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6 Causes That Got You Turned Down From A Tax Refund Advance Loan

If you have faced rejection for a tax refund advance loan, initiating communication with the concerned company is advisable to ascertain the reason behind their decision. You can also ask our free Dedicated Tax Professional with any questions you have. The issue at hand, such as an inadequate submission of the required documents, could be rectified, making it worthwhile to make a subsequent attempt. Conversely, if the underlying matter is more grave, such as an offset or credit-related predicament, it may not be prudent to pursue it further. Nevertheless, there is no cause for despair as tax season is fast approaching, and the Internal Revenue Service (IRS)

Considering this, some individuals opt for a Tax Refund Advance Loan or RAL to overcome the financial gap between the beginning of the year and the mid-to-late February period. However, obtaining an RAL is not always a guaranteed success. There are instances when you may be denied, despite your belief that you have followed all the necessary steps and even if you have had a clean track record in previous years. You can often discover the reasons behind such rejections. If you have faced rejection when applying for a loan related to tax refunds, one of the following factors might have contributed to it.

Tax Refund Advance

1. You need better credit.

A poor credit history should remind you that an RAL is essentially a loan. It is crucial to remember that regardless of whether your tax refund is smaller than expected or nonexistent, you are still responsible for repaying the entirety of the loan. For your tax refund advance to cover the loan, it must be substantial enough after factoring in interest rates, fees, and tax preparation expenses.

Various factors can potentially decrease the final amount you receive, such as modifications to tax laws and offsets (which will be discussed further shortly). The absence of a “debt indicator” provided by the IRS now challenges lenders to determine if any portion of your refund will be used for offset. This obscurity makes it harder to predict your ultimate refund and allows lenders to consider alternative criteria, such as conducting a credit check.

2. You’re subject to offset.

The occurrence of offset affects individuals who owe money. For quite some time, it has been the situation that if a person has outstanding debts, their federal income tax refund may be taken to fulfill those debts. This process is known as “offset” and falls under the Treasury Offset Program (TOP). Various federal obligations, such as overdue federal income taxes and defaulted student loans, can lead to offset. Additionally, states have the authority to request the interception or offsetting of federal tax refunds for state tax liabilities or debts owed to state agencies, encompassing overdue child support payments.


In the realm of financial measures, there was once a time when debt indicators held significant importance. However, despite relying on these indicators, alternative methods can still uncover certain triggers that may lead to offset. For instance, a thorough credit check could unveil cases of student loan delinquency or default, while certain localities may publicize information regarding parents falling behind on child support payments. It is crucial to note that being subjected to offset can deem an individual as a risky borrower, potentially resulting in the denial of loans on this basis.

Your Personal or Financial Circumstances Have Changed.

Various factors can impact the amount of your tax return beyond just tax laws. It’s important to consider how your personal or financial circumstances may have changed. Life events such as getting married or divorced, welcoming a new baby into the family, sending a child off to college, experiencing changes in employment status, or relocating to a different state can all impact your tax situation.

Due to a change in circumstances, your tax preparer may determine that your refund will be insufficient to issue you a loan from tax refund advance, even if you consistently receive the same amount every year.

You’re The Victim of Identity Theft.

Imagine finding yourself in a situation where your identity has been compromised. You may encounter obstacles when attempting to pass a credit check, even if your credit history needs to be impeccable. This could be due to the unfortunate reality of identity theft. Suppose someone has stolen and used your personal information to file a tax return fraudulently. In that case, it can significantly disrupt your ability to successfully file your return and claim any entitled tax refunds, potentially impacting your chances of obtaining a loan.

Suppose your personal information remains untarnished by unauthorized individuals attempting to file a tax return under your identity. In that case, it is important to note that implementing a credit freeze in response to a data breach will impact the accessibility of your credit data.

The Lending or Refund Advance Company is Dishonest.

They depend on numerous taxpayers. It is only logical that companies would arise to meet the demand when a need arises. There is a mix of integrity in the realm of companies that offer loan services. While many of these companies operate honestly, it must be acknowledged that not all of them can claim the same. Some disreputable entities, lurking in the shadows, intend to reject loan applications from the outset. Regrettably, their ulterior motives remain concealed, motivated by their desire to exploit customers through various means such as tax preparation, loan application, credit check, and miscellaneous fees. Though the IRS has taken action against some of these deceitful companies, new ones consistently emerge to take their place.

Tax Refund Advance Services Can Be Crooks.

