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Credit Karma Tax Review

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Credit Karma
Our Rating: 3.4/5
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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 800 employees across its three offices. With over 85 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 Credit Karma Tax in 2016, bringing something different to the tax planning field by offering completely free filing for federal tax returns and state tax returns. There are no hidden fees or upsells. There are no exclusive features available only with a paid plan. The sole plan is free and gives all users access to the same features.

Credit Karma Tax’s Filing Options

Credit Karma Tax is completely free to use. It only offers one plan which includes all of the available features. You can file both federal and state returns. All schedules and deductions are available. There is no upselling, no hidden fees and no income limit. This is very different from other filing services, which usually offer multiple plans and require you to upgrade for access to certain forms, schedules, deductions or other features.

But because Credit Karma Tax is still new, there are some forms and tax situations that it does not yet support. You can’t file multiple state returns or part-year state returns. It doesn’t offer part-year New York City or Yonkers tax returns. Credit Karma Tax also won’t work for you if you have foreign earned income or if you’re status married filing separately for a community property state. If you’re a business owner, you can file schedule C but there is no option to file corporation, partnership or multi-member LLC forms.

When you start a return with Credit Karma Tax, you have the ability to import the prior year’s return, even if you used another services like TurboTax, H&R Block or TaxAct. This allows you to quickly fill in personal information. You can also import the information on your W-2 by taking a picture of your form and uploading.

Then there are two different ways to fill out the rest of your return forms: interview-style filing or self-guided filing. The interview method asks you easy questions, like whether you sold any stocks or bonds in the past year. You answer the 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, 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 your return online. Then you have the option of e-filing it or printing out your return to mail. There’s no extra fee for either filing option.

There is a Help Center to assist with your questions and offer some explanations, but there’s no detailed, step-by-step guidance the way other services have. Plus, Credit Karma’s customer support is limited largely to email and chat. Support is available over the phone but calls are reserved for advanced and complicated issues. Keep in mind also that the customer service representatives aren’t tax experts or financial advisors. They’re unable to give personal or legal tax advice.

Document Import

Credit Karma has increased its document import capabilities for the 2018 tax year. Instead of manually entering information on your W-2, you can upload a picture of your form. Credit Karma will then add the information. You just need to confirm that it’s correct.

If you filed your return last year with TurboTax, H&R Block or TaxAct, you can also upload your return from the previous year to import your information.

Refund Options

The tax refund goes directly into your bank account via direct deposit. If you don’t have a bank account, you can opt to receive a check in the mail from the IRS. This typically takes several weeks to arrive.

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Tax Audit Services

In case of an audit, Credit Karma provides Audit Defense (again, it’s free) for one year. This service comes courtesy of Protection Plus, a third party that also partners with other tax services.

Protection Plus will work with you to help you understand and handle your audit. It will review all necessary documents so you’re ready for your audit. If you need to have any meetings or conferences with tax authorities, Protection Plus can attend and act on your behalf as your advocate.


Filing Options Costs Features
Credit Karma Tax Free Federal and state e-filing; Easily import the previous year’s tax return from other services; Import your W-2 via picture

Pricewise, Credit Karma is hard to beat. Credit Karma believes that tax filing, much like accessing credit score information, should be free. The service has some limitations but it supports most major federal forms and that makes it an affordable option for filers of all stages.

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 or guidance as other services. It’s easier than filing a paper return, but there’s no step-by-step guidance or extensive customer support. If you’re a first-time filer, you may need to do some of your own research to get answers to your questions.

If you know what you’re doing, then Credit Karma Tax is a good option. Just be sure to check that your forms are available, especially if you're a business owner.

What's the Catch?

As a new tax planning service, Credit Karma Tax isn’t quite perfect yet. For example, it doesn’t currently support all tax forms. If you’re a new filer or otherwise want help understanding taxes or the filing process, you’ll find that Credit Karma does have as much educational content integrated into the tax-filing process as other services. It also doesn’t have many other features or tools. You don’t necessarily need these things to file your taxes, but they can help to make the process simpler and less stressful.

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 Tax is free, it requires that you sign up for the entire Credit Karma service (by creating an account). This means that you’ll have access to the credit score and report service as well, rather than just Credit Karma Tax. While you have the option of not using these services, some may find this unnecessary or even annoying.

There are ten states in which Credit Karma cannot file state tax forms:

  • Alaska
  • Florida
  • Montana
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee 
  • Texas
  • Washington
  • Wyoming

How Credit Karma Tax Stacks Up

Tax Planner Plans Offered Costs (Federal) Costs (State)
Credit Karma Tax Free $0 $0
TurboTax Free, Deluxe, Premier, Self-Employed Free: $0 Deluxe: $39.99 Premier: $59.99 Self-Employed: $89.99 Absolute Zero: $0 Deluxe: $36.99 Premier: $36.99 Self-Employed: $36.99 TurboTax Live: $36.99
TaxAct Free, Basic+, Deluxe+, Premier+, Self Employed+ Free: $0Plus: $25 Freelancer: $39 Premium: $51 Free: $0 Basic+: $19.95 Deluxe+: $39.95Premier+: $39.95 Self Employed+: $39.95

Credit Karma has a price advantage over its competitors. Most services offer a variety of filing options, with different options giving you access to different forms. There’s often a free option, but to get the most features, you have to upgrade to a paid option. But competitors also tend to offer more features than Credit Karma.

One of the most popular tax planning services is TurboTax. Though more expensive than most services, TurboTax offers extensive features. It has four different online filing options that each target different individuals. For example, TurboTax’s Self-Employed filing option caters to contractors, freelancers, small business owners and other self-employed filers. This specialization is useful for people who have complex returns. If you have a simple return, you may qualify for the free filing option, which allows you to file your federal and one state return for free.

TurboTax has common features like the ability to import a variety of income documents, audit support and a maximum refund guarantee. There are also more advanced features like tools for tracking your charitable donations and business expenses throughout the year. The educational content is extensive and TurboTax provides step-by-step guidance. This could help you if you don’t know much about taxes, you have complex taxes or your taxes this year are significantly different from previous years.

The big caveat with TurboTax is the cost. It offers a lot of features, but that comes at a cost. Filers who have very simple returns or who understand taxes pretty well and feel comfortable doing their own research may not want to pay so much to file their taxes.

A tax filing service that offers a range of features at a more affordable price than TurboTax is TaxAct. TaxAct offers a free filing option for simple returns, but you will need to upgrade if you have a more complex situation. TaxAct’s paid options are not overly expensive but they still come with a fair number of features. For example, there is a loan calculator and healthcare tax credit calculator. You can get a free, personalized financial report to help you maximize your tax savings. You can also get three years of audit support from Protection Plus, the same company that provides audit services for Credit Karma.

Bottom Line: Should You Use Credit Karma Tax?

With the launch of Credit Karma Tax in 2016, Credit Karma created an affordable option that you should consider if your primary goal is to save money when filing your taxes. But Credit Karma Tax doesn’t have as many features as other filing services and it lacks educational content. This could be reason enough to pay for another service if you are new to taxes, if your tax situation is a bit complicated or if you just don’t feel confident filing taxes on your own. However, filers who do feel confident filing taxes on their own may want to take advantage of the fact that Credit Karma Tax is free.

Tips for Getting Through Tax Season

  • Credit Karma Tax 100% guarantees you'll get the refund you deserve, and not a penny less. And because they're always free, they won't take a bite out of your refund.  File your taxes with Credit Karma Tax today.
  • 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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