Simultaneously, the loan amount, interest, and fees are withdrawn. Tax refund loans give quick cash amounts of up to $4,000 in certain cases. Tax refund loans are made available by several companies, including TurboTax and H&R Block. Find out about refund advances as well as any other possibilities.

What is Tax Refund Cash Advance Loan?

A tax refund cash advance loan is available for those who want urgent cash but have to wait and save on interest by doing so. Taxpayers who make less than $54,000 per year qualify for the IRS’s free filing option, made possible via a partnership with tax professionals. Tax refunds arrive after three to eight weeks, depending on how the taxes are filed.

How does Tax Refund Cash Advance Loan work?

Tax preparation services or businesses collaborating with tax professionals make these loans available. An explanation of how to apply for a tax refund advance loan is provided below.

  1. Choose a tax preparer or program that offers advance refunds. Examine the fees involved in submitting taxes and requesting a return advance loan. Some businesses ask for a fee or refund percentage in exchange for giving advance. Ensure that the additional expenses associated with this financing are marginally higher than others.
  2. Maximize earnings. The greater the advance to get, the more the return. Make sure to maximize the return with valid tax deductions and credits before moving on to the last stage.
  3. Finish filing the tax return. Complete the tax return after identifying a solution and establishing how to increase the refund. After this procedure, decide whether to proceed with filing—and pay any expenses related to that—or not. It lets the borrower confirm that the refund is sufficient to cover an advance and is worth the submission cost.
  4. Consider a tax refund advance. Choose the advanced option if it is applicable. According to the return size and other considerations, some providers provide loans at varying levels.
  5. Obtain payment. The advance is provided by the company that created the program or the tax preparer. Getting a check, a deposit into a bank account, or an instant transfer is possible. However, read the fine print since there are additional fees for speedy transfers.
  6. Be patient as the IRS processes the return. The IRS would normally send the return money to the business that offers the advance if they consented to a tax refund advance. It deducts what is owed, including any fees and the amount advanced, and then sends the remaining balance to the account.

How to qualify for a Tax Refund Cash Advance Loan?

Tax loans are given out depending on the amount the IRS expects to reimburse the borrower. It indicates that the expected tax return, the amount anticipate receiving, and the standing with the IRS are the primary factors determining whether eligible for a tax loan. A bank account or a great credit score to get approved for a tax refund advance loan is unnecessary. It makes tax refund advances a handy kind of loan.

What are Companies offering Tax Refund Cash Advance Loan?

Taxpayers borrow a part of the estimated tax return before the IRS issues it. A tax preparation firm offers a loan backed by the taxpayer’s tax return. H&R Block, Jackson Hewitt, and Liberty Tax provide tax refund loans. These loans have hefty fees and interest rates, so examine the details before applying.

  • Block & H&R

H&R Block doesn’t charge interest. No finance costs or fees. Apply for a loan. (MetaBank, N.A. is offering the loan.) Get a tax refund cash advance loan the same day the bank authorizes it in most circumstances. H&R Block Emerald Prepaid Mastercard is used.

Prepare taxes at an H&R Block location. People who submit their taxes online want assistance in obtaining a refund in advance. The cost of person-to-person interaction is high. Complex returns cost $200 or more.

  • TurboTax’s Tax Prepaid Visa Card

All users who file taxes online with TurboTax have the return deposited into a Turbo Prepaid Visa Card instead. Those who file their taxes with TurboTax request a cash advance on the return using a pre-paid Visa card issued by the company. Choose the cash advance option while e-filing the taxes, then fill out a loan application.

  • Michael Hewitt

Two Refund Advance loan products are offered by Jackson Hewitt, both of which are underwritten by MetaBank. Choose between a refund advance loan with no costs or an early refund advance loan with a 35.9 percent annual percentage rate.

Why are Tax Refund Cash Advance Loans popular?

Tax refund cash advance loans are popular because borrowers acquire immediate financing to meet a necessity. Receives refund faster—sometimes instantly. 

1. High approval rates

PaydayChampion links borrowers with lenders after completing the quick online application to prequalify for tax refund cash advance loans. A borrower must earn at least $800 per month, be 18 years old and a U.S. resident, and have a bank account to qualify.

2. 0% interest and No loan fees

No-fee tax-refund loans are normally for lesser sums than interest-bearing loans, although products vary. Lenders, tax preparers, and financial and credit health affect how much to borrow. The interest rate on the no-fee refund advance loan is 0%, and it borrows up to $3,500 with it but gets it in January. Submit taxes through Jackson Hewitt for both of these loans.

3. Taxes and funds in one location

The best location for an investor’s assets relies on financial profile, tax legislation, investment holding periods, and tax and return characteristics of underlying securities. Lower capital gains and dividend tax rates and the opportunity to postpone profits make tax-friendly equities ideal for taxable accounts. Riskier, more volatile assets belong in taxable accounts to delay taxes and collect tax losses on badly performing investments sold at a loss.

4. No impact on credit score.

Requesting a Tax Refund Advance won’t impact the credit score. People with poor credit or a short credit history sometimes need help to obtain loans. However, loans against the tax return are secured by the money that expects to receive from the IRS. Having excellent credit or any credit approved for the loan is unnecessary.

What are the pros and cons of a Tax Refund Cash Advance Loan?

A tax return cash advance loan’s primary benefit is that it gives borrowers access to the anticipated tax refund money ahead of the IRS issuing the refund. Those in urgent need of cash which cannot get a loan from a bank or other conventional lenders benefit from this option. However, there are downsides to consider.


  • Rapid response time. A tax refund loan assists borrowers in getting through a difficult period if having an urgent need for money and need it sooner.
  • Potentially free. Interest is paid to access funds, albeit borrowers have to pay some costs. These costs are less than those incurred with a credit card or personal loan.
  • Reduce debt more quickly. Any current high-interest debt is paid off more quickly by using a tax refund.
  • No credit check is required. Have excellent credit to get accepted. No effect is felt on credit score.


