Four major tax-preparation services—H&R Block, Jackson Hewitt, Liberty Tax, TaxSlayer—and Credit Karma are offering advances on your federal tax refund, with no apparent strings attached. This tax season you can get as much as $3,250 in advance, an increase of nearly $2,000 over the maximum offered last year.

The advances are certainly tempting. But before you take advantage of them, make sure you understand how they work and what to watch out for, as we explain below.

Unlike the refund-anticipation loans that were outlawed in 2012, these relatively new “refund advances,” which are also technically loans, have no fees and do not charge interest.

More on taxes

The amount of the advance you can get depends on which tax preparer you use. H&R Block is offering advances of up to $3,000 per federal tax return. Jackson Hewitt will offer up to $3,200, and Liberty Tax offers as much as $3,250. TaxSlayer, an online tax-prep company, and Credit Karma, a personal-finance website, are both offering advances of up to $1,000 per federal return. 

At Jackson Hewitt you can even get a tax refund advance of up to $400 before your W-2 arrives if you can show a pay stub or another valid proof of income.

The main requirement in all cases is that you must get your taxes done by the company offering the refund advance. To apply for an advance from the big three storefront companies, you’ll need to go to the tax preparer’s office. With Credit Karma and TaxSlayer, which have no brick-and-mortar presence, you handle the application process online.

The tax-prep companies themselves don't loan you the money. A bank that works with the tax company lends you the money, which typically is loaded onto a new prepaid card. When you receive your tax refund, the advance amount is directed back to that bank, effectively paying back your loan for you. In most cases, you can choose to get the remainder of your refund refund loaded onto the prepaid card or direct deposited.

If your refund turns out to be less than the advance you received, the companies say you won’t need to pay back the difference. “Jackson Hewitt covers that cost,” says Alan Ferber, the company’s CEO.

The timing of these offers is appealing to many people. That’s because more than 26 million taxpayers who claim the earned-income tax credit or the additional child tax credit won’t get their tax refunds until at least mid-February because of an IRS fraud-prevention process that will focus on 2017 tax returns that claim those credits. Typically, such taxpayers file early to get their entire refunds. Last year the average refund was $2,782, according to the IRS

Questions to Consider

If an advance sounds like something you would want, ask yourself:

Do I qualify for an advance? If you don’t expect a refund from the IRS, you shouldn’t apply. Certain financial situations also could disqualify you from getting an advance, including an unpaid student loan or other debt with government, owing back child support, or an outstanding garnishment on your wages. This means there’s a risk that you’ll pay for tax prep but then find yourself ineligible for the loan. H&R Block and Liberty Tax require you to complete and file your return before you apply for the advance. 

Why would tax preparers offer me an advance? The answer is that they hope to also generate new business from you. “Those loans give the company the leverage to extract profits from consumers elsewhere,” says Adam Rust, director of WiseWage, a Durham, N.C., not-for-profit that helps “unbanked” workers set up direct-deposit accounts.

A tax preparer, for example might try to sell you an audit protection service, though the IRS reports that only about 1 percent of all individual tax returns are audited in a given year. 

Are there any hidden costs? Tax preparers could charge you more for their service than if you did your taxes yourself or used a free, not-for-profit tax-prep concern such as the AARP Tax-Aide or the IRS’ Vita service. IRS FreeFile allows anyone with 2017 adjusted gross income of $66,000 or less to use its tax software at no cost. Using tax software can be low-cost or free.

Credit Karma is the only provider of the five that charges no fee to prepare and file nearly all types of individual federal and state tax returns, including the standard long form and associated schedules. Though this personal finance website might not upsell you tax-related services, be aware that it earns commissions when you use a recommended product or service from one of its third-party vendors, such as mortgage and credit-card companies. (Like all the tax-preparation companies, Credit Karma maintains that it does not share users’ tax information.)

Some of the offers require you to put the advance on a prepaid debit card. Those cards can have fees.

Should I apply for an advance? If you think you’ll qualify, you can go ahead and apply for it. Just expect the company to try to sell you other services, or refer you to other companies selling services. Also keep in mind that when you get your tax advance, if it’s credited to a prepaid card there might be fees associated with using that card.

