ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Tax Refund Advance Money

Updated on July 13, 2011

Tax Refund Advance Loans

Many tax preparation companies will offer a tax refund advance to their consumers. Well known companies like Liberty Tax Service and Jackson Hewitt advertise these advances in their television ads.   These tax advances are actually loans.  The loans are based on the amount of one's tax return filing.  These tax advances can be detrimental to the cash needy tax filer.

Moneys given as tax refund advances are loans that are not actually given by the company that prepared your taxes like Liberty Tax Service.  Tax refund preparers are not authorized to issue loans.  The tax preparer must partner with a third party, a lending institution like a bank, such as American Financial Institution.

Tax preparers partner with banks to orchestrate these loans.  By linking you with the lending institution the tax preparer is entitled to part of the moneys made on this loan.  Banks charge hefty interest rates for advances on tax refunds.  The loans are basically unsecured except for the anticipated tax refund check.  They are not guaranteed by an asset which can be attached if the refund check fails.  Thus, interest rates on these types of loans can be significantly higher than regular bank loans.


Are These Loans Good For You?

Tax refund loans come at a premium. Often times the rates are as much as 33% APR. Credit card companies which are notorious for having high interest are often lower than these loans. (Most credit card companies average between 22%-25% APR on the unpaid balance and with credit card companies you usually get a grace period of 30 to pay in full without an interest charge.)

There have been law suits settled over the misrepresentation of advance refund loan advertisements. These ads have been found to be misleading to the unaware consumer. Be sure to understand all the terms of your loan prior to signing any contracts.

Impatient tax refund waiters, who want their money early, pay a premium price for it. In addition to the fees for an advance on their anticipated tax refund, these individuals often pay a fee for having their checks cashed. Check cashing fees for these individuals are estimated to be around 205 million dollars in 2004.

It is nice to be available to walk out of the tax preparer's office with money. As mentioned earlier in this article, there is a cost associated with this convenience. In addition these these absorbent costs, there are other dangers to be aware of.

If your actual tax return is less than the anticipated amount, you may not have enough money to cover the advance you took on your tax refund. If this happens, you are still responsible for the balance of the loan. Tax refund amounts can be affected by liens filed against your future tax return, unpaid child support, unpaid student loans, and tax preparer error.

Before filing for an advance on your pending tax return, be sure to consider all of the factors that come into play. It can be a very costly adventure and you may end up owing money in the end. It is probably wise to wait until you have the tax return in your hand before you start spending it.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)