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The IRS generally delivers tax refunds speedily, paying out nine in 10 refunds within three weeks of receiving an electronic tax return (paper returns can take up to six weeks). In recent years, the pandemic upended normal operating procedures, pushing both the tax deadline and overall refund payout schedule back several months.
The IRS warns that while it expects to pay most refunds within 21 days, certain refunds are likely to take longer. Specifically, taxpayers who claim the Earned Income Tax Credit or Additional Child Tax Credit can’t expect their refunds before mid-February, no matter how soon they file.
Luckily there’s an option for anyone who’s expecting a refund and doesn’t want to wait. A few popular online tax preparers can help you get access to part of your tax refund on the same day you file.
A tax refund advance is a short-term loan that gives you access to your cash sooner than the IRS or your state tax agency can get it to you. If you’re approved, you can get a lump sum loaded onto a debit card or deposited in your bank account, usually the same day. You can typically get up to half your refund amount early.
When the IRS or your state tax agency distributes your refund, the lender will automatically be repaid the amount you borrowed and the remaining money will be sent to you.
Here’s an example: You file your taxes and the tax preparer estimates your refund will be $3,000. You apply for a refund advance loan and get approved for $1,500. You’ll get that money within 24 hours. Later, the IRS will distribute your $3,000 refund to the lender, who will claim their $1,500 and send the rest to you.
H&R Block and TurboTax, (in partnership with Credit Karma Money) offer refund advance loans from early January through various dates in February. In addition to that, Jackson Hewitt also offers an early refund advance option starting mid-December through mid-January.
You have to apply for the loan after you file your tax return, meaning you only get one shot at approval (you can’t try out another tax preparer if you get denied). The company’s partner bank will review your application and may consider your tax payment history as well as review your credit report. Applying for the loan shouldn’t affect your credit score.
Always look at the interest rate. Many predatory lenders will market personal loans as refund advances during tax season, but they’ll charge excessive interest rates and fees. The options outlined here are free, though you might be required to pay for tax preparation prior to applying for the loan and ATM fees to get cash off the refund debit card.
Personal Finance Insider named H&R Block the best tax software in 2021. Its offerings cater to a wide variety of tax situations at a reasonable price point, and its user interface is modern with easy-to-follow instructions. There’s also a robust free version for filers who qualify.
H&R Block’s refund advance loan is issued by MetaBank (member FDIC), the same bank used by the IRS to distribute stimulus check debit cards.
TurboTax is also on our list of best tax software this year. In addition to a solid free version, TurboTax offers excellent services for anyone itemizing personal or business deductions.
Jackson Hewitt is incredibly simple and easy to use, and has both DIY filing and options to work with a tax pro to complete your return. But, there’s no free version, even for simple tax situations.
The bottom line: If you need cash quickly and are expecting a tax refund, the best way is to file your taxes with one of these online preparers. They’re our top picks for filing online and they don’t charge a cent in interest or loan origination or application fees.