This winter, it may be time to look into getting a tax refund advance; 2020 has been a very interesting year, to say the least, with many people struggling to handle this very unusual financial situation. Long before the pandemic, about 70 percent of Americans were already struggling financially. Many Americans may still face a financial crunch in early 2021.
One way to curb the tide this winter and early spring is to get a cash advance on your income tax refund. Let’s walk through how easy this process can be.
Yes, it is perfectly legal to get a cash advance on a tax return, and many tax preparers offer this as a benefit while doing your taxes.
The only exceptions are for people who still owe taxes, don’t expect a return or have a lot of governmental or student-loan debt. In those cases, the IRS might offset or subtract from your refund, affecting both your total refund and how much you’d be able to take out in an advance. This will usually become clear while preparing your taxes with a trusted accountant.
Typically, in order to get the loan, you’ll want to bring all the information you would normally need to complete your taxes, including last year’s information. For some lenders, you may not even need to get your W-2 yet in order to qualify – just a proof of income during the year, such as a pay stub. After the application goes through, individuals can get an advance on their tax returns within about 48 hours, depending on the lender.
As long as you expect money back from the IRS and don’t owe back taxes, you can be eligible to apply for a loan. These loans are typically small, short-term loans against your tax refund before it’s processed by the IRS. Typically, you will borrow a portion of what you would normally expect out of your total refund. The IRS can take anywhere between 21 days to as much as 14 weeks to process your return, and getting cash quicker than that can help Americans in a pinch. Working with a trusted preparer can help alleviate financial strain during the tumultuous Q1 period.
The amount you can get depends on the size of your return, the tax preparer you use and other factors. Bell Finance, for instance, allows its customers to apply for an advance loan up to $6,000, whereas other national brands only offer as little as $1,000. Also, the interest rate, the terms of the loan (which are typically very short) and preparer fees typically depend on which tax preparer you go with as well. Many providers will charge an interest rate and a financial charge, which typically comes out of your refund when you get it.
Those who need a short-term boost to their finances can be most helped by this type of loan; those who need a longer-term, higher-paying solution may want to look into a personal installment loan or other form of loan.
