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Dutchess_III's avatar

When filing your tax returns, can you designate a certain amount of your return to go to a second party, such as a lender?

Asked by Dutchess_III (40379points) October 5th, 2016

As asked. Assume that you know you will be getting a $5,000+ return, and you need a loan now for $2,000 from a lender.
When you file the return can you specify that that amount go to the lender? And do lenders even do that?

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7 Answers

zenvelo's avatar

There are tax preparers that will give you a “tax refund” loan. But they will charge you a lot for the privilege of a short term loan.

And you have to get your return done by them. Check with H&R Block if you can have it electronically deposited at a third party.

Call_Me_Jay's avatar

You mean refund, correct? I don’t think you can direct itto a third party. I guess you could give someone else’s bank account and routing number for direct deposit.

Also here – Frequently Asked Questions about Splitting Federal Income Tax Refunds

“You have several options for receiving your federal income tax refund. You can:”

• Split your direct deposit refund among two or three different accounts, with up to three different U.S. financial institutions;
• Direct deposit your refund into a single checking or savings account; or
• Receive your refund in a paper check.
• Buy up to $5,000 in U.S. Series I Savings Bonds with your refund.

Dutchess_III's avatar

How much do they charge @zenvelo?

Love_my_doggie's avatar

No, you can’t send a refund to a third party. A direct-deposit must be to an account that’s in the taxpayer’s own name (both names or the spouse’s name, if a jointly-filed return). As @Call_Me_Jay mentions, you can split your refund among up to three separate accounts, but they need to be your own accounts.

The IRS cracked-down on this a couple of years ago. Sadly, there were unethical tax preparers who’d steal refunds from people. Recent immigrants, not familiar with U.S. law or perhaps not proficient in English, were especially vulnerable.

Dutchess_III's avatar

Well, it would be easy enough to set up a savings account now with $50 and let it set until tax time. Then just pay the loan off from that account.

zenvelo's avatar

@Dutchess_III “Tax Refund” loans are not based on “I expect that next spring I will get $5,000.” They are given at the time of filing your return.

As to fees, that all depends on the complexity of your return.

Dutchess_III's avatar

She has a savings account already. Hey, we’re just trying to figure something out. She’s never taken out a personal loan before. I want to help her, but I’m kind of down and out of business today. Not up to driving 60 miles to meet with her and loan officer.

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