What Is a Tax Refund Advance Loan?
Expecting a payday from the IRS in the form of a tax refund but need the money faster than the government might pay out? A tax refund advance loan could be the option for you. These loans let you use your tax refund as security to get money right now. Find out more below.
What Is a Tax Advance?
In short, a refund advance loan is a short-term loan offered by select tax preparation services. The loan is taken out against your tax refund. If you’re approved, you’ll receive your loan money before the IRS processes your tax return—and sometimes as soon as the day you file your taxes. Usually, you only get a loan for part of your tax refund. It’s unlikely you’ll be approved for a loan for your entire tax refund.
Refund advance loans are also known as instant refunds, tax refund cash advance emergency loans, or tax refund cash advances. In essence, you borrow your own money and the IRS repays it to the financial institution when your refund is issued. If applicable, you receive your remaining refund directly from your preparer or tax prep software company.
How Do Refund Advances Work?
These loans are offered by tax preparation services or companies working with tax preparers. Here’s a step-by-step guide for how to get a tax refund advance loan.
- Choose a reputable tax preparer or tax software company that offers tax refund advances. Deal with a licensed tax firm – Highly recommended.
- Maximize your return. The more your refund is, the more you might potentially get in an advance. Before the final step, take time to ensure you’re maximizing your refunds with eligible tax deductions and tax credits.
- Complete your tax return. Once you’ve found a solution that works for you and determined how to maximize your refund, complete your tax return.
- Select the option to receive a tax refund advance. Select the option for your advance if applicable. Some providers offer different levels of loans depending on your refund amount and other factors.
- Receive your money. The tax preparer or software company will send your advance as agreed. It could be in the form of a check, a deposit into a bank account or an instant transfer.
- Wait for the IRS to process your return. If you agreed to a tax refund advance, the IRS will typically send you your refund payment.
Benefits of Tax Refund Advances
- You get your refund money faster—in some cases almost immediately.
- You can get emergency funding to take care of a need that won’t wait until your refund comes in.
- Because your tax refund secures the advance, there typically aren’t strict credit requirements.
Potential Downsides of Tax Refund Advances
None that I can think of. How about you? Feel free to share your opinions on previous experiences with us, even if they were negative, so that we can improve your tax refund advance at 7 Day Tax Relief.
Qualifying for a Tax Advance
While you don’t necessarily need good credit to get these types of loans, there are some things that might disqualify you. If there are reasons your tax refund might be offset—including owing child support, federal student loans, or back taxes—a lender is unlikely to advance the funds. Lenders may also consider factors such as your income. Contact us for more details if you like.
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