Did you know that if you claim an “Earned Income Credit” or an “Additional Child Tax Credit,” the IRS can delay your refund? The delay was created to combat tax-refund fraud. So, your refund is delayed until they check you out!

That’s one of the reasons that tax preparation companies offer tax-refund advances – so you don’t have to wait weeks or months to get your refund.

But here’s the thing. It’s not an “advance”. It’s a loan from a bank, and they have the right to check your credit, report the loan on your credit report, and it could possibly reduce your credit score. And, if you read the fine print, your “loan” is subject to underwriting requirements—which means that even if you apply for the tax-refund advance, there is no guarantee that you’ll be approved.

The interest rate is usually zero. However, you will be charged a “processing fee” – usually $40 to $60 – for the privilege of getting your refund in advance. And there is usually a limit to the amount the tax prep company will advance.

For example, if you are expecting a refund of $4,500, they may only advance $2,000. When the refund is received, the $2,000 will be deducted.

By the way, according to H&R Block, the tax-refund approval rate is 75%.

If you take the standard deductions—don’t pay for someone to prepare your taxes!

If you can wait a few more weeks—don’t take the tax-refund advance!

Guardian Mortgage and Wade Betz do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.