Tax refund advance: Is it worth it?

News

If you’re struggling with end of year bills you may be considering a tax refund advance.

A number of tax preparers are offering loans.

But is it worth it, and what’s the cost?

7News takes a deeper look in this 7news consumer watch.

Tax prep offices like H&R Block and Liberty Tax, as well as “do it yourself” services like Turbo Tax are offering tax refund advances.

“Basically you come in with your tax documents you get your returns ready to go to the IRS. We submit it to the tax bank and you may get the advance check that day,” said Andy Carter with M&M Income Tax Service.

Carter says M&M is offering advances starting January 2nd.

But other places like Jackson Hewitt are offering them now!

It’s not the tax prep companies who lend you the money. It’s actually a bank. And when you get your refund the advance amount is deducted to pay off your loan.

But Susan Ingles who does consumer law with South Carolina Legal Services warns, beware of hidden fees.

“There’s so many fees to think about but at least not only are you paying a fee to the tax preparer, you’re also potentially paying other fees to the bank, to a transfer charge an application charge, there’s any number of fees that different tax preparers might charge and you need to know what those are,” said Ingles.

And she’s quick to point out anyone can do their taxes for free at IRS.gov or get free help through the VITA program if you earn 66,000 or less.

Carter says M&M is upfront about its fees.

“There would be the interest that the tax bank charges on the advance and then the tax preparation fees would be the fees that are involved,” he said.

And some places, like H&R Block say there are no bank fees or interest so the only cost to you is the tax preparation.

Each tax prep service has their own rules and fees so bottom line read the fine print before you sign.

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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