what is bank products for tax professionals
What is bank products for tax professionals
Bank products for tax professionals are financial services, such as refund transfers and refund advances, that tax preparers offer to their clients through a partnership with a bank
.The products enable clients to pay tax preparation fees directly from their tax refund, which helps tax preparers get paid faster and serves clients who cannot or prefer not to pay upfront.
How bank products work
Client chooses a bank product. A client with an expected tax refund can choose to have their tax preparation fees automatically deducted from their refund when they opt for a bank product.
Preparer files the return. The tax professional uses tax preparation software integrated with the bank's services to file the client's return.
IRS sends the refund to the bank. Once the IRS processes the return, it sends the full refund amount to the partner bank.
Bank disburses the funds. The bank deducts the tax preparer's fees, plus any other associated bank and technology fees, and then sends the remaining refund to the client.
Client receives refund. The bank offers multiple disbursement options for the client's portion of the refund, such as direct deposit, a prepaid debit card, or a printed check.
Key bank product offerings
Refund transfers: The most common bank product, this service allows clients to pay their tax preparation fees using their refund instead of out-of-pocket. It simplifies the payment process for both the client and the tax professional.
Refund advances: These are loans that provide a client with a portion of their anticipated refund, sometimes interest-free, often within hours of filing. This is especially attractive to clients who need access to their money quickly.
Prepaid debit cards: An option for clients who are unbanked or prefer a method other than direct deposit. Refunds are loaded onto a prepaid card that clients can use immediately.
Benefits for tax professionals
Faster, easier fee collection: Bank products automate the fee collection process, eliminating the hassle of invoicing clients or waiting for payments.
Increased client base: Offering "no upfront fees" through refund transfers attracts a wider variety of clients, including those who are underbanked or have limited cash flow.
Competitive edge: Providing a broader range of financial options helps tax preparers compete with larger tax firms and stand out in the marketplace.
Improved cash flow: The tax professional gets paid promptly once the refund is funded, which provides stable income throughout tax season.
Additional revenue: Some banks offer rebates or other incentives based on the volume of bank products a preparer sells.
Choosing a bank partner
Tax preparation software companies, such as TaxSlayer Pro and TaxAct, partner with specific banks to offer these products. Well-known bank product providers include:
