In this Credit Karma Tax review, we’ll explain how it works, explore its features, and help determine if it’s is right for you. Enjoy!
Credit Karma has provided members with access to free credit scores access and other valuable financial tools since 2008. In recent years, it added free online tax services, too. Over the past few years, Credit Karma Tax has evolved, adding more value with new features every year.
Credit Karma Tax is a premium online tax service provided at the perfect price – free! It offers a streamlined process, mobile capabilities, audit defense, and maximum refund and accuracy guarantees. But how does this free online tax software compare to its competitors? Find out in this Credit Karma Tax review.
Credit Karma Tax at a Glance
- Launched in 2017
- Completely free tax service
- Supports most common tax forms and schedules
- Maximum refund guaranteed by Credit Karma Tax
- Offered in 40 states and Washington, D.C.
Services Provided by Credit Karma Tax
- Smart File W-2 upload
- Free Audit Defense program
- Accurate calculations guarantee
- Maximum refund guarantee
- 24/7 chat support
What Is Credit Karma Tax?
Credit Karma Tax is an online tax filing software. Launched in 2017, this tax service is completely free to use. There are no hidden fees or upsells to worry about with Credit Karma Tax. It does require a Credit Karma account, but that is free, as well. A Credit Karma account also gives you access to your credit score, along with a host of other financial resources and tools.
Don’t let the free price tag fool you, though: This tax service packs a value punch that should appeal to most people. It doesn’t work for every tax situation, but Credit Karma Tax is good for the majority of tax filers.
Credit Karma Tax Online Products
Credit Karma Tax allows customers to file both federal and state taxes for free. There’s only one version available, which you can use online or through the Credit Karma mobile app.
As you start the process, you’ll be guided through some basic questions to narrow down which tax situations apply to you. If filing jointly, this is where you enter your spouse’s information, as well as any eligible dependents. Once finished, customers work to fill in more detailed information such as:
- Retirement savings/investments
- Charitable donations
- Self Employment
- Moving and job expenses
- State taxes
The process will look different for everyone, depending on whether you have a simple or complicated tax situation. Once you’ve finished filling out all of the federal and state tax forms, Credit Karma guides you through a review to check for errors and enter any missed information. Credit Karma Tax provides a simple tax solution that’s broken up into manageable blocks.
There are a few tax situations not supported by Credit Karma Tax. It doesn’t support multiple state filings, partial-year state filings, or non-resident state filing. Nor does it support the Earned Income Tax Credit with non-dependents or Foreign-earned income. Notable forms not supported include the K-1 and Schedule J. It’s also not offered in 10 states as of this writing, so be sure to check that it covers the state you live in.
Credit Karma Tax Service Features
Several features help Credit Karma stand out among the competition. Here’s a list of some of its best features.
Credit Karma uses a streamlined process designed to help users file tax returns quickly and efficiently. From uploading W-2s to importing past tax returns, Credit Karma Tax gives customers every chance to simplify taxes this season by auto-populating information into your return. The process breaks your return into blocks, with easy-to-understand questions.
Credit Karma Tax includes Audit Defense for all users. If the IRS or state taxing authority audits you, you’ll receive help from a tax preparation professional. He or she will walk you through the process, provide guidance, and help answer any inquiries you receive. This doesn’t include representation in front of the IRS, however.
The Credit Karma mobile app gives customers another way to work on their taxes. In fact, the entire filing process can be completed from your phone. The mobile app is available on both iOS and Android and is free to download and use.
Credit Karma’s app also gives mobile access to all of Credit Karma’s other tools, such as free credit score updates.
Depending on your level of comfort and experience filing your own taxes, you may need extra help. Credit Karma Tax comes with free 24/7 chat support. There’s also a tax help center on its website with links to helpful articles on almost every aspect of tax filing. If you don’t find the answers you need, you can also email Credit Karma with questions. Plus, there’s an option to seek out help from the Credit Karma community.
Credit Karma doesn’t currently offer phone support for its software, something we’d like to see in the future.
When planning to file taxes online, you want to know that your tax return and personal information are protected. Security is a top concern for Credit Karma. It has many security measures in place to protect customers. All personal information and transmissions are encrypted using the latest technology. If there is any suspicious activity, you’ll be alerted immediately. Credit Karma also regularly audits its systems and technology to ensure safety for everyone.
Credit Karma Tax Refund Options
Credit Karma offers a few different options for tax refunds:
- Direct Deposit
- Paper Check
- American Express Prepaid Serve Card
- Credit Karma Savings Account
New in 2020, Credit Karma members can choose to allocate funds to a Credit Karma Savings account. If you don’t have one of their savings account yet, there’s an option to open a new one and allocate your refund to it. Credit Karma Savings is a high-yield savings account, which currently offers a respectable 0.56% APY, which is decent in today’s market. If you’re expecting a significant tax refund this year, moving it to a high-yield savings account is a great way to supercharge your savings.
