TL;DR: Credit Karma Tax Software is a simple and 100% free method of filing both federal and state taxes. It’s a good, streamlined approach to doing your taxes that is only brought down by the fact that not all income forms are accepted.
It’s a new year—which means that it’s one day closer to tax time. For many, tax season is incredibly stressful because they do not know what to do. Between getting the right forms, calculating your income and deductible expenses, and figuring out how to file, prepping your taxes is definitely one of those things that virtually nobody looks forward to.
That is one reason many people just hire a tax professional to handle all that stuff for them. But hiring a tax pro can be expensive. For those who do not want to hire a tax pro, they can turn to the internet.
Credit Karma is a personal finance company that is known for its credit reporting service but they also offer tax prep services. Credit Karma stands out against other online tax prep services because they offer their services 100% for free!
Free is good but is free software really worth it? Is Credit Karma a good resource to file your taxes? We will answer that question and more in our Credit Karma Tax Software Review.
100% FREE
With Credit Karma, you can file both your federal and state taxes (most states) from the same place for free.
STREAMLINED APPROACH
Regardless of whether you use the self-guided or interview approach, the tax filing forms are clearly labeled and there is very little clutter on the screen.
ACCURACY GUARANTEE
Credit Karma guarantees that your return and refund will be accurate. If there is a calculation mistake and you get penalized, Credit Karma will reimburse you for up to $1,000.
Credit Karma Tax Software: Overview
Credit Karma was founded back in 2007 and got its start as a personal finance company. Today, the company employs more than 800 people worldwide and over 85 million users. In 2016, Credit Karma launched its online tax service. The real benefit of Credit Karma’s tax software is that it is 100% free to use, no strings attached.
Further, you can use Credit Karma to file both your federal and state taxes. They offer all major filing options so you should be able to file no matter if you are employed or are a freelancer. This is a great addition as many tax software services, such as H&R Block, require you to pay extra if you have more than just a normal W-2 filing. Not many other online tax software options allow that for free.
How Does Credit Karma Tax Work?
To start using Credit Karma, you will have to first make an account. You start by giving your email, setting a password, and providing your basic personal info like name, phone number, and tax identification status. Don’t worry about your personal data either; Credit Karma keeps all your info safe with 128-bit encryption, so no hackers are going to get your data.
Once you have the basic account set up then you can see your Tax Dashboard. From here, you can start entering your income information like W-2s, 1099s, and so on. The sidebar also keeps a running tally of how much of a refund you are entitled to. This system of entering information is super-simplified, much more so than a lot of other online tax prep software. They also allow for business and self-employed income filing, which many other services make you pay for.
Credit Karma has two main modes for entering tax info. You can do it all on your own with the self-guided approach or you can use the interview mode. The interview mode consists of a series of questions such as “do you own any stocks.” You answer the questions and the wizard will take you to the relevant forms.
Keep in mind that it’s up to you to make sure you are entering all relevant information. Credit Karma will calculate your estimated return but it cannot account for any income info that you do not provide. So make sure you have all your financial documents present and accounted for before entering your information.
Once you have filled out all of the fields, Credit Karma will review your info one last time too so you can catch any omissions or inaccuracies. After that, you can press the button and it will e-both your federal and state taxes. Credit Karma gives you the option to receive your refund via direct deposit or via a physical check sent in the mail.
If you owe money during tax season, then Credit Karma will help you set up a direct payment through your bank account. And that’s all you have to do: simple, right?
Credit Karma Tax Software Features
Refund Guarantee
Like any good tax software worth its salt, Credit Karma offers a 100% max refund guarantee. So if the refund you receive is less than what the software calculates, then they will pay the difference up to $100. $100 is not a lot so if they are off by a lot it won’t make much difference, but it’s still good that they have this kind of guarantee.
Accuracy Guarantee
Credit Karma also guarantees that all calculations are accurate. If your owed calculations are off by any amount and you get penalized by the IRS, Credit Karma will reimburse you up to $1,000. Tax penalties from the IRS can be fairly harsh so this $1,000 guarantee is nice. Keep in mind that this guarantee only applies if you entered all your relevant info. For example, if you failed to put something in and get penalized, you will not get the $1,000.
Audit Defense
Also, if there is an error on your filing and you get hit with an audit, Credit Karma will offer their services. With Credit Karma’s audit defense service, they will advocate for you, correspond with authorities, and other services.
Smart File Upload
Entering all your info manually can get tedious, especially if you have multiple sources of income to report. Thankfully, Credit Karma streamlines this process by having smart upload features. You can import your personal data from previous tax years from other services and you can also upload your W-2s by taking a picture. This is a great feature if you have a lot of fields to enter.
Live Chat
If you have problems with the software at any time, you can hit up Credit Karma’s live chat support. They also have a very large self-help section for common inquiries. You have to wait in a queue for the chat services, but things proceed quickly. Using Credit Karma, I never spent more than 5 minutes waiting to chat with a pro. The customer support team is also very knowledgeable and friendly.
How Much Does Credit Karma Tax Software Cost?
We already said that Credit Karma is free to use, but you might be thinking: There has to be some kind of catch right?
Nope, there is no catch at all. Everything is 100% free to use and there are no upsells or subscriptions. Credit Karma does not charge you for using the tax software as they get money from their partners for featuring products on their site. So you do not have to pay a single dime to file both your state and federal taxes.
Credit Karma Pros & Cons
Pros
- 100% Free. Credit karma is 100% free to use. There are no upsells, no subscriptions, and no filing charges. It won’t cost you a penny to file your taxes.
- Streamlined approach. Regardless of whether you use the self-guided or interview approach, the tax filing forms are clearly labeled and there is very little clutter on the screen. Each box has a name describing the field and the software does all the calculations for you.
- Accuracy guarantee. Credit Karma guarantees that your return and refund will be accurate. If there is a calculation mistake and you get penalized, Credit Karma will reimburse you for up to $1,000.
- Federal & state filing. With Credit Karma, you can file both your federal and state taxes from the same place for free.
Cons
- State filing not always available. Some states do not allow online tax filing so Credit Karma can help you calculate your state return but will not be able to e-file it.
- Not all forms of income accepted. Credit Karma allows most common types of income filing and some uncommon types, but they do not offer everything. For example, you can file a Schedule C if you own a business, but you cannot file corporation, partnership, or multi-member LLC forms.
Conclusions
So, is Credit Karma Tax Software worth using? We say yes. Credit Karma is definitely worth using. If you get stressed out with tax time, then it is definitely worth trying out Credit Karma. It is 100% free to use, you can file both your state and federal taxes, and there are some decent support options. So why pay a bunch of money to file when you have already paid a bunch of money in taxes?