  • Less cash was received. The tax preparer’s services must be paid for, which leads to a smaller refund. Spend more than otherwise if generally do the tax preparation.
  • Need to engage a tax preparer. Only some tax preparation businesses provide tax refund loans, so if they file with one, they won’t obtain one.
  • Time constraints. Deadlines for tax return loans are set at the beginning of the year. Only apply if all required documents are finished by the end of February.
  • Limitations on who is eligible. Ineligibility is possible if having a federal tax lien or a child support debt. Borrow money from another source if the tax return exceeds the required amount.

How much does Tax Refund Cash Advance Loans cost?

Tax refund loans are pricey—some mimic high-interest cash advance loans. A trustworthy tax agency charges less than a third-party loan. Lenders require a $100 application fee. Tax preparation costs $40. A prepaid debit card costs $30, whereas a cheque costs $20. Lenders demand additional costs. Double-digit and even triple-digit interest rates are common.

A two-week loan costs 10% or more of the return overall. Owe an extra if the return is delayed or there are other complications. Tax refund loans have early deadlines. Child support, unpaid taxes, and school debts limit IRS refunds.

How to determine the amount to borrow in Tax Refund Cash Advance Loan?

The authorized amount is determined using various criteria, including the federal return quantity and personal tax information. Maximum Refund Advance amounts are not accessible if these standards aren’t met. To calculate how much to borrow, consider the following:

  • Tax refund. The loan amount depends on the estimated tax return. Be cautious in calculating since the actual return is less than expected.
  • Fees and interest rates are a proportion of the loan amount. Fees and rates vary per lender, so compare offerings to discover the best deal.
  • Borrow just what is affordable to repay, considering other financial responsibilities.
  • Consider utilizing a credit card or a bank loan to acquire the needed money. These choices offer fewer fees and interest than tax return cash advances.

What is the maximum and minimum amount to get in Tax Refund Cash Advance Loans?

The amount to borrow with a refund advance loan is contingent upon the business providing the loan and the anticipated amount of the federal income tax return. For example, H&R Block and Jackson Hewitt provide tax return advances of up to $3,500, although TurboTax gives loans of up to $4,000, and Liberty Tax provides refund advance loans of up to $6,250.

When is Tax Refund Cash Advance Loans available?

Anticipate refund Loan disbursed within 12 hours following IRS approval. Fund availability depends on the borrowers’ bank. Lenders analyze IRS payment history, defaulted federal student loans, unpaid child support, tax liens, and other factors that result in the IRS withholding tax return. Certain businesses enable one to prequalify online to understand better whether to be accepted and how much to borrow. Prequalification requires SSN, prior year’s tax return, and contact information. Just remember that becoming prequalified doesn’t ensure the loan is granted. Submit a loan application with the return.

How fast to get a tax refund loan?

The Internal Revenue Service typically processes the refund in less than 21 days when taxpayers file the returns online and select direct deposit as their refund method. On the other hand, some of the returns include problems or calls for more inspection, which causes the processing time to be extended.

What are Tax Refund Cash Advance Loans alternatives?

The greatest approach to receiving quick money to meet an emergency need differs from the tax return. To make the best decision for the financial position, look at some of the alternatives listed below.

  • Personal loan. Apply for a personal loan to use the cash for any lawful purpose. Although a good credit score is required for eligibility for most of these products, it is still possible to get financing even if having poor credit.
  • A secured loan or line of credit. Mortgages and auto loans are the most frequent types of secured loans. A secured loan, also known as a collateral loan, requires the borrower to pledge an asset as collateral for the loan. The mortgage on a piece of property is a typical example of a secured loan. Those assets are put to use to cover unexpected costs in an emergency.
  • Credit cards. Charge the purchases to a credit card, particularly if having one that has a low annual percentage rate (APR) or an introductory deal that makes it simple to pay off the debt over the loan’s term.

Does the Government regulate Tax Refund Cash Advance Loan?

Yes, loans based on anticipated tax refunds are subject to government regulation. The size of the anticipated return affects the eligibility. Identity verification, a check of tax return data, and history are requirements for tax refund cash advance loans. Access the loan amount on a prepaid card with limits and fees or a bank account once approved. The tax preparer deducts the loan and interest from the return. Tax return loans often don’t have the same credit score restrictions as unsecured loans, but the bank evaluates an applicant’s credit record without damaging the credit score.

Is Tax Refund Cash Advance Loan worth it?

Yes, a  tax refund cash advance is worthwhile if the borrower currently utilizes a tax preparation service and anticipates a sizable advance. It is better if one needs the fund to settle high-interest debt, such as a payday loan, and have access to a debit card to make the payment. 

Is Tax Refund Cash Advance Loans risky?

Yes, it is risky. The IRS sometimes takes longer to process refunds. That is due to a return mistake or because the IRS has a lot of returns to review (as is the case early and late in the tax season). Tax refund loans are costly. Know the loan’s charges. Need to pay fines if the IRS return is late. Loan delinquency is a disaster. It adds interest and costs.

What is the difference between tax refund cash advance loans and tax refund loans?

A tax refund is the sum of money that the Internal Revenue Service (IRS) gives after processing and approving the tax return. However, it is essential to remember that not all taxpayers who submit a tax return are eligible for a tax refund.

Personal Finance Writer at Payday Champion

Kathy Jane Buchanan has more than 10 years of experience as an editor and writer. She currently worked as a full-time personal finance writer for PaydayChampion and has contributed work to a range of publications expert on loans. Kathy graduated in 2000 from Iowa State University with degree BSc in Finance.

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