Looking for completely free tax filing? Credit Karma Tax is the only service offering free Federal and state filing to all users. And this year, free doesn’t mean low-quality.
Credit Karma Tax offers an excellent, self-guided user interface that can make tax filing easy. Here’s what you need to know about Credit Karma Tax in 2021
So should you use Credit Karma Tax for filing your tax return? In a lot of cases, the answer is YES! Here’s what you need to know about the service and how it compares on our list of the best tax software.
- Free Online Tax Filing
- Improved customer service and usability
- Doesn’t support multiple states, don’t recommend for investors or real estate owners
Credit Karma Tax – Is It Really Free?
Unfortunately, Credit Karma Tax doesn’t support every tax situation in 2021. This includes multi-state tax prep and some other unique situations.
What’s New In 2021?
In 2020, Credit Karma Tax found a formula that worked. This year, the “semi-guided” navigation stuck around with just a few tweaks to make navigation even easier. Of course, Credit Karma made some “under the hood” changes to make sure that the software appropriately accounts for tax credits and deductions.
However, the biggest change is one that users won’t see this year. Credit Karma sold Credit Karma Tax to the payment processing company Square. If you use Credit Karma Tax this year, your information will go to Square.
Credit Karma Tax Price And Plans
Credit Karma Tax is completely free for state and Federal filing.
Yes, that means $0 for Federal, and $0 for state.
However, if you have to file taxes in more than one state, or if you have complex investments, Credit Karma Tax may not support your filing situation.
Credit Karma Tax offers users a “semi-guided” navigation experience. Users answer a questionnaire at the start of the filing experience. Using the responses, Credit Karma Tax serves up the appropriate menus.
This year, Credit Karma allows users to enter all their information at once, or to opt for “multi-page” forms which break up some of the longer sections.
In addition to the semi-guided navigation, Credit Karma Tax has an incredible search feature which is unusual to see in tax software.
Tax Ease Of Use
Credit Karma Tax is an incredibly easy to use software (especially given the free price tag). Users can easily navigate throughout the software. Additionally, Credit Karma gives users the option to import W-2 forms. It does not allow users to import other forms. This may present challenges for stock market traders or self-employed people who rely on imports.
Credit Karma Tax is as easy to use, or easier to use than most other tax filing software. The only companies that beat it out on this front are H&R Block, TurboTax, TaxSlayer, and TaxHawk. However, the competition is tight.
Tax Knowledge Articles
The one area where Credit Karma Tax falls short is in its knowledge articles. Credit Karma sprinkles info bubbles throughout the software, but the information often contained tax-jargon. Further reading links often went to IRS articles or the Credit Karma blog. These are good sources of information.
However, users who aren’t familiar with tax jargon may struggle. This is especially true for users who face more complex filing situations (for example self-employment) but don’t have a lot of background knowledge on the topic.
When you get free filing, you don’t expect extras. However, Credit Karma Tax offers a free audit defense guarantee for all filers. If you’re audited, you can call on this service to help you interpret and respond to IRS letters. This is not a legal defense guarantee, but it can help you communicate with the IRS.
Does Credit Karma Tax Support Crypto Investments?
Credit Karma Tax offers instructions on how to file taxes related to crypto investments. However, the software treats it like other capital gains activities. There are no special integrations to make crypto filing easier. Maybe Square will add those integrations next year.
Can I Request My Missing Stimulus Check With Credit Karma Tax?
With the 2021 tax filing season just starting, Credit Karma Tax is rushing to make last-minute updates related to stimulus checks. Once the updates are complete, users will be able to claim the full Rebate Recovