What Are Tax Refund Advances?

Last year, like for many other people I know, the year was very difficult for me financially. I had just graduated from college and was enjoying the start of my new job. Unfortunately, I didn’t know that in December, my new employer would fire me and my source of income would be gone. I had to begin finding odd jobs and anything I could. I didn’t find anything more permanent for two months. Once a found a job, it was great. Now I had another problem to deal with; how was I going to pay my state taxes? Although I only owed a small amount, I had to dip into my savings and nearly ran out of money. It is hard for someone who lives alone, has no other financial support and is paying the bills by himself.

At this point, I had barely had just enough money to pay my taxes. The good news was that I was expected to get a fairly high tax refund for my status; the bad news however was until I got my tax refund, it would really be hard for me to pay my bills on time and I was afraid to go into debt.

So after a little thought I decided to go to a tax professional about what I should do. He began to discuss with me a type of “advance“, something I had yet to hear of: the tax refund advance, which is also known as a RAL.

I heard this and began to learn what it was. Essentially, these tax refund advances are given to people such as me based on how much I earned and the amount of overpaid taxes I anticipate receiving back from the IRS. Once my actual refund was issued by the IRS, the bank would then use it to pay back my tax refund advance. At first I was concerned about the whole process: what would happen if I did not get the refund? And how long would it take to get the tax refund loan? On the other hand, I also needed it badly otherwise I wouldn’t be able to pay the rent.

So I took out the refund advance and I was approved for the tax loan within the same day.

The IRS sent back my refund and that paid back my advance. If I did not get that loan in February, I probably would be on the street now and my life would have been much harder now. I am now debt free and thanks to the help of my tax preparation service, I do not need to worry about my finances for the future.