A Refund Race You Didn’t Know You Were In

Every year, taxpayers compare notes online. One group gets their refund on Tuesday or Wednesday, while others wait until the following week. The common pattern:

• FreeTaxUSA users get their deposit fast
• TurboTax users report delays of 3–7 days

And no—it’s not because the IRS prioritized one filer over another. It’s because of what happens between the IRS and your bank.

The Middleman Problem: Temporary Bank Accounts

Here’s the secret mechanism few taxpayers know:

FreeTaxUSA + Direct Deposit

Your refund path is:
IRS → Your Bank

TurboTax + “Refund Processing Service”

Your refund path becomes:
IRS → Third-Party Bank → TurboTax → Your Bank

That extra step inserts a significant delay.

Most TurboTax users unknowingly agree to something called a:

• Refund Transfer
• Bank Product
• Refund Processing Fee
• Payment out of refund

This triggers a rerouting of the refund through an intermediary bank like:

• Santa Barbara Tax Products Group
• MetaBank
• Civista Bank

This adds 2–5 business days, sometimes more.

The Psychological Game: “Pay Nothing Now”

TurboTax markets:

• “File now, pay later”
• “Pay your fees out of your refund”

It feels painless.

But the tradeoff is costly:

• You save maybe $40 now
• But you wait 5–7 extra days for your money later

And for many taxpayers, that refund is urgent.

What the IRS Actually Does

When your IRS transcript shows:

TC 846 – Refund Issued

The funds left the IRS that day.

At that point, TurboTax should have no role in the process.

But if you selected a refund transfer, this happens:

IRS → temporary bank holds the funds
Temporary bank deducts:

• tax prep fee
• refund transfer fee
• possibly additional service fees

Then sends the remaining refund to your real account.

Meanwhile, FreeTaxUSA Bypasses the Detour

FreeTaxUSA users who choose direct deposit get:

• No fee deducted
• No middle bank
• No rerouting
• No secondary processing

The direct path means checks hit your bank as soon as your institution receives the ACH deposit.

Real-World Example

Two taxpayers filed on January 30th.

User A — FreeTaxUSA

IRS code 846 posted Feb 14
Refund arrives Feb 15

User B — TurboTax with refund transfer

IRS code 846 posted Feb 14
Funds sent to SBTPG Feb 14
SBTPG releases funds Feb 20
Refund arrives Feb 21

Same IRS release date
Different receipt date
Because one refund took the long way home

Signs You Will Experience the 7-Day Delay

Check your paperwork or email for:

• “Refund processing fee”
• “Bank handling channel”
• “Santa Barbara TPG refund routing”
• “Refund Transfer Election”
• “Your refund will be deposited to a temporary account first”

If you see ANY of that—you’re in the waiting category.

The Ironic Twist

TurboTax is known as the premium option…
Yet FreeTaxUSA users often receive their money first.

Because TurboTax monetizes refund routing, while FreeTaxUSA leaves it alone.

How to Avoid This Next Year

When filing:

1. Use direct deposit only
2. DO NOT pay fees out of refund
3. If using TurboTax, pay upfront by card
4. Or switch to a software that doesn’t use bank products

The fastest path to your money is always:

IRS → Your Bank

The Bottom Line

TurboTax isn’t slower because it’s worse software—the IRS treats all filings the same.
It’s slower because TurboTax routes refunds through a third-party bank to facilitate fee deduction.

FreeTaxUSA users receive refunds faster because:

• No refund transfer
• No middleman accounts
• No bank settlement hold

When the IRS issues a refund, the fastest recipient is the one with the fewest steps between government and pocket.