who are looking for fast cash to pay holiday bills,
unexpected car repairs or skyrocketing heating bills are
being bombarded with TV ads, window signs and other
pitches for tax refund advances.
Jon Hamm, wearing bib overalls, laments being stuck
after his old truck breaks down in a Dust Bowl setting
in an H&R Block commercial.
got to be a way to get us some money fast," Hamm’s
character says. "If only there was some kind of
advance we could get on our tax refund."
pitch is tempting, especially when the commercial says
up to $3,000 could be available in an advance. Jackson
Hewitt, which has its own refund advance product, noted
that 43 percent of millennial taxpayers polled indicated
in a recent survey that they plan to use their tax
refund to pay holiday debt, compared with 31 percent of
the general population.
refund loan products are relatively new. Consumers must
dig into the details to understand what kind of loan
they might expect and exactly what’s being offered.
advance loans are made by banks — and secured by and
repaid directly from a consumer’s tax refund. As a
result, the size of the loans will be limited.
if you’re owed a $3,000 tax refund, there’s no way
you’re getting a $3,000 refund advance loan. Yet the
big number is what consumers will see first.
Feb. 28, a 0 percent interest loan for up to $3,000 is
being offered to current and new customers at H&R
Block. If approved, H&R Block says, clients will
typically have access to money the same day they apply.
Hewitt has a product that promises up to $3,200 — up
from a maximum of $1,300 last year — for a 0 percent
Tax is promoting what it calls "the largest tax
refund advance offer in the industry" with its Easy
Advance Loan of up to $3,250 through Feb. 28. No fees or
interest are associated with the loan.
refunds, of course, can be the single biggest financial
payout for many consumers each year.
demand for refund advance loans is being driven up after
a crackdown to combat tax refund fraud.
Internal Revenue Service is now required to hold back
some tax refunds for those claiming the Earned Income
Tax Credit or the Additional Child Tax Credit. Last
year, about 15 million people who filed early in the
season faced those delays.
IRS warns tax-return filers that refunds that include
such credits will not show up in a taxpayer’s bank
account or debit card until at least Feb. 27 for those
choosing direct deposit. But there could be more delays,
if there are other issues with the tax return.
important point: The delay applies to the entire refund,
not just the portion of refund money that’s associated
with these credits.
the IRS advises consumers not to bank on getting a
refund by a certain date, especially when making major
purchases or paying bills.
you feel you cannot wait, well, you’re going to be
eager to listen when someone starts talking about ways
to get fast cash. Here are some points to consider:
Everyone isn’t getting a 0 percent loan of $3,000 or
Tax, for example, notes that to be eligible for the
maximum $3,250 loan amount, you’d need an expected
federal income tax refund — minus authorized fees for
tax preparation services — that amounts to at least
available loan amounts at Liberty Tax are $500, $800,
$1,300, and $3,250.
actual loan amount will vary based on the expected
refund amount, ID verification, eligibility criteria and
refund advance loans at H&R Block are in four
different amounts — $500, $750, $1,250 or $3,000 —
depending on what you’re qualified to receive.
Block said a client needs to be due a federal income tax
refund of at least $1,000 to be eligible for a Refund
Advance and meet underwriting criteria.
average federal income tax refund last year, according
to the IRS, was $2,782.
Hewitt customers can get loans available in amounts of
$100, $200, $500, $750, $1,000 or $3,200.
advance loan is offered to Jackson Hewitt clients by
MetaBank in Sioux Falls, S.D. MetaBank said it will make
up to $750 million in interest-free refund advance loans
in 2017, up from the available $450 million last year.
spokesperson for MetaBank said the bank works to provide
the highest loan amount possible, and in many cases the
loan amounts are more than 50 percent of the refund due.
refund advance loan is offered to H&R Block clients
by BofI Federal Bank in San Diego.
loan at Liberty Tax is offered by Republic Bank &
Trust Company, based in Louisville, Ky.
You cannot go online to get one of these advances.
going to need to visit a tax professional and have your
taxes prepared at a participating H&R Block, Jackson
Hewitt or Liberty office to obtain any of these loans.
Jackson Hewitt also has tax preparation offices in
Wal-Mart stores, too.
No fee does not equal no cost. Most of these promotions
for refund advances highlight that there are no finance
charges and no loan fees associated with the loans.
this is key: Any tax preparation fees would apply. So
you want to try to understand what you might pay to get
your taxes prepared at a given location.
Block notes that you can file a federal 1040 EZ free
beginning through Feb. 28.
many people cannot file the EZ form. For example, you
cannot file an EZ if you claim dependents. And you
cannot file the EZ form if you claim any credits other
than the earned income credit.
H&R Block notes that additional fees apply for the
Earned Income Credit and certain other additional forms,
for state and local returns, and if you select other
products and services.
forget there are now plenty of ways for many people to
file tax returns without paying a charge. Free File tax
software, for example, will be available at www.irs.gov
for many households with incomes less than $66,000.
lower- and moderate-income consumers could end up paying
for tax preparation services simply to get one of these
advance loans — even when they might qualify for free
tax services via volunteer sites, such as the Accounting
Aid Society in Detroit.
Chi Wu, staff attorney at the National Consumer Law
Center, said some mystery shopping tests have shown that
tax preparation fees can be $400 to $500 for some lower
or moderate income taxpayers who qualify for the Earned
Income Tax Credit.
tax preparation fees typically are taken out of your
refund when you take out a refund advance loan.
Is this really a way to get same-day cash?
Hewitt says the refund advance money is available
minutes to 24 hours after completing a tax return with
Jackson Hewitt if the money is loaded on the American
Express Serve prepaid card. It’s often one hour. But
you do have to watch for any fees associated with using
a prepaid card.
you choose direct deposit into your bank, the money
could be available within three days. The loan is
automatically repaid once the tax refund is received.
Do you need to rush?
you’re looking at a smaller advance, say $500 or $800,
could you come up with that money on your own to pay
some bills? Remember that these 0 percent loans offer
you money only a few weeks before your tax refund would
be issued anyway.