Credit Karma Tax Guarantees
Like other online tax software companies, Credit Karma backs up its tax services with guarantees.
Maximum Refund Guarantee
Credit Karma guarantees you’ll get the maximum refund using its service. If you receive a larger refund or owe less using another tax software, you could be eligible to receive the difference in the amount (up to $100) in the form of a gift card.
Accurate Calculations Guarantee
Credit Karma also stands behind its product and its accuracy. It will reimburse you for any penalties or other fees to the IRS or state taxing authority, up to $1,000 total. The reimbursement comes in the form of a gift card.
Its guarantees don’t compare to those offered by premium online tax software companies, which can be up to $100,000. Still, it’s nice to know that you’ll receive some relief if there’s an issue with your tax return. I’m sure most people would rather get an actual refund than a gift card. If you’re choosing where you file your taxes based on its guaranteed services, Credit Karma Tax isn’t the top pick.
Credit Karma Membership
Using Credit Karma Tax requires a Credit Karma membership. The main draw of Credit Karma membership is free access to your credit score, which is updated weekly. Your credit score isn’t affected negatively through Credit Karma, which uses a soft credit inquiry to get information from credit bureaus TransUnion and Equifax.
A free Credit Karma membership opens the door to other free tools, as well. Besides your credit score, Credit Karma offers credit monitoring, which alerts you to any changes on your credit reports.
Other free tools and services from Credit Karma include:
- Credit card recommendations and offers
- Identity monitoring
- Unclaimed money
- Credit score simulator
- Financial calculators
- Educational articles
- Auto, home, and personal loan recommendations and offers
It only takes a minute to sign up for Credit Karma. Free services tend to equate to less value, but Credit Karma membership is more than worth the effort of signing up, especially since its tax services are included.
Where Does Credit Karma Tax Shine?
The main draw for Credit Karma Tax is that it’s completely free. There aren’t different price points or versions that cost more. Everything is free, including audit defense and state filing. You won’t get halfway through your tax return and see surprise fees pop up.
Credit Karma Tax doesn’t have all the bells and whistles included with premium tax software, but it does have a clean interface. It’s easy to use, so beginners with simple tax situations should walk through the filing process with ease.
While it doesn’t include all tax situations you may need, most people are covered. Plus, it allows you to itemize and report rental and investment income. Freelancers and independent contractors can file returns through Credit Karma, as well.
We also appreciate that users can file their tax returns entirely through Credit Karma’s mobile app. You can upload your W-2 by snapping a photo and uploading it. Having access through the mobile app allows you to access and file your tax return from almost anywhere.
Where Does Credit Karma Tax Fall Short?
Credit Karma Tax covers a multitude of tax situations. There are some forms and situations not covered, though. People who need to file more than one state return can’t use Credit Karma. The same goes for those who have a Foreign Tax Credit.
Customer service is okay, but not great, with Credit Karma. When you’re working on something as important as your tax return, it’s nice to have the option to talk to someone over the phone or in person. Neither option is available with Credit Karma Tax.
The company guarantees accuracy and the maximum refund possible. What it offers, though, pales in comparison to its competitors and may not be enough if there are significant errors on your tax return. Plus, any refund comes as a gift card rather than cash.
Most online tax software companies offer multiple filing options, including free versions. However, if you need more extensive tax software or have more complex tax situations, there is no upgraded version of Credit Karma Tax available. What you see in the free version is what you get.
Who Should Use Credit Karma Tax?
Credit Karma Tax is for people who are confident filing their own taxes and don’t require much support. It’s okay to use if it’s your first time filing your own taxes, as long as you have a simple tax situation.
If you’re looking for guidance or have a more complex tax situation, you might be better off with a more robust online tax program like TurboTax. Some programs, such as H&R Block, even offer both online and in-person help, which is great if you want to do your own taxes, but want a backup plan.
Credit Karma Tax isn’t available for state tax filing everywhere. Currently, it’s available in 40 states and Washington D.C. Make sure Credit Karma Tax is available where you live before signing up. If it’s not available in your state, you might want to check out FreeTaxUSA instead.
Is Credit Karma Tax Worth It?
Credit Karma provides one of the best free online tax return solutions on the market. It’s an easy-to-use program that appeals to a wide range of people and tax situations. It doesn’t offer all of the benefits and perks provided by other programs on the market, but it more than holds its own against other free versions.
Ultimately, whether Credit Karma is right for you will depend on your specific tax situation and your comfort level with doing your own tax filing. It doesn’t come with the best support, but it’s enough for most users. It also isn’t offered in all states, so be sure to check before you get started.
It does require a Credit Karma membership, but signing up is free and gives you access to valuable credit score information and other financial tools we recommend anyway. Credit Karma Tax is a great online tax solution for individuals looking for a quality self-service program without spending a dime.