A Tax Advance Loan uses the taxpayer’s anticipated tax refund as security against a loan for the same or a lesser amount of money.
With a Tax Advance Loan, you can get a portion of your refund in as little as 24-48 hours after the IRS accepts your e-filed tax return.
The IRS says their goal is to get everyone’s tax refunds processed within 21 days of filing. Last year, nine out of ten taxpayers filing electronically got their tax refunds within this three-week period.
Some people report getting their refund back in a little over one week, but most get it back within two weeks. However, others have to wait much longer, which is why a tax advance loan is a fantastic option.
Ways to Speed Up Tax Returns
There are a few strategies you can use to get your tax returns back from the IRS faster:
- File early. The IRS can start accepting tax returns by the end of January. The sooner you submit your returns, the sooner the IRS can process them.
- File electronically. Refunds for electronic returns take an average of 21 days. If you were to send in paperwork via snail mail, they can take closer to eight weeks.
- Opt for direct deposit. The IRS reports that a refund can show up in your account 5 days after being sent. A paper check may take several weeks, and it could get lost or waylaid in the mail.
- Triple check your tax return for errors. One of the main reasons a refund is slowed down is due to calculation errors or misinformation. By triple checking your return, you facilitate the process for the IRS and get your money faster.
Sometimes there are unavoidable reasons that your tax refund may be delayed.
People claiming the Earned Income Tax Credit (EITC) typically experience a delay in their refund. The IRS recently released a statement saying that assuming a taxpayer has completed everything correctly, the earliest they can expect their refund if they claim the EITC is the end of March 2021.
Filing taxes with the Additional Child Tax Credit (ACTC) or the American Opportunity Credit (AOC) could also trigger delays in the refund.
The current government shutdown could lead to delays in refunds this year as well.
Tax Advance Loans
When a delay in your tax refund is unavoidable, consider working with a professional tax preparer and applying for a tax advance loan.
Once your tax preparer has filled out your paperwork and sees how much of a return you should receive, they may offer you a tax advance loan. This means they will make you a loan based on your anticipated return. This allows you to get money within 24-48 hours rather than waiting for the IRS. When the actual refund from the IRS comes through, your tax preparer usually takes their fees plus the loan amount out of the return automatically. This allows people to get professional help with their taxes without having to pay up front for the service.
Having access to your tax refund through a loan can be really beneficial if you need the money quickly -especially if you're filing an EITC.
Access to a tax advance loan is just one of the many benefits of using a professional tax filing service. Here are some other reasons people choose to get help filing their taxes:
- There’s a much smaller chance that your refund will be delayed when you let professionals handle filing your taxes
- Some tax preparers offer a free quote for their services so you know up front what you’ll pay
- Certain tax preparers offer free help if the IRS audits you
- If you bring new customers to your tax preparation service, you may receive a referral incentive or bonus
- Some tax preparers have easy to use apps to help you stay organized, and allow you to do your taxes on-line.
- You may get a cash incentive when you file your taxes, depending on the service you choose and their current promotions
Getting part of your tax refund early is a great incentive to use a tax professional. For people who file with the EITC, the additional delay is unnecessary if they have a tax service that offers Tax Advance Loans.
Taxes can be overwhelming. That's why we've created the Sunset Finance Guide to Tax Returns to provide you with more information.