Don’t pay for an advance on tax refund in any scenario

I was mad about the hit television series “Mad Men.” So I hope Jon Hamm, the lead actor in the drama, doesn’t take this the wrong way.

I’m not a fan of his shilling to get people to get a tax refund-related loan. Hamm stars in a series of commercials for H&R Block. They want your business. OK, fine. The ads are cute because, well, Hamm is so fine.

But in one of the commercials, Hamm is on a movie set eating a meal with a woman made up like a zombie. Here’s their dialogue.

Hamm: “Hey, here’s an idea. What if instead of waiting weeks for your tax refund, you could get an advance on that refund?”

Zombie woman: “An advance on my tax refund. I could really use that.”

Hamm: “What would you do with that money”?

Zombie woman: “I’d like to take a tropical holiday.”

Hamm: “I’d be careful with your skin tone.”

Zombie woman, laughing: “I get it because I’m a zombie.”

Hamm wraps up the commercial with the tag: “Don’t just get your taxes done. Get your taxes won.”

This type of loan will be appealing to a lot of folks because, this tax season, a lot of refunds will be delayed. In 2015, Congress passed the Protecting Americans from Tax Hikes Act, which aimed to curb errors and fraud involving the earned income tax credit (EITC) or additional child tax credit (ACTC).

Because of the law, the IRS can’t issue a refund on tax returns claiming either credit until Feb. 15. People who have filed early and are claiming the EITC or ACTC should not expect their refunds until the week of Feb. 27, according to the IRS.

H&R Block is offering zero percent refund advance loans in the amounts of $500, $750, or $1,250, depending on eligibility. Another company, Jackson Hewitt, is promoting a similar “Express Refund Advance” of up to $1,300.

Keep in mind that these are loans backed by your refund. Although the rate is zero percent, I’m concerned about the upsell that could tack on other costs for taxpayers. In fine print on its website, H&R Block says: “Fees for other optional products or product features may apply.”

Here’s the deal: In order to get access to a loan, people have to first pay to get their taxes done. And the loan disbursement is placed on a prepaid card, which, depending on how people withdraw their money, could come with fees.

Certainly these loans are better than their cousins: refund-anticipation loans, or RALs, which used to generate millions in fees for tax-preparation companies. Thankfully, as the popularity of e-filing and directly deposited refunds took off, the appeal of these costly loans faded.

“No one can get your full refund to you faster than the IRS,” said David Sieminski, policy analyst at the Consumer Financial Protection Bureau (CFPB). “Be careful to look at all the terms of any type of ‘refund advance’ before agreeing to accept one.”

I get that doing your taxes can be very intimidating. You may not feel capable of doing it yourself, so you hire someone to file your return. But at least investigate free preparation and filing options.

The IRS’ “Free File” preparation and e-filing assistance is available to taxpayers who have a 2016 adjusted gross income of $64,000 or less. Go to www.IRS.gov/freefile. The agency’s Volunteer Income Tax Assistance (VITA) program offers free filing to people with incomes below $54,000, persons with disabilities or those who are not proficient in English. The IRS’ Tax Counseling for the Elderly program also offers free tax help. The AARP Foundation’s TaxAide program offers help at no cost to anyone who can’t afford a tax-preparation service. You can find a local Tax-Aide site at aarp.org.

The CFPB has a blog post (http://bit.ly/2jYJHl2) with tips and links about filing your return and information on free preparation services.

If you want to check on the status of your refund, go to irs.gov and search for “Where’s My Refund?” or use the IRS2Go mobile app. The agency says both portals will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15.

Technically, as advertised, the tax refund advances seem like a deal. I understand that people want and need their money fast. In the end, however, being in a rush to get your refund may cost more than you should spend. And that’s money you could save toward a vacation.