Many taxpayers choose H&R Block because the software advertises “Pay nothing today” or “Pay your tax filing fee out of your refund.” Sounds convenient—but that simple choice triggers a behind-the-scenes financial detour that slows down your refund and quietly deducts a $42 Hidden Fee. Here is the truth behind the Refund Transfer process and why it costs you time and money.

What Is a Refund Transfer?

A Refund Transfer is when your tax preparation fees are deducted from your refund instead of paying upfront with a debit or credit card.

Simple idea—but here’s the real process:

1. IRS issues the refund
2. Money is sent to a third-party financial partner (NOT your bank)
3. That intermediary bank subtracts fees
4. Remaining amount is then forwarded to your bank account

With H&R Block, this third-party bank is typically Pathward (formerly MetaBank), or similar partner institutions.

This routing through another bank is what causes your refund delay.

The $42 Hidden Fee Break-Down

When you choose Refund Transfer, here’s what is typically charged:

• $42 “Refund Transfer Fee”
• Additional service fees depending on product
• Possible check printing or deposit handling fees

This means your refund is lower than you expected—and slower.

Why The Refund Gets Delayed

Instead of:

IRS → Your Bank

You get:

IRS → Pathward Bank (H&R Block partner) → Your Bank

That extra step can add:

• 2–5 business days processing
• possible weekend delays
• banking settlement lag
• verification holds

Even worse: if anything mismatches (name, SSN, address, bank info), the transfer process triggers TC 841 direct deposit rejection and forces a paper check.

That can add 6–8 more weeks to the wait.

What H&R Block Doesn’t Emphasize

They heavily promote:

• No upfront payment
• Pay filing fees out of refund
• Nothing due today

But they don’t emphasize:

• The $42 transfer fee
• Additional service charges
• Refund routing delays
• The fact that you MUST use their banking intermediary
• A Refund Transfer may remove refund deposit eligibility for certain banks or prepaid cards

The “pay later” option is profitable for them—because YOU pay more and wait longer.

The Better Option: Pay Up Front

If you pay your tax prep fees using:

• debit card
• credit card
• pre-pay
• direct bank payment

Then the refund flows:

IRS → Your Bank

Because there is no third-party bank interference.

This can result in:

• faster refund
• no withholding or transfer hold
• fewer account mismatches
• no $42 bank product fee

You keep the $42—and get your money sooner.

Real-World Example

Your expected refund: $2,450
Tax prep fee: $89
Refund Transfer fee: $42
Other service charges: $5
Actual deposit: $2,314

Total lost to fees: $136

Plus, you waited several extra days for the routing transfer.

Who Should NEVER Use Refund Transfer

Avoid this option if:

• you need your refund fast
• you are relying on direct deposit
• you’re using prepaid cards or online banks
• you have mismatched identity data
• you were previously flagged by IRS identity checks
• you are waiting for EITC/ACTC payments

A delayed refund will be even MORE delayed when routed through a third-party bank.

The marketing makes it sound like a smart, painless option—but the Refund Transfer is one of the most expensive traps in modern tax filing. If you have the ability to pay tax prep fees up front, always do so. It eliminates the $42 bank fee and can speed up your refund by nearly a week.

Take control of your refund by avoiding the “pay out of your refund” gimmick—because convenience should not cost you time AND money.