Credit Karma Tax Review: Should You Use It?

Credit Karma Tax Review: Should You Use It?

Credit Karma has earned quite a lot of traction for its free credit reports and tools, but the company offers much more than that.

Their free tax preparation software called Credit Karma Tax is becoming equally prominent, offering to assist anyone and everyone through the often confusing process of tax filing.

Free for everyone and intuitive, the Credit Karma Tax software can be a wonderful way to complete your routine tax filing with relative ease.

But is it a suitable solution for every situation?

Read on to this Credit Karma Tax review, and learn how it works, and whether you should give it a shot.

A Little Background on Credit Karma

Founded in March of 2007, Credit Karma is a company dedicated to providing its users with free credit reports.

Based on your score, the platform also offers a list of recommendations to help you increase your ratings.

However, because their services are completely free, some users tend to think it’s too good to be true.

But Credit Karma’s business structure allows them to earn through other means, relieving the need to charge their end-users. Aside from advertisements, Credit Karma earns its revenue if clients opt to avail of the financial services that they endorse.

For instance, if a user with a bad credit score takes out a personal loan through a lender recommended by Credit Karma through their platform, they earn a commission.

Before you gain access to Credit Karma Tax return, you first have to open an account with their main Credit Karma platform.

While you’re going through the tax preparation process, the company has the opportunity to make some credit card and loan recommendations, and that’s ultimately how their revenue comes in if you’re there for tax purposes.

How to Use Credit Karma Tax

To access the Credit Karma Tax dashboard, you first need to sign up for the mother site.

If you like to do things through your cellphone, the company also offers a mobile app for both iOS and Android users.

Once you’ve logged in, the interface is relatively intuitive. What makes the software especially attractive is that they have what is perhaps the widest list of tax forms on any free tax prep service.

They do have some unsupported forms, however, including:

  • 1040-PR
  • Schedule J
  • Schedule K-1
  • Form 1040NR
  • Form 1116
  • Form 2555
  • Form 2210
  • Form 8332
  • Form 8885
  • Form 8903
  • Form 8915A
  • Form 8915B

So if you need any of these tax forms to file your federal or state taxes, then the Credit Karma software might be limited.

All of their available forms can be found relatively effortlessly through the platform.

Alternatively, you can type the names of the forms to find them in the database if you’re not sure where to locate them.

All the information you punch into the system is stored in real-time, so you can navigate away from the website or app without losing your details. Also, users who have tried the Credit Karma Tax software in previous years can pull out information from their latest forms to cut down on the time it takes to complete.

Throughout the process, you can access scheduled customer assistance via email or chat. Keep in mind that these are not tax specialists but Credit Karma Tax personnel who can help clear up confusion about their software.

Once you’ve completed all of your files, you can submit them straight from the platform for e-filing. It’s really that easy.

Benefits of the Credit Karma Tax Software

There are loads of tax preparation software choices out there just waiting to pounce on your need for assistance.

So why should you trust Credit Karma Tax with your taxes? Well, there are a few good reasons.

It’s Completely Free

There’s nothing to lose with Credit Karma Tax. Its strongest suit is that it’s a free service — no hidden charges, no trial periods, no pay-to-access features.

This gives it an obvious edge over other service providers that will charge you right from the start just to join the platform.

Other companies will let you hop on for free, and may even provide certain forms without charge. But other forms — like the vast array of schedules — might only be available after you pay an added fee.

Maximum Benefits and Deductions

Not everyone knows how to taper down their taxes. But Credit Karma Tax has a few measures in place to help you maximize your benefits and deductions.

As the nature and complexity of your income and employment change, so do your taxes. So you’ll find that over time, that standard deduction might no longer give you the full extent of tax benefits you could reap.

To help you achieve the maximum deductions, the Credit Karma Tax software lets you compare between itemizing and standard deductions.

Using the information you’ve entered, the tax preparation platform brings you real-time comparisons that show you which of these two options will let you pay the least.

Widest Form Selection

Sure, they might not have all the forms at your disposal. But with the wide selection of forms in their roster, the Credit Karma Tax platform accommodates almost everyone.

But there are other services offering an even wider selection of forms,’ you might be thinking.

While that might be true, it helps to consider whether or not they offer their list of forms for free.

Most of the tax assistance companies that you can access through the web will charge you to access their available forms.

Easy, Breezy, Effortless

As long as you know what forms you need, there’s really no easier way to file your taxes than with a platform that basically walks you through the process.

Credit Karma Tax makes it especially easy to take the reins on your taxes, giving you greater financial independence.

Not only does this empower the humble taxpayer, but it also gives a deeper understanding of your finances and how taxes come into play.

No need to call mom or dad – the Credit Karma Tax software gives you total control and confidence.

Completely Digital

Welcome to the digital age where anything and everything can be performed online.

