TurboTax does not offer refund advances directly, but it partners with third-party lenders who do
TurboTax itself does not lend money against your tax refund. However, TurboTax has partnered with lenders (the specific partners change year to year) who offer what are called refund advance loans or refund anticipation loans. These are short-term loans that pay you before the IRS sends your actual refund. TurboTax presents these options during the filing process, typically near the end when you are reviewing payment and delivery choices.
The lenders are separate companies, not TurboTax itself. TurboTax earns a referral fee when you take one of these loans, but the loan terms, interest rates, and fees come from the lender. You are borrowing from the lender and repaying them when your refund arrives at the IRS.
Key Takeaways
- TurboTax shows refund advance loan options during filing, but the loans come from third-party lenders, not from TurboTax or the IRS.
- Refund advance loans typically charge fees ranging from $0 to $200 or more, depending on the lender and the size of your refund.
- The loan is repaid automatically when your actual refund arrives at the lender's account, usually within one to three weeks of IRS approval.
- You can decline the loan offer and wait for your refund through standard IRS delivery instead, which costs nothing.
- Not all lenders are available in all states, and some states restrict or prohibit these loans entirely.
How the refund advance loan works through TurboTax
When you file through TurboTax, you reach a step where you choose how to receive your refund. TurboTax will show you options for direct deposit to your bank account, a debit card, or other methods. At that same step, if a refund advance loan is available in your state, TurboTax will display it as an option alongside the standard delivery methods.
If you choose the loan, you provide your bank account information and sign an agreement with the lender (not with TurboTax). The lender then deposits the loan amount into your account, usually within one to three business days. When the IRS approves your return and sends your actual refund, it goes to the lender's account first. The lender automatically deducts the loan amount plus fees and deposits the remainder to you.
The entire process happens through TurboTax's interface, but the money and the contract are between you and the lender. TurboTax is the middleman connecting you to the lender.
Fees and costs vary by lender and refund size
Refund advance loans are not free. The cost depends on which lender TurboTax partners with that year and the size of your refund. Some lenders charge a flat fee (for example, $25 to $50), while others charge a percentage of the loan amount or a tiered fee based on refund size. A few lenders advertise $0 fees, but they may charge other costs or have stricter terms.
Before you accept a loan offer, TurboTax should show you the exact fee amount and the net amount you will receive after the fee is deducted. Read this carefully. If your refund is small (under $500), the fee might consume a significant portion of what you get back. If your refund is large, the fee is usually a smaller percentage of the total.
You can always decline the loan and wait for your refund through standard IRS delivery, which has no fee. The trade-off is time: standard delivery takes longer, but costs nothing.
Timeline: how long you wait with and without a loan
With a refund advance loan through TurboTax, you typically receive the loan amount within one to three business days of approval. You get the money quickly, but you are borrowing it and will repay it when your actual refund arrives.
Without a loan, your refund comes directly from the IRS. If you file electronically and choose direct deposit (which TurboTax does by default), the IRS typically approves your return within 21 days and deposits your refund within one to two business days after that. In practice, many refunds arrive within 5 to 10 business days of filing, but the IRS does not may provide faster than 21 days.
So the loan gets you money in days, but you pay a fee. Standard delivery is free but takes longer. Neither is inherently better—it depends on whether you need the money immediately and whether the fee is worth it to you.
State restrictions on refund advance loans
Not all states allow refund advance loans. Some states have banned them or restricted them heavily. If you live in a state that prohibits these loans, TurboTax will not show the option to you, even if you reach the refund delivery step.
States that have restricted or banned refund advance loans include New York, Connecticut, and others. The list changes, and some states have restrictions that apply only to certain lenders or certain fee structures. If you do not see a refund advance option in TurboTax, your state likely does not permit it or the lender is not available there.
You can still file through TurboTax and receive your refund through standard direct deposit or other methods. The loan is optional, not required.
Alternatives to refund advance loans
If you need money before your refund arrives and do not want to pay a loan fee, you have other options. Some banks and credit unions offer their own refund advance products or short-term loans to customers. These may have different terms and fees than the lenders TurboTax partners with.
You can also simply wait for your refund through standard IRS delivery. If you filed electronically with direct deposit, the refund usually arrives within two to three weeks. If you need money urgently for a specific bill or expense, a personal loan or credit line from your bank might be cheaper than a refund advance loan, depending on your credit and the loan terms.
Another option is to adjust your withholding or estimated tax payments for next year so that you do not overpay taxes in the first place. A smaller refund means less money tied up waiting for the IRS to return it.
What happens if the IRS rejects or delays your return
If you take a refund advance loan and the IRS later rejects your return or delays it significantly, you still owe the lender the loan amount plus fees. The lender does not wait for the IRS to approve your return—you owe them on the schedule stated in your loan agreement, usually within a set number of days.
If the IRS rejects your return (for example, because of a math error or missing information), you will have to file an amended return. The lender will not receive your refund, and you will owe them the loan amount out of pocket. This is a real risk if your return is complex or if you are unsure whether all your information is correct.
Before taking a refund advance loan, make sure your return is accurate. TurboTax does run error checks, but errors can still slip through. If you are uncertain, consider waiting for the standard refund instead of borrowing against it.
Frequently Asked Questions
Can I get a refund advance loan if I file through TurboTax Free Edition?
Yes, if the option is available in your state. The refund advance loan is offered during the filing process regardless of which TurboTax edition you use. The fee and lender may vary, but the loan itself is available to most filers.
What if I change my mind after accepting the loan?
Once you have signed the loan agreement and the lender has deposited the money, you cannot cancel it. You are obligated to repay the loan. If you want to avoid this situation, decline the loan offer before you submit your return to the IRS.
Do I have to use the lender TurboTax offers?
You do not have to take any refund advance loan at all. You can decline the offer in TurboTax and receive your refund through standard IRS direct deposit instead. If you want a refund advance from a different lender, you would have to file your taxes separately and then contact that lender directly.
Will taking a refund advance loan affect my credit score?
Most refund advance lenders do not report the loan to credit bureaus, so it typically does not show up on your credit report or affect your credit score. However, some lenders may perform a credit check or report the loan if you default on it. Check the lender's terms before you accept.
What if my refund is smaller than the loan amount?
If the IRS approves a refund smaller than the loan amount you received, you will owe the lender the difference out of pocket. This can happen if the IRS adjusts your return or if you made an error in your filing. The lender will contact you about repayment. This is another reason to make sure your return is accurate before taking a loan.