The Truth About “Paying Tax Prep Fees With Your Refund”
Millions of taxpayers choose the convenience of paying H&R Block’s tax preparation fees out of the refund, instead of upfront using a debit or credit card.
It sounds easy —
No money out of pocket.
But here’s what most people don’t know:
Choosing a Refund Transfer automatically routes your money through a third-party bank partner — and that’s where the secret delay — and the hidden fee — begins.
What the Refund Transfer Actually Does
When you file with H&R Block and choose to have your fees deducted from your refund:
- The IRS sends your refund to a third-party financial institution
- That bank takes the fee out of it
- The bank then sends the remaining balance to your bank account
This is not automatic.
This adds a financial hop between:
IRS ➜ third-party bank ➜ you
That extra step adds 3–7 business days.
The Hidden Cost: $42 (and Sometimes More)
H&R Block charges a standard Refund Transfer fee — commonly around $42, sometimes higher depending on state or program.
This is not a tax preparation fee.
It is a fee just for using the middle-man bank.
Meaning:
- Filing fee: separate
- State fee: separate
- Audit protection upsells: separate
- Refund Transfer fee: additional $40–$45
That’s pure overhead — just for “paying fees out of the refund.”
Why Your Refund Was Delayed
Here’s what happened behind the scenes:
If you filed:
IRS approves refund → TC 846 posts → refund sent
But instead of going to you:
IRS sends refund to H&R Block’s bank partner, often:
- Pathward, N.A. (formerly MetaBank)
- Republic Bank & Trust
- BofI Federal Bank
Then that bank:
- extracts H&R Block prep fees
- extracts the Refund Transfer fee
- forwards the remaining amount
This delay is not caused by the IRS.
Example Timeline
Direct Deposit Users
TC 846 posts → refund hits bank in 1–2 business days
Refund Transfer Users
TC 846 posts → IRS sends to third-party bank → 3–7 day hold → refund finally released
The difference?
Up to 7 days slower.
Why H&R Block Pushes Refund Transfer So Hard
Because:
- The bank gets the fee
- H&R Block gets a cut of the fee
- It locks the filer into their ecosystem
- It increases incremental revenue per customer
Convenience for you?
Sure.
But profit for them?
Absolutely.
How to Avoid This Delay Next Year
Option 1: Pay Upfront with Debit/Credit Card
No bank product
No transfer
No $42 fee
Refund direct from IRS to you
Option 2: Use IRS Free File
No bank products
No transfer fees
Direct, fast deposit
Option 3: Use cheaper services like FreeTaxUSA
They do not push Refund Transfer as aggressively
Option 4: Use your IRS Online Account to update banking
Ensuring direct deposit is always enabled
Signs You Used a Refund Transfer Without Realizing It
If your refund status says:
- “Your refund was sent to your bank on [date]”
but your bank shows nothing…
and
You call your bank and they say:
“We have no pending deposit from the IRS.”
That means:
Your refund was NOT sent to your bank.
It was sent to the tax-prep bank first.
The $42 H&R Block Refund Transfer fee:
- reduces your refund
- reroutes your deposit
- delays your payment
- profits the bank and tax prep company
- adds extra steps to your tax refund journey
If you want the fastest refund:
Always choose direct deposit directly from the IRS
— NOT through a refund transfer.
