If you're counting on getting a refund anticipation loan ... don't. Those are loans for the amount of your anticipated tax refund until the refund itself comes in to repay the loan — about two weeks. They're usually arranged through a tax preparer when you have your taxes done.
These loans have pretty much dried up for those in the military community, largely because of a 2006 law capping the interest rate on consumer loans to the military community — including payday and refund anticipation loans — at 36 percent.
Nobody is discriminating against military personnel and their families. Nobody banned refund anticipation loans. Congress simply said that if those loans are offered to troops, the annual percentage rate can't be more than 36 percent.
And, as has been the case for many years, that APR must include fees and charges associated with the loan. Most tax preparation companies have said the banks they work with can't afford to make loans at that rate, so they no longer offer the loans to the military community.
One well-known tax preparation service, H&R Block, has designed a "military refund anticipation loan" product that has a 36 percent APR. It's the only such loan I could find.
You say 36 percent interest is high? Well, you were paying a lot more for refund anticipation loans before — ranging from 50 percent to nearly 500 percent. Although the loans are generally for the two-week period before the IRS sends your refund, the rate is annualized, same as with payday loans.
"Thirty-six percent sounds high. But when you calculate it on 11 or 12 days, that's what makes it high," said Ken Treat, senior vice president for field operations for H&R Block's U.S. tax services.
The company's military refund anticipation loan charges a flat rate of $1.07 per $100. For example, the cost for a $3,000 loan would be $32.10. The average tax refund for military personnel last year was about $2,900, according to H&R Block.
The public would pay $62.14 to $82.14 for the same $3,000 loan because of additional fees, although the finance charge is computed the same way.
H&R Block's military refund anticipation loan is offered at fewer than 150 offices around the country and some in Europe, all near military bases. It is available only to active-duty service members and their families. For more information, check out the military page at http://www.hrblock.com.
H&R Block is offering this loan, Treat said, because "we didn't want to pull the rug out from under our men and women in the military."
Treat said H&R Block offices that don't offer the loans are reporting that troops who can't get them are upset.
"Many, after the holidays when they overspent, are waiting for the refund anticipation loan," he said. "Now, they're having to wait a little longer for the money."
Treat said that in some cases, troops may be deploying within the next few weeks and want to get their money so they can pay off debt or bills before they leave.
Other people simply "want to be finished," he said. "They get their taxes prepared and don't want to wait 14 days for the refund."
H&R Block employees always inform people that these loans are expensive, Treat said, and suggest alternatives. "If they don't need them, we advise them not to get them," he said.
So think hard — really hard — about why you can't wait two weeks to get your tax refund. And remember that if you don't get the refund you expected, you'll still have to repay the loan.
If that happens, Treat said, H&R Block's bank will work with you to get the loan repaid.
Consider other options. Contact your military relief society — Army Emergency Relief, Navy-Marine Corps Relief Society, Air Force Aid Society or Coast Guard Mutual Assistance. You may qualify for a grant or an interest-free loan.
Banks and credit unions offer short-term loans and lines of credit at much lower interest rates — you might pay one-third of the cost or less over a two-week period.
The next step is to arrange to have less tax withheld from your paycheck. A little extra cash will make your life easier all year long.
Or put that money into savings and let it earn interest for you, rather than letting the government have it all year.