Many taxpayers have significant dependence on them. It is only natural that when there is a demand, companies will meet that need. While numerous trustworthy companies exist in this industry, it is crucial to recognize that not all companies operate with integrity. Unfortunately, some deceitful companies intentionally set out to reject your loan application from the start while withholding this information from you, aiming to profit from tax preparation, loan application, credit checks, and unnecessary fees.

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5 Reasons Why Your Tax Refund Anticipation Loan (RAL) Application May Have Been Rejected

As the final week of January arrives, taxpayers are eagerly preparing to open the doors of tax season. With anticipation of potential tax refunds, many individuals are eagerly awaiting the opportunity to file their taxes especially for RAL for some.

In order to ensure fairness in the tax system, certain taxpayers are not immediately eligible to receive a tax refund. According to the law, the Internal Revenue Service (IRS) is mandated to withhold refunds that are associated with the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until at least February 15.

Taking into account weekends and the President’s Day holiday, taxpayers can start receiving their EITC/ACTC related tax refunds at the end of February. Specifically, the last weekday of February marks the beginning of this process. It is important to note that the message on the IRS phone line predicts that these refunds will start arriving just after, during the initial week of March.

When it comes to tax season, many people rely on Refund Anticipation Loans (RAL) to help them bridge the gap between filing their tax returns and actually receiving their refunds. In certain instances, you may face rejection despite believing you have followed all the correct procedures and have not encountered any difficulties in previous years. If you have experienced the disappointment of being denied a loan related to tax refunds, it is possible that it was due to one of the following causes.

Make sure to locate your dedicated tax professional that will walk you through the RAL application from start to finish for free and minimize the chances for rejection.

ral tax rejection

1. You need better credit for RAL

It is important to remember that an RAL functions as a loan. Regardless of whether your tax refund is smaller than expected or if you are still waiting to receive a refund, the entire loan amount must be repaid. Your tax refund should be substantial enough to cover the loan repayment after considering interest rates, fees, and tax preparation costs.

Various factors can affect the total amount you receive from applying for RAL, such as modifications in tax legislation and offsets (which we will discuss later). The Internal Revenue Service (IRS) has discontinued the provision of a “debt indicator,” which previously informed lenders in advance if a portion of your refund would be allocated for offset purposes.

In light of these circumstances, determining your ultimate financial outcome becomes increasingly intricate while simultaneously increasing the lender’s propensity to consider alternative factors such as conducting a credit evaluation.

2. You Need to Have the Proper Documents for RAL Application

The deadline for banks, employers, and other entities to provide tax forms is usually January 31. Many individuals eager to prepare their taxes might be tempted to arrive at their tax preparer’s office with only their final paycheck.

In order for tax preparers to e-file their tax returns, it is crucial that they receive forms W-2, W-2G, and 1099-R, if applicable, as mandated by the IRS. Failing to provide these necessary documents may render your tax preparer unable to justify extending your loan.

3. You Made Too Much Money for RAL 

Let me clarify this for you, as I can understand your confusion. The majority of the substantial tax refund checks pertain to refundable tax credits such as the EITC and the ACTC. These credits are typically subject to a “completed phaseout amount,” which signifies the income threshold at or above which no credit can be claimed.

You may find yourself ineligible for tax credits if your income exceeds a certain threshold. It is important to keep in mind that your tax preparer is well aware of this. Consequently, if your income aligns differently from the requirements for such credits, you may receive a smaller tax refund that may not even be substantial enough to consider taking out a loan (considering the accompanying fees such as tax preparation fees).

4. You’re Maxed Out.

Despite being current on all your credit card payments and other financial responsibilities, having a limited credit history can still lead to being denied. When your credit cards and other loans have reached their maximum limit, a lender may hesitate to offer you more credit. To avoid uncertainty about your credit status, it is advisable to check your credit report at the present moment.

According to regulations, individuals can receive a complimentary copy of their credit report annually from the three primary credit reporting agencies. The process can be initiated through an online platform. To confirm their identity, individuals must furnish their full name, residential address, social security number, and date of birth.

5. You Needed to Make More Money.

At the heart of the “earned income tax credit” lies the concept of “earned income.” The credit calculation is directly tied to earned income, excluding unearned income. Consequently, individuals who depend on dividends and interest cannot benefit from this credit, as it is exclusive to those who earn a living through their work.

When you face a shortage of income, it is important to consider the potential impact on your eligibility for various tax benefits. Specifically, your ability to claim refundable tax credits may be restricted. Remember, your tax preparer is well aware of this situation, and failing to meet the required income threshold could lead to a denial.

