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Credit Karma Tax Review

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by Emily Zhu Updated
Credit Karma
Our Rating: 2.7/5
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Credit Karma is a personal finance company whose mission is to provide tools and education to help people make financial progress. Founded in 2007 and based in San Francisco, it now has over 700 employees across its three offices. With over 60 million users, it’s best known for offering all its services free-of-charge. Credit Karma makes money from its partners rather than its customers, giving users free access to credit scores and reports. You’re able to manage your finances without any financial burden.

Credit Karma launched with its credit report services but is now expanding into other fields. In 2016, Credit Karma launched Credit Karma Tax, bringing something different to the tax planning field by offering completely free federal tax and state tax returns. There are no hidden fees or upsells. There are no exclusive features available with a paid plan – the sole plan is free and gives all users access to the same features. This introduces an affordable and accessible option for tax filing. In its first year, 1 million returns were filed with Credit Karma Tax.

Credit Karma Tax’s Filing Options

Unlike other tax planners, Credit Karma Tax is completely free to use. It only offers one plan which has all the features included at no extra cost. Other services often include more features with more expensive plans, but Credit Karma allows you to get everything it offers without the need to upgrade. It says it believes that filing taxes should be free to put more money back into customers’ pockets. This means free federal and state e-filing, no upsells, no hidden fees and no income limit. You’re able to file single or joint returns and a variety of other forms. These forms include 1040EZ, 1040A, 1040, Schedule A, Schedule C, Schedule D, Schedule K-1 and more.

But because Credit Karma Tax is still new, there are limits to the forms that can be filed. Depending on your residency, you may not be able to use Credit Karma Tax. You can’t file multiple state returns or part-year state returns with the service. It doesn’t offer part-year New York City or Yonkers tax returns or Detroit income tax returns. It also doesn't support state returns for community property states if your filing status is married filing separately. If you’re a business owner, there is also no option to file small business, corporation, partnership or multi-member LLC forms.

Credit Karma Tax does make filing less overwhelming. Though it doesn’t have an automatic import option, meaning you have to fill everything out manually, the service makes it easy. There are two different ways to fill out forms: interview style or self-guided filing. The interview method asks you easy questions, like whether you sold any stocks, bonds or mutual funds in the past year. You answer questions and it directs you to the appropriate forms. The self-guided approach allows you to navigate to relevant sections that need filling out. Everything is labeled clearly, from wages and salaries to student loans to interest and dividends. Credit Karma Tax automatically does the calculations and inserts the information in the appropriate boxes. This limits mistakes made on your end.

And though everything is online, you don’t necessarily have to file online. Credit Karma Tax allows you to fill and complete the return online. Then you have the option of e-filing it or printing and mailing it. There’s no extra fee for either option.

A drawback to Credit Karma Tax is that it doesn’t have extensive guidance or support throughout the filing process. There is a Help Center to assist with questions and offer some explanations. But there’s no detailed, step-by-step guidance that other services have. Plus, its customer support is limited. Customer support is available through email or chat, but phone calls are reserved for advanced and complicated issues. In addition, its customer service representatives aren’t tax advisors – they’re unable to give personal or legal tax advice. This could be a drawback, especially if going through something urgent like a tax audit.

Credit Karma’s tax features are limited. There’s no easy import option, audit support or step-by-step guidance. It does not offer all tax forms, and a couple states are not currently covered. Credit Karma’s overall focus on personal finance and credit also means that it’s lacking specific tax planning detail. It doesn’t have tax tips, tools or professional tax advisors to help with filing. But with 1 million returns filed in the first year, it has room for improvement as its service grows.

Additional Features 

Refund Options

The tax refund goes directly into your bank account. If you don’t have a bank account, the IRS mails a check to you. This typically takes several weeks to arrive. 


Filing Options Costs Features
Credit Karma Tax Free Federal and state e-filing; user-friendly interface

Pricewise, Credit Karma is hard to beat. Credit Karma believes that tax filing, much like accessing credit score information, should be free. With this philosophy, its price – or more accurately, the lack of one – makes it affordable and accessible. 

Though the service has some limitations, it supports most major federal forms and schedules. You’re also able to file online, increasing its convenience.

Who Credit Karma Tax is For

Since Credit Karma Tax has no filing fee, it’s an affordable option for all. But it’s a better fit for those who have simple taxes or a basic understanding of tax filing. Credit Karma Tax doesn’t offer as many educational tools and guidance as other services. It makes it easier to file online than on paper, but there’s no step-by-step guidance or extensive customer support. If you’re a first-time filer, it may be harder to get answers to your questions.

But if you know what you’re doing, then Credit Karma Tax is a good option. This free service makes it easy to navigate through tax forms and find deductions and credits. But be sure to check that your necessary forms are available. Credit Karma Tax doesn’t offer tax returns for all states and some forms for business owners are also not available.

What's the Catch?

As a fairly new tax planning service, Credit Karma Tax has its benefits and drawbacks. It has room to improve to establish itself as an affordable, efficient option. Because it’s so new, it doesn’t offer as many features as its competitors do.

