As the website for Jackson Hewitt states, a “refund anticipation loan” is a loan by a third party, typically a bank, and secured by a tax refund. You get your money immediately, rather than waiting for a refund from the IRS, and/or state tax authority.
As the same website states, the Bank charges a credit investigation fee, and a finance charge may apply.
This is a very expensive short term loan. For example, if you receive a $1,000 refund for a $75 fee, and the refund takes the IRS 30 days to process, you are paying 7.5% for a 30 day loan.
According to IRS website, Publication 2046, the projected time from electronic filing your tax return to direct deposit (of the refund money to your bank account) is normally approximately 10 days. You can provide your bank information on your return to the IRS.
Although there is no guarantee that you will get the IRS electronic refund in 10 days, in general, it is better to avoid the bank fees.
Attorney Robert M. Singer
Law Offices of Robert M. Singer, LLC
2572 Whitney Avenue
Hamden, CT 06518