Here’s how the five services, shown here in alphabetical order, compare:

Credit Karma Earlybird Advance

Deadline to apply: Mid-February

Amount of the advance: To apply you must be expecting at least $750 in a federal refund. You can apply for an advance of $500, $750, or $1,000, as long as the advance is equal to or lower than the refund you’ll receive. 

How it works: When you’re done preparing your taxes online at Credit Karma, choose how you want to receive your refund: direct deposit, mail, or Earlybird Advance. If you choose the advance and you’re approved, you'll receive an American Express Serve prepaid card for that amount. Once the IRS sends your refund, the Earlybird Advance will be automatically repaid. You can receive the rest of your tax refund that wasn't advanced on your Serve Card then, too.

Prepaid card details: The American Express Serve card charges a variety of fees but can be used free at 24,000 MoneyPass ATMs. 

To get use Credit Karma’s Earlybird Refund, you must sign up as a Credit Karma member—there’s no fee—and expect a federal refund of at least $750. Among other requirements, you can’t reside in Maine; the service is not offering tax prep for that state this year.

H&R Block Refund Advance

Deadline to apply: Feb. 28 at participating locations.

Amount of the advance: You can apply for an advance of $500, $750, $1,250, or $3,000, depending on your eligibility.

How it works: After your return has been prepared and electronically filed at an H&R Block location, you can apply for the advance. You’re notified of approval typically within 24 hours after applying. Funds will be loaded onto an H&R Block Emerald Prepaid Mastercard.

Prepaid card details: H&R Block Emerald Prepaid Mastercard has a variety of fees, including $3 per ATM withdrawal. (Emerald cardholders can use the card without triggering fees.) The Emerald Card allows a one-time, no-free transfer of funds from your card account by check or via automated clearinghouse (ACH) transfer.

Jackson Hewitt Express Refund Advance

Deadline to apply: Late February

Amount of the advance: You could get a total advance of up to $3,200 once you file your return. To get up to $400 of that advance upfront—before you even file—you must show a pay stub or other income verification.

How it works: Apply on the Jackson Hewitt website to see if you prequalify. Then go to a storefront office to have your taxes prepared. If you come in with a pay stub, the first advance—$200 to $400—can be loaded onto an American Express Serve prepaid card within minutes to 24 hours. (Provide your W-2 to receive the rest of the advance, up to $2,800 more.) Alternatvely, wait for your W-2 and get up to $3,200 when you have your taxes prepared. The money will be loaded onto an American Express Serve card. If you choose to have the advance direct deposited into your bank account, it’ll take one to three days after you file.

Prepaid card details: American Express Serve card has a variety of fees but can be used free at 24,000 MoneyPass ATMs.

Liberty Tax Easy Advance

Deadline to apply: Feb. 28 at participating locations.

Amount of the advance: Up to $3,250, depending on your eligibility.

How it works: You need to have your tax return prepared at a Liberty Tax location. Your advance will arrive within 24 hours after it has been accepted by the IRS (or 24 hours after filing, if you file before Jan. 29). Funds can be loaded onto a NetSpend Liberty Tax Prepaid Mastercard or direct deposited.

Prepaid card details: NetSpend Liberty Tax Prepaid Mastercard has a variety of fees, including $2.50 per ATM withdrawal.

TaxSlayer refundNOW

Deadline to apply: There is no specific deadline, but refundNOW is available for a limited time, "while supplies last," according to TaxSlayer.

Amount of the advance: You can apply for an advance of $500 or $1,000. The advance amount depends on the size of your expected tax refund but cannot exceed $1,000. The advance amount and your overall eligibility will be determined when you apply, based on underwriting criteria by River City Bank, which is backing the loans.

How it works: Apply for refundNOW online when you complete and electronically file your return with TaxSlayer. Once the IRS accepts your return, it generally takes 48 hours to get the refundNOW advance. You can choose to have the advance direct deposited into a bank account or loaded onto a new American Express Serve card.

Prepaid card details: The American Express Serve card has a variety of fees but can be used free at 24,000 MoneyPass ATMs. Customers who file their returns with TaxSlayer by April 17, 2018 and opt to put their entire refund on a new American Express Serve card by June 30 will receive an additional $10 on that card.