What Is a Tax Refund Anticipation Loan?

Getting Your Money Back Sooner

For many Americans, tax season brings a heavily anticipated refund. This year, it could also deliver missing stimulus checks. After the year we’ve had, taxpayers are even more impatient as they await the extra bit of money they’re owed. 

While working with our tax preparation lawyers can make the process of sending your documents to the IRS easy and efficient, the wait for your tax return to come back from the IRS can be excruciatingly long. Third-party companies recognize this and, in response, offer tax refund anticipation loans.

What Is a Tax Refund?

Most working Americans will receive a tax refund. These payments are comprised of the excess money an individual paid in state or federal income tax during the previous year. So, in this year’s filing, you will receive any surplus from the taxes you paid in 2020.

When Can I Expect My Refund?

The tax return timeline varies based on how you file and how you elect to receive your refund. If you filed:

  • Electronically and with direct deposit: Most taxpayers who file this way receive their return within 21 days of an IRS e-file acceptance.
  • Through the mail and receive a check: Paper returns could take four weeks to be received and accepted by the IRS. It will typically take between 6 and 8 weeks from the date they receive your return for you to get your refund. 

Timelines could be extended if your tax situation is complex or your taxes are incomplete.

The IRS is not accepting returns for the 2020 tax year until February 12. With this date being the earliest possible day to file, it’s unlikely that returns will reach taxpayers before March.

Third-Party Loans to Get Money Sooner

If you file your taxes on February 12 electronically and with direct deposit selected, you can expect your refund in early March. While the Internal Revenue Service cannot offer any expedited returns, some third-party companies, typically tax preparation businesses, offer tax refund anticipation loans to filers.

These loans, while offered to anyone expecting refunds of less than a few thousand dollars, are typically only advisable when you are in immediate need of the money. The service fees, interest, and other costs could take a considerable portion of your refund away from you.

Adjusting Your Withholdings to Avoid Refunds

Taxpayers who receive large refunds could take this tax season to reevaluate their tax withholdings. By lowering their state and federal income tax withholdings, they could keep the extra money that makes up their tax returns in their paychecks throughout the year. If they do, they, in a way, already receive that money in segments every pay period.

Of course, lowering the tax withholding too much could lead someone to owe taxes. This means that the time of year that used to bring that taxpayer a pleasant bonus could instead introduce an upsetting debt.

Don’t let the tax season overwhelm you. Scaringi Law offers professional tax preparation services. Let us put our knowledge to work for you. Contact us today to get started.


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