For example, there’s no easy, automatic import. Other services often have audit support and a maximum refund guarantee, as well – Credit Karma doesn’t. And if you just moved, you’re out of luck since you can’t file some part-year state returns. Its website is also lacking in extensive educational information, which makes it harder for beginners with no tax experience. So although Credit Karma Tax’s pricing makes it accessible to all, it doesn’t offer as many supplemental tools.

Plus, the customer service at Credit Karma is lacking. Because tax planning is just one division of Credit Karma, its customer service isn’t focused specifically on tax planning support. There’s no access to tax advisors, so you can’t receive personal or legal tax advice. Plus, customer support is only available through email and chat. These aren’t the fastest ways to communicate, which is a drawback if you’re filing near the deadline. Credit Karma only contacts you over the phone in complicated situations.

And although Credit Karma is free, it requires that you sign up for the entire service. This means that you’ll have access to the credit score and report service as well, rather than just Credit Karma Tax. Some may find this unnecessary or even annoying.

How Credit Karma Tax Stacks Up

Tax Planner Plans Offered Costs (Federal) Costs (State)
Credit Karma Tax Free $0 $0
TurboTax Absolute Zero, Deluxe, Premier, Self-Employed, TurboTax Live Absolute Zero: $0 Deluxe: $39.99 Premier: $59.99 Self-Employed: $89.99 TurboTax Live: $149.99 Absolute Zero: $0 Deluxe: $36.99 Premier: $36.99 Self-Employed: $36.99 TurboTax Live: $36.99
TaxAct Free, Plus, Freelancer, Premium Free: $0 Plus: $25 Freelancer: $39 Premium: $51 Free: $0 Plus: $37 Freelancer: $37 Premium: $37

Credit Karma has an advantage over its competitors by offering a truly free tax planning service. Other services offer multiple plans at different prices. There’s often a free option, but to get the most features, you’ll have to upgrade to a paid plan. Credit Karma combats this by offering all features at no extra cost. But its competitors tend to offer more features than Credit Karma.

One of the most popular tax planning services is TurboTax. Though more expensive than the typical tax planning service, TurboTax offers extensive features. It has five different online filing options that are targeted toward different individuals, whether you’re a student, homeowner, landlord or self-employed. This ensures that you get the specific guidance and help you need to navigate through tax season. TurboTax also has easy import, audit support and a maximum refund guarantee. You can also track your charitable donations. But if you’re looking to file a particular form, it may only be available in a different plan. This means that you’ll have to upgrade to get full access.

For the 2017 tax season, TurboTax has reduced the prices for federal and state filing in all plans. State filling decreased from $39.99 to $36.99. Federal fees for the Deluxe plan were reduced from $59.99 to $39.99, while the Premier plan went from $79.99 to $59.99. A plan called TurboTax Live, which costs $149.99, gives you access to tax experts throughout the filing process. In addition, TurboTax has the Absolute Zero program, which allows individuals to file federal 1040EZ, 1040A and state taxes for free. TurboTax is dedicated to getting the most out of tax season, while making it as stress-free as possible.

Another tax planning option is TaxAct, which is one of the more affordable options. TaxAct offers a truly free plan, with no federal or state filing fees. However, this free plan only covers federal filings that use 1040EZ and 1040A forms. Its paid plans are not as expensive as TurboTax. Although TaxAct isn’t the fanciest program out there, it’s useful for those with straightforward finances. Its interface is simple and gets the job done. There’s also unlimited phone support. If you have a more complicated tax situation, it may require upgrading, but it’s still relatively affordable.

Bottom Line: Should You Use Credit Karma Tax?

Credit Karma is already known for its free services, offering credit scores and credit reports at no cost. Its goal is to help people make financial progress by helping them understand their starting point. With the launch of Credit Karma Tax in 2016, the company is applying that same mindset to tax filing. By offering free tax filing with no hidden fees or upsells, federal and state filing is made affordable and accessible.

But with the newness of Credit Karma Tax, there are some limitations. It doesn’t cover all state tax returns or forms applicable to business owners. In addition, it doesn’t have an easy import option or a maximum refund guarantee.

Those who will get the most out of Credit Karma Tax, are users with either simple tax return needs or a basic understanding of tax filing. Credit Karma Tax doesn’t offer as many tools or guides as its competitors, which makes it harder to get the answers you need if you have complicated finances. But with no filing fees, Credit Karma Tax can’t be beat on pricing.

Tips for Getting Through Tax Season

  • If you’re unsure how to file your taxes, consider talking to a financial advisor who specializes in taxes. An advisor who is savvy about the intricacies of the tax code will be able to help you navigate tax season and maximize your refund. An advisor can also help you prepare for following year so that your next tax filing is as easy as possible
  • If you’re relying on your tax refund each year, you may have room to change your tax withholding. By claiming more allowances on your W-4, you decrease how much money your employer removes (withholds) from your paychecks. That means more take home pay and perhaps less reliance on your refund. You may also want to check out this paycheck tax calculator so that you understand how much your employer is supposed to withhold.


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