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.

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.

Recovery Rebate Credit FAQ’s

recovery rebate credit

What is the Recovery Rebate Credit?

You can claim your missing stimulus payment with the Recovery Rebate Credit. The IRS introduced the Recovery Rebate Credit for eligible taxpayers who did not receive first or second stimulus payment.

This credit was authorized for COVID-19 assistance under the CARES Act. It is an advanced payment which will increase your refund or lower your tax due to the IRS.

What are the requirements?

Continue reading “Recovery Rebate Credit FAQ’s”