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Want Early Access to Your Tax Refund? It's Possible, but Experts Don't Recommend It

You can request an "advance" on your estimated tax refund from a tax preparation company.

hand holding dozens of one hundred dollar bills
You can get part of your expected tax refund now with a refund advance, but most experts warn against these loans.
Mykola Sosiukin/Getty

This story is part of Taxes 2023, CNET's coverage of the best tax software, tax tips and everything else you need to file your return and track your refund.

Receiving a refund may be the highlight of tax season for many. But did you know you could get access to this money now?

With tax refund advance loans advertising access to your refund now, you may be tempted to take out a loan to access your money a little sooner. But experts warn against this move.

A tax refund advance is a type of loan that offers you a portion of your expected tax refund amount weeks or months ahead of your actual refund. The premise may seem compelling, especially if you're still knee-deep in holiday shopping. With inflation making everything more expensive this holiday season, having extra funds at your disposal could be helpful, but a high-interest tax refund advance is generally not the way to go.

"Many companies will advertise 0% APR loans, but in reality, they're charging fees to offset this, including the tax preparation fee they're charging for filing the return in the first place," said R.J. Weiss, a certified financial planner and founder of the website, The Ways to Wealth.

What exactly is a tax refund advance and does it make sense for your financial situation? We'll walk you through everything you need to know about this unique loan, below.

What is a tax refund advance?

A tax refund advance is a short-term loan that uses your anticipated tax return as collateral. You can typically borrow between $200 and $4,000 between December and February. 

Interest for this type of loan is typically higher than most other loans, with annual percentage rates spanning around 35%. For context, average credit card APRs are around 18%, while personal loan APRs are around 11.08%. Some tax filing services don't charge interest for this service as long as you agree to file your taxes with them, but that may mean you end up paying a fee to file your taxes.

"This isn't a standardized product," said Weiss. "Therefore, fees, requirements and APRs vary drastically from one company to the next." If you're considering a tax refund advance, Weiss recommends reading the fine print and comparing different options. 

How do tax refund advances work?

You'll apply for a tax refund advance on a tax preparation company's website. You may need to provide proof of income, your W-2 (if available) and other financial records.

Tax refund advance loans typically don't have the same credit score requirements other loans do, and the amount you're approved for may depend on your expected refund amount. So, even if a service advertises $3,000 advances, it doesn't mean you'll qualify to receive this full amount.

You'll receive your funds within a few business days, though some services provide same-day or next-day access to your money. If you're required to file your taxes with a tax preparation company, the amount owed may be automatically taken from your refund. Otherwise, you'll need to repay your loan by the agreed upon due date.

What are the risks to taking out a tax refund advance loan?

There are a few reasons why you should be wary of tax refund advance loans. 

Since these loans are based on an expected refund, there's always the possibility that you may not receive a refund when you file your taxes in 2023 -- or your refund may be smaller than expected. If this happens, you're responsible for repaying the loan in full (or the amount your refund doesn't cover) from your own pocket. 

Secondly, a refund advance is rarely free, even if it's advertised as 0% APR, said Weiss. There may be hidden fees, including requiring you to pay for tax filing services, which can be expensive. Plus, some services do charge high interest rates, making this a more expensive loan option.

Who offers advances on tax refunds?

Many leading tax filing companies offer advances on your tax refund. While it's still pretty early in the tax season, both Jackson Hewitt and H&R Block currently offer some form of tax refund advance.

Jackson Hewitt has two refund advance loans: an early refund option and no fee refund option. The early refund option allows you to receive up to $1,000 in December and up to $3,500 in January, but has a finance charge and steep APR of 34.22%. The no-fee refund advance loan offers up to $3,500 and has a 0% APR, but isn't available until January. You'll need to file your taxes with Jackson Hewitt for both loans.

H&R Block is offering Emerald Advance®, which is a little different. It's a line of credit up to $1,000 from now through January 7. You do not have to file your taxes with H&R Block to apply, but if you do, you can use your refund to pay down your line of credit.

Note: Be careful of payday lenders that may advertise similar loans during this time of year, since these companies often have extraordinarily high interest rates and fees. In some states, payday loan rates can average as high as 391% to 521%. Personal finance experts recommend avoiding payday loans at all costs.

What are some good alternatives to tax refund advance loans?

Waiting until your refund comes through in 2023 is your best option. Even a simple miscalculation could lead you to expect a higher refund and accidentally borrow more money than you can afford to pay back when your refund hits your account. 

If an emergency expense pops up, like an essential medical bill, car repair or other necessity, there are better borrowing options available. Weiss recommends a personal loan if you need quick funding, which will often have more favorable terms and a lower interest rate than a tax refund advance.

You could also consider a credit card as a last resort. Just make sure you can repay the balance in full within 30 days to avoid interest, late fees and other penalties.

For more tax advice, check out our story on the key tax changes that may impact your refund next year, and learn about all of the homeowner's credits and deductions you may be able to claim.