How tax advance loans work
The process generally looks like this:
- Prepare and electronically file your return through a participating tax service.
- Apply for the advance and review the loan disclosures.
- The lender evaluates your expected refund and other eligibility information.
- If approved, you receive part of your expected refund through direct deposit, a temporary bank account, or a prepaid card.
- When the IRS issues your refund, it’s used to repay the loan and applicable fees. You receive any amount left over.
Keep in mind that the following may vary by provider:
- Approval
- Loan amounts
- Delivery times
- Repayment terms
Note: Keep in mind that a tax advance loan doesn’t speed up IRS processing—your return moves through the same timeline either way.
Costs and terms to compare
Even if a tax advance loan is advertised as no-fee, you may still pay for:
- Tax preparation
- Refund transfer
- Accounts
- Prepaid cards
Review the full agreement before applying.
| Term or feature | What to review |
|---|---|
| Loan cost | Annual percentage rate, finance charge, and lender fees |
| Tax preparation cost | Whether preparation and filing fees are charged separately |
| Refund shortfall | What you’ll owe if your refund is reduced, delayed, or not issued |
| Receiving the money | Whether an account or prepaid card is required and what access fees apply |
| Repayment | How the lender collects the loan and when another payment may be required |
Source: Consumer Financial Protection Bureau
Refund advance vs. a refund transfer
A refund advance gives you borrowed money before the IRS sends your refund. A refund transfer, sometimes called a refund anticipation check, isn’t a loan. It lets a tax preparer deduct preparation and related fees from your refund after the IRS issues it, and it may carry a separate fee.
What to know before you apply for a tax advance loan
Consider the total cost, not only the advertised interest rate. Confirm:
- How much you’ll receive
- Every fee you may pay
- What happens if the IRS reduces your refund
- Whether you’ll owe money if the refund doesn’t cover the loan
- How and when you can access the funds
If you can wait, electronically filing and choosing direct deposit is generally the fastest way to receive your refund without borrowing. The IRS issues most refunds in less than 21 days, although some returns take longer.
