InvestingBytes.com

Filing taxes can be a hassle and what makes it even more difficult is the time that one must wait to receive the tax refund. Tax returns can make a big difference to one’s personal finances and the constantly newly introduced regulations can lead to stalled returns. Typically, the IRS takes about 21 days to refund the tax returns, however, this may be a long period for some if they need the funds urgently. This is when one can resort to the income tax refund advance loan. In recent years, tax companies have issued more than one million of the same to taxpayers.

How does an income tax refund advance work?
Most big tax preparation companies offer customers an advance on their income tax refund. Usually, the institutes that offer this option do not levy any added interests on advance refunds. However, one is required to file the taxes with these tax preparers. The tax preparing company will calculate the advance based on the refund amount that the customer is likely to receive. Some companies may also only issue a portion of the advance amount. The refund amount received through the tax preparing company comes through a bank or financial institution. These tax preparing companies partner with financial institutions to bring forth this offer.

Eligibility and cost associated with income tax refund advance
Getting an income tax refund advance from tax preparation companies may or may not involve an interest rate. However, it does come in the form of a loan. For this reason, the financial institution will approve of the taxpayer and whether he/she is eligible for the loan. The factors that decide eligibility include the amount expected in the form of an advance refund and the validation of the ID.

Approved income tax refund advance
If the income tax refund advance is approved by the tax preparing company and financial institution, then the customer will receive the amount through a prepaid debit card. When the IRS sends a tax refund post the given time period, the advance amount will be deducted from the same.

Limitations attached to an income tax refund advance
While getting an income tax refund advance from the tax preparing companies can seem like a lucrative offer, they do come with their own set of limitations.

• Eligibility only when the tax is aided through a limited number of taxes preparing companies.
• There may be a restriction on the advance amount that one can receive.
• Fees apart from that taken to prepare the tax may be applied and deducted from the final refund.

For an individual who can wait the 21 days taken by the Service to send a refund, it is best to avoid the several complexities and the other cost related to getting the income tax refund in advance. The IRS may claim that the refund for people who file the tax returns online could take up about 21 days, but it is typically found to arrive much faster than that period. However, if one is unable to wait, it is imperative to evaluate the refund advance options very carefully and note the given terms.

One can also take certain steps to ensure that the income tax refunds are issued faster. The tax returns must be filled as soon as all the required documents are in place. It is also important to ensure that there are no errors made during filling as the same can slow the process of the returns. E-filing can help in getting a quicker refund than through mailing a paper return. Additionally, it is best to opt for a direct deposit from the IRS as it will quicken the period taken for the refund to be fulfilled.