These loans as very easy to get and are so common most tax preparers offer some sort of loan or work with a local lender to provide this service. In most cases the process is as simple as filling out an additional form with your tax preparer while filing your taxes. The loan will not be for the amount of your tax return, it will be lower. The general maximum amounts of these types of loans are $5000. But once the tax paper work is completed you will receive your loan.

The fine print on the form that is signed will reveal the price of the loan. Along with the high service fee for this loan is an extremely high interest rate. Some of these annual rates can be calculated into the triple digits. These are short term loans usually lasting only 10 days but the price is extraordinarily high. The reason tax preparers can get away with charging these high rates is by using a lender that is located where there is no cap on interest rates like South Dakota or Delaware.

For the year 2004 there were 12.38 million tax payers that opted for this type of loan with their tax returns. For these loans almost $1.24 billion was paid in loan fees and another cost of $360 million in administration, electronic filing and application fees were paid. 56 percent of those that received this type of loan also filed for an earned income tax credit in their tax return which is the largest federal poverty assistance program from the United States of America.

These figures are from a report released by the Consumer Federation of America. Before you take a tax return loan know the facts and the price, is it really worth it.