The upcoming tax season is highly anticipated, with the looming increase of advance tax refunds. The IRS aims to distribute the refund in less than 21 days for taxpayers who file electronically and choose a direct deposit. However, the service is not available until January 23, some taxpayers may not be able to wait for the money to arrive with the current financial crisis.
Hence, some Americans may seek advances against their income tax refunds. As further explained by Kathy Pickering, H&R Block Chief Tax Officer, “…most temporary COVID-19 relief measures and programs have expired including Recovery Rebate Credit, Child Tax Credit, the expanded Earned Income Tax Credit, and dependent care credit for individuals.” Last year also had no advance payment, and the credit dropped to $2,000 per child.
Several accounting firms and tax preparers increase their advance refund loans days before the distribution of advance tax refunds. These tax refund loans have no finance charges or loan fees, but some may require a service, software, and/or electronic filing fee.
Santa Barbara Tax Product Groups have increased the advance refund loans from $6,000 to $7,000. They have also extended the loan availability by two weeks to March 17. This firm handles 20% of IRS refunds and manages refund loans for some tax preparers and accounting firms. The increase may be related to the findings of a survey conducted by H&R Block, a tax preparation company. According to the result, 69% of employed people are “extremely concerned” about rising inflation rates. Other tax preparers have also been prompted to increase their loan offerings.
|
Tax preparer |
Through (Bank/financial institution) | Amount of Loans Offered | Fees and Annual Percentage Rate (APR) | Last Day of Service |
Availability of Funds (if approved) |
| H&R Block Refund Advance | Pathward, N.A. | $250, $500, $750, $1,250, $3,500 | $0 charge or loan fees.
0% APR |
February 28 | Prepaid debit card |
| Intuit’s TurboTax | First Century Bank N.A. | $250 to $4,000 (for filers with at least $500 refunds) | $0 loan fees
0% APR |
February 15 | Money is deposited in Credit Karma MoneySpend (checking) account; funds can be accessed through a virtual card and a physical Visa debit card |
| Jackson Hewitt – Tax Refund Advance | Republic Bank and Trust | $300, $500 and $1,000 | 6% finance charge | January 15 | American Express prepaid card within 24 hours or in 1-5 business days for direct deposit |
| Jackson Hewitt – No Fee Advance | Republic Bank and Trust | $500 and $3,500 | $0 fees
0% APR |
February 19 | American Express prepaid card within 24 hours or in 1-5 business days for direct deposit |
Lastly, some tax preparers can also offer Fast Cash Advance loans through First Century Bank in amounts between $500 to $7,000. If approved, the money will be available by check, direct deposit, or GO2bank Visa dept Card. All loans for this service have an APR of 35.99%.
