How H&R Block Enables Instant Tax Refunds
Filing taxes is hardly a walk in the park.
There’s the scraping of W2s, 1099s, and numerous receipts collected over the year, not to mention the angst of triggering an audit with an incorrectly completed form.
Fortunately, online tax filing solutions have helped reduce the heaps of paperwork that goes into preparing and filing — and consumers seem to be happy about it. Since March 16, 2018, the Internal Revenue Service (IRS) reports approximately 72.7 million individual returns were filed electronically, a slight increase of 0.7% over the same period in 2017.
For many, however, the hardest part comes after filing their taxes and they are left to play the waiting game, even if they choose to get refunds by direct deposit. That wait can seem like an eternity for those planning to use refunds to pay bills or splurge on vacation or on a big-screen TV.
However, the tax preparation industry is growing and several players, like H&R Block, are now offering instant payment solutions. These options give approved filers quick access to cash at tax time through same-day loans disbursed to prepaid cards to ease the stress of waiting.
For the first Smarter Payments Tracker, Karen Webster of PYMNTS recently sat down with Jim Koger, VP of Corporate Operations for H&R block. They discussed how the company’s adoption of more efficient payment technology is a competitive advantage at a time when personal tax filing is growing in popularity, increasing competition in the tax preparation segment. and giving consumers faster access to their money.
Accelerate the return process
The average federal tax refund is $2,960 — $3,091 for direct deposit filers — as of March 2018. For many Americans, receiving this money can be one of the biggest financial events of the year. . That includes a significant portion filing with H&R Block, Koger said.
Given the stakes, it’s no wonder that direct deposit is the preferred option for filers. The most recent Disbursement Satisfaction Index™ found that consumers gave direct deposit the highest possible satisfaction score of 100 out of 100. It also found that income tax refunds were the most common use case for direct deposit. direct deposit, with 56.88% of consumers receiving this type of payment.
Nine out of 10 tax refunds are Posted by direct deposit in about 21 days, according to the IRS. But, as Webster pointed out, that several-week period may be too long for filers who want to use the money for a big purchase or to finally pay a bill. Koger confirmed that many of H&R Block’s filers have similar plans in mind for when refunds are rolling.
“Some of them use it to pay bills, some of them consider it fun money [that allows them to] take that special trip or buy that special thing that they’ve been waiting for,” Koger said.
These long waits are prompting tax preparation companies like H&R Block to seek more efficient refund payment options. One such H&R Block option is a reimbursement advance of up to $3,000 for qualified registrants. The advance is an interest-free loan issued by its banking partner, BofI Federal Bank, which can be refunded on the filer’s federal or state tax returns. Funds are released to an Emerald Prepaid Mastercard on the same day customers apply for the loan.
Once issued, Refund Advance prepaid cards can be used like a debit card to make purchases. The interest-free loan also has no fees, and customers can manage the funds stored on the card using a mobile app, Koger explained.
“There are a lot of customers who get caught up in the 21-plus day window to get their refund, and it’s a very meaningful thing for them to be able to access some of that refund sooner,” he said. -he declares.
The first declarants could in particular benefit from a reimbursement advance. Koger noted that while early risers could catch the worm, many early filers still have to wait until the end of February to get their refunds, given recent regulatory changes.
Millions of filers who get a boost on their taxes in January will face a backlog due to the current law on the books. Under the Protecting Americans from Tax Hikes (PATH) Act, the IRS must withhold refunds from those claiming the Earned Income Tax Credit or the Additional Child Tax Credit. According to an H&R Block Press releasethe law affects approximately 15 million taxpayers at the start of the season.
Having the ability to immediately get a sum equivalent to a portion of their refunds could help these first-time filers enjoy the fruits of their early labors, Koger noted.
“It allows customers who are in this position of living paycheck to paycheck to come in and get an interest-free loan,” he said. “We can help them get money today while the IRS is still, by law, taking the time to process and send them that refund.”
The omnichannel advantage
The prepaid card payment option comes in handy at several other tax preparation companies – including online tax preparation services such as TurboTax and TaxAct – but these services also come with a waiting period at least 10 days. This is where H&R Block’s omnichannel strategy becomes an advantage, according to Koger. Instead of waiting for the prepaid card, H&R Block staff can issue cards directly at the office for customers who come to a tax office.
Having a physical presence and in-person tax professionals can also be helpful for filers who are starting to file online but are running into difficult questions about their returns. H&R Block allows users to digitally begin the deposit process and then pause it to consult with a professional at one of its outlets. Koger admitted that there were times when he started his own tax return, but ran into a few issues that required the advice of a tax professional.
“We have many different combinations of options where clients can do their taxes, but it’s more comfortable for them these days,” he said.
Build a smarter tax filing system
Not only are new tools available to help filers get their taxes instantly, but they’re also about to get smarter as technology evolves. Looking ahead, Koger predicts that machine learning and artificial intelligence (AI) will lead to a more efficient tax filing process.
“H&R Block is already at the forefront of using this technology, as we’ve started using it with the millions of returns we’ve prepared to help customers get all the credits and deductions they need. eligible,” Koger said.