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Credit Karma is a popular credit monitoring platform that offers an array of free services and resources to its customers. The company was founded in San Francisco in 2007, and with the help of more than 800 employees, Credit Karma has grown into one of the most widely used free online services for millions of Americans.
The most popular service offered by Credit Karma is its free credit score reporting, but in recent years, the company has branched out in its offerings.
In 2016, Credit Karma launched its tax preparation software under the name Credit Karma Tax. With the same mission of offering free services to consumers, Credit Karma Tax is a completely free tax filing platform that allows users to file both federal and state tax returns. Using Credit Karma Tax to file your tax return this year may be a smart move if you’re cost-conscious, but it isn’t right for all tax situations. Here’s what you should know about Credit Karma Tax.
In this review:
- Getting to Know Credit Karma Tax
- The Benefits of Using Credit Karma Tax
- The Downsides of Using Credit Karma Tax
- How Does It Compare to Other Tax Filing Services?
Getting to Know Credit Karma Tax
With Credit Karma Tax, individuals and couples can file their state, federal, and some limited business taxes for free. The online tax filing software offers a single plan at no cost to users, with all schedules and deductions included. Credit Karma Tax does not require membership to use the tax filing service, unlike some of the company’s other resources, and there are no up-selling tactics or hidden charges when using the platform.
Anyone can use Credit Karma Tax, regardless of their total income or sources of income, but because it is relatively new, there are some tax situations that aren’t supported. For instance, if you need to file tax returns in multiple states, you can’t use Credit Karma Tax. Business owners can use the platform as well, but there are no options for filing as a corporation, a partnership, or a multi-member LLC.
Credit Karma Tax Filing Options
The free tax filing service from Credit Karma offers different filing options for individuals and couples: federal returns, state returns, and business tax returns. All three options are completely free, and all the features available through Credit Karma Tax can be accessed and used by taxpayers under each option.
The federal, state, and business tax filing options covered by Credit Karma Tax allow for W2 and 1099 income situations, common deductions including student loan interest and mortgage interest, and profit and loss schedules for businesses. Each option also allows for filing a completed return through e-file systems, both on a state and federal level where available. Users also have the option to print and file their return through the mail if they choose. Preparing a state, federal, or business tax return is free, as are the filing options once the return is ready.
Credit Karma Audit Defense
One of the features added in at no cost to taxpayers is Credit Karma’s Audit Defense. This included benefit offers protection to help tax filers get through an audit should one be requested by the IRS. When calculations are incorrect or information is inputted incorrectly, Credit Karma Tax Audit Defense helps foot the bill to connect you with tax professionals who can offer guidance and attend hearings or meetings on the taxpayer’s behalf.
Audit Defense includes a guarantee that Credit Karma will get calculations 100% accurate behind the scenes, including updates to tax laws. If the math isn’t right, Credit Karma offers a reimbursement of up to $1,000.
Non-Filer Audit Defense
Credit Karma’s Non-Filer Audit Defense allows members and non-members who filed their taxes elsewhere to receive professional representation during an audit. Ensuring you are represented after filing your taxes is invaluable because being audited by the IRS in many cases is random.
“Credit Karma is able to transform a systemic process that is convoluted and confusing into something more transparent and easier to navigate.”Credit Karma Tax
Credit Karma’s Non-Filer Audit Defense is free and encourages financial progress by providing accessible representation after filing.
The Benefits of Using Credit Karma Tax
Credit Karma Tax offers several advantages to its customers, namely a 100% guarantee on accuracy and a 100% guarantee that each tax refund will be for the maximum amount available for each tax filer using the system. In addition, the service is 100% free to use, and it has an easy-to-use interface that makes the process of filing taxes simple and fast.
Free to Use
Unlike some other tax filing software available online, Credit Karma Tax is completely free to use. Federal and state tax returns can be filed at no cost, and e-filing is included. Even if you have one or more of the following tax circumstances or deductions, you can use Credit Karma Tax for free which differs from other tax services:
- Property tax deductions
- Student loan interest deductions
- Mortgage interest deduction
- Earned income and child tax credits
- 1099 Dividend or Interest reporting
- Itemized deductions
- Schedule B
- Profit or loss from a business, including income and expenses
- Self-employed income
- Rental property income
- Capital gains or losses
There is no need to upgrade to a premium tier of service to include these tax situations in your state or federal return, something TurboTax frequently pushes on its users. Credit Karma Tax offers just one plan: free. Each of these deductions, credits, and filing needs are included in the free plan.