At Credit Karma Tax, there’s no need to download, print, and mail any forms – although you do have the option to do so if that makes you more comfortable.

The platform automatically sends all of your completed documents via its e-filing feature, letting you get the entire process done from the comfort of your mobile device or computer.

Even submitting certain files like the W-2 can be done by uploading a photo taken with your smartphone.

All of your information is stored securely in their database where it stays until you find the need to pull it out.

But for the traditional taxpayers, the Credit Karma Tax software offers printable copies that you can produce and store away in your file cabinet for safekeeping.

Safe and Sound

Credit Karma files taxes and takes the necessary precautions to keep your identity and information safe from potential threats.

The service uses 128-bit encryption to protect the data being transmitted from your device to their servers. They also employ a dedicated security team that constantly monitors online activity for any inconsistencies.

And to give you that extra bit of peace of mind, it helps to know that Credit Karma Tax is an authorized IRS e-file provider which simply means they meet all of the IRS’s business, privacy, and security standards.

Downsides of the Credit Karma Tax Software

As you might have guessed, there’s no such thing as the perfect tax preparation software.

And considering that the Credit Karma Tax prep software is free, it does have certain limitations.

Aside from the previously mentioned forms that are not available on the database, there are certain taxpayers that Credit Karma Tax might not be able to accommodate.

According to their website, they are presently unable to serve people in the following situations:

SituationDetails
Part-year state returns
You or your spouse if you’re filing jointly resided in a state for only a portion of the calendar year
Multiple state returns
You or your spouse if you’re filing jointly earned your income in more than a single state during the year
Non-resident state returns
You earned income from a state that you were not a registered resident of

Married filing separately in community property states

Married couples living in community property states (Arizona, California, Idaho, Louisiana, New Mexico, Texas) filing their taxes separately might not be able to file their state tax return with Credit Karma Tax. They may still file their federal tax, however.

Part-year New York City tax returns or Part-year Yonkers City tax returns

During part of the taxable year, you were a resident of either of these cities

Filing state taxes without filing federal taxes

Credit Karma Tax does not allow users to file their state taxes without first filing their federal taxes. You may, however, file your federal taxes without your state taxes.

Similarly, Credit Karma Tax might not have the structure required to process more complicated tax situations.

For instance, the limited resources on the platform may cause pass-through business owners to pay more than they should in federal taxes.

Who is Credit Karma Tax For?

At this point, you’re probably wondering – is Credit Karma Tax for me? The answer to that is fairly simple.

Anyone working traditional employment, perhaps holding a few investments, might be able to leverage Credit Karma Tax with little fuss.

The platform accommodates all sorts of taxpayers, including:

  1. Single
  2. Married filing jointly
  3. Married filing separately
  4. Qualifying widow(er) with dependent children
  5. Head of household

Many of those that the product serves are traditional employees with very little experience handling taxes. But thanks to the intuitive system, filing a few 1099 forms can be a no-brainer.

On the other hand, people who find themselves in more complicated tax situations — like large-scale enterprise owners or those who earn their income through overseas remittances — might not find the best assistance through the platform.

Aside from the fact that the service doesn’t offer a complete list of forms necessary for such complex tax filing processes, it’s basic resources don’t fully support more complicated situations.

If you’re earning your income from outside of the country, if you reside in multiple states during the taxable year, or if you’re earning your income in the form of foreign currency, then Credit Karma Tax might not be for you.

Ultimately, Credit Karma Tax was developed for the standard 9 to 5 employee who doesn’t have to worry too much about alien tax forms.

Do You Need Credit Karma Tax?

That ultimately depends on your situation. Credit Karma Tax software proves to be a worthy tax preparation software not just for individuals, but for enterprises seeking to assist their employees with the financial climate of their lives.

For instance, many of those who leverage Future Fuel for their business might be interested in endorsing free tools like Credit Karma Tax to their workforce.

Future Fuel is a service that empowers companies to help their employees towards freedom from student loan debt.

We do this by baking student loan repayment into companies’ employee benefits packages.

If you’re using services like Future Fuel, endorsing free tax preparation assistance software like Credit Karma Tax may further improve the financial outlook for your workforce, giving them more leverage to free themselves from debt.

Other than that, almost anyone working typical employment can find satisfying results from the use of Credit Karma Tax.

Free Tax Preparation Software That Works

Anyone reading ‘free tax preparation software’ will almost always think that the service is a scam. 

But Credit Karma Tax 2020 proves that not everything that’s free is too good to be true.

The intuitive software makes filing taxes a breeze, giving you a wealth of forms that you might need to complete the process.

Certainly, there are limitations. You can only expect so much out of free software.

But when it all comes right down to it, Credit Karma Tax filing can help most of those working typical employment through an effortless tax filing process that doesn’t cost an added penny.