'Free' tax loans still come with a cost - NBC12 - WWBT - Richmond, VA News On Your Side

'Free' tax loans still come with a cost

(Source: file photo) (Source: file photo)
(WWBT) -

Before you sign up for one a tax refund advance payment to get your money faster, be aware of what you'll still have to pay.

The ads for tax refund advances are already all over the place with big tax prep companies like H&R Block and Jackson Hewitt pushing their own versions.

Here's how those advances work: They're really loans, made by banks, which are repaid directly from your tax refund. 

Several companies are promoting tax advances up to $3,000, but remember the advance is based on your own refund. 

The ads say the loans are interest free, with no fees, but that doesn't mean "no cost." 

In order to be eligible for the advance you have to pay for tax preparation by one of those companies, and that could cost you several hundred dollars.

Remember the IRS offers a free-file program for taxpayers earning less than $66,000 a year. 

That means 70 percent of American taxpayers could file their taxes for free.

And people earning more than that also have access to free fillable forms through the IRS.  The IRS says it turns around 90 percent of refunds in 21 days or less, with early filers getting their refunds in as little as eight days.

If you're eligible to file for free and you can file early in the season when that turnaround is shortest, it may not be worth it to pay those tax prep fees to get the money just a few days faster. 

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