In addition to the completely free service, Credit Karma Tax also offers an easy-to-use interface. The platform is well-designed, giving users a simple way to file their federal and state returns. It allows tax filers to complete a guided, question-based process through the platform, or a self-navigation process without the questions.
Also, users have the option to upload income documents, such as W-2s, as last year’s tax returns. Even if different tax software was used to file in the past, Credit Karma allows tax filers to import previous years’ information easily online. If there are any issues with the system or a question on completing and filing a return, Credit Karma also offers access to customer support through its website.
The Downsides of Using Credit Karma Tax
Although there are plenty of benefits to using Credit Karma Tax to file your taxes, some downsides to the service do exist. Not all tax situations are supported by the platform, and users don’t get quite as much handholding as with other tax preparation services. Customer support is also lacking in some areas. While there is no cheaper option for filing your taxes online, it is necessary to review these downsides closely before using the platform.
The program is easy to navigate, even for first-time tax filers. However, compared to some paid services, there isn’t quite as much guidance or answers to specific questions about data input or calculations offered. The guided process walks you through common tax situations and asks if they may apply to you, but that’s where the handholding stops. If you’re looking for added support throughout your tax preparation and filing, it may require looking elsewhere to get it.
Limited Customer Support
Credit Karma Tax does offer customer support should you get into a jam while using the platform. But unfortunately, customer service options are limited. Users can start an online chat with Credit Karma support or send an e-mail and wait for a response. During tax season, though, Credit Karma’s support staff is busier than usual, meaning you could be waiting for a while before you get the assistance you need. You can also visit the Help Center for answers to common questions or problems. There is no phone option for support.
Not Ideal for Every Tax Situation
Credit Karma Tax is not the best for every tax situation, even though it comes at no cost to users.
Most notably, tax filers who are required to file taxes in multiple states cannot use the platform, since Credit Karma does not support the forms necessary to do so. Similarly, those with foreign earned income don’t have access to the appropriate forms through the system. And although self-employed freelancers and small business owners can use Credit Karma Tax, those who need to file taxes as a corporation, a partnership, or a multi-member LLC don’t yet have the ability to do so.
How Does It Compare to Other Tax Filing Services?
When you file your taxes, you have several different options. You may be a do-it-yourself type, or you may prefer to let a professional tax preparer handle it for you. But for many, the first option is too intimidating, and the second is too expensive.
Credit Karma Tax fills this gap nicely. It doesn’t do as much as a professional tax advisor or CPA, who will take away most of your need to work through the numbers or input specific information yourself. But it also doesn’t leave you with a stack of complicated IRS forms and confusing instructions.
As online tax filing services go, Credit Karma Tax is the most cost-effective program for those who need to file federal or state returns. There are no upcharges for certain deductions or specific tax forms, and even businesses can use the platform for free.
This differs significantly from other tax services, such as Intuit’s TurboTax, which tries to upsell users throughout the whole tax filing process. These two platforms offer similar services, but with Credit Karma Tax, you don’t have to worry about being charged for state filing at any point. However, TurboTax does offer slightly more guidance throughout the process, and its higher-tier products cover some areas that Credit Karma Tax can’t yet accommodate, such as filing as a multi-member LLC.
>> Read More: Credit Karma Tax vs. TurboTax Comparison
Credit Karma Tax is the most comprehensive tax filing platform available at no cost. Individuals and couples have the option to file state, federal, and business taxes through the company without having to worry about hidden fees or charges for adding deductions, business income, or tax credits. The platform is easy to use and includes options for print or e-filing when a return is complete. Users also get free Audit Defense and access to hundreds of tax-related articles through the Help Center.
However, Credit Karma Tax is still made for a certain crowd: those who don’t want to go fully down the path of do-it-yourself but who also don’t want to pay the high price tag associated with a tax professional in person. Also, Credit Karma Tax doesn’t support all tax forms for every tax situation, so it’s necessary to review its limitations before starting your tax return with the company.
Author: Melissa Horton