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Most Asked Questions about Refund Anticipation Loans (RAL)

What You Should Know About Tax Refund Anticipation Loans

On January 29, 2024, taxpayers will welcome the opening of tax season with mixed emotions. Some eagerly anticipate tax refunds, while others bear the weight of anxiety. In such situations, some taxpayers resort to seeking refund anticipation loans (RALs). Understanding the workings of these loans and the potential disqualifications is crucial. Here’s what you need to know.

Offered by certain tax preparers, an RAL (Refund Anticipation Loan) is a type of loan that taxpayers can opt for if they are anticipating a tax refund. It’s worth noting that this loan must be repaid, as it falls under a contractual agreement. By entering into an agreement with a lender, usually a bank, individuals can receive an advance on their projected tax refund in exchange for a commitment to repay the loan. One of the main advantages of an Refund Anticipation Loans RAL is quick access to cash, even if the tax refund itself is not disbursed for several weeks.

As Monday ushers in the start of tax season, receiving your tax refund immediately might not be possible. The law stipulates that the Internal Revenue Service (IRS) must wait until mid-February to distribute refunds to those who claim the Earned-Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).

Refund Anticipation Loans

Considering typical processing times for banks, as well as weekends and the upcoming President’s Day holiday, it is anticipated that the earliest refunds related to EITC and ACTC will be accessible on February 29, 2024. This is, of course, assuming that the refunds are made through direct deposit without any complications. Is worth mentioning that February 29, 2024, marks the final weekday of February. It is important to note that the recording on the IRS phone line advises taxpayers to expect these specific refunds to become available starting from the initial week of March.

In the process of facilitating RALs, the IRS maintains a clear separation. Lenders are not supplied with information by the IRS, nor are taxpayer tax refund amounts guaranteed. Consequently, every year, I am bombarded with inquiries regarding RALs.

Here’s a quick rundown of some of the most common, together with my answers:

If RAL was denied, does that mean I won’t get my tax refund?

Despite being coordinated or completed at the same location, keeping the Refund Anticipation Loans (RAL) application separate from the tax return preparation is necessary. Turning down the RAL will not impact your eligibility for a tax refund, as it will still be payable to you even if you have yet to receive any funds from the lender.

However, it is important to note that you might still find yourself responsible for various fees associated with loan applications, such as credit check fees and miscellaneous fees. This is a crucial aspect to consider when searching for a reliable RAL provider, as some may prioritize earning revenue from these charges rather than genuinely assisting you in obtaining the loan.

Why would I be denied of RAL?

When it comes to getting turned down for an RAL, there are a variety of factors that could come into play. One of the most frequent causes of this rejection is the lender deeming you too much of a risk.

When considering the size of your tax refund, you must be optimistic that it will cover the loan once interest rates, fees, and tax preparation fees are deducted. Otherwise, you must rely on your finances to cover the remaining amount. Furthermore, alterations in tax laws and offsets, where the government reduces your refund due to outstanding debts like child support or student loans, can impact your overall financial situation.

The lenders, banks, and tax preparers are now in the dark when it comes to the IRS, no longer providing them with the much-needed “debt indicator.” This indicator is used to give them an advanced heads-up on whether your refund had any portions earmarked for offset. With this crucial information gone, it becomes increasingly more work for lenders to gauge your bottom line accurately. As a result, they now have to rely on alternative criteria such as your credit history or salary to decide on whether to grant you a loan.

My Refund Anticipation Loan status says “Your application has been received but has not been accepted at this time.” What’s going on?

An RAL is subject to the lender’s due diligence requirements as with any loan. The level of due diligence may vary depending on the lender, ranging from a simple credit check to a more extensive process, particularly for larger loan amounts. If it has been several days since your application, it is worth seeking an update from the lender or the tax preparer who facilitated the loan.

Got denied for an RAL, will I got my tax papers back?

You can expect to have your documents returned to you, but the timing may vary. Your tax preparer may have a specific schedule for sending out copies of tax returns, and yours might simply not have been sent out yet.
In the event that this scenario arises, it would be wise to provide the individual in question with a brief period of time before taking further action. Nonetheless, it is within your rights to insist on promptly returning your information forms if the tax preparer fails to complete the necessary preparations. To learn additional strategies for handling an uncooperative preparer, get in touch with your dedicated Tax Professional to help you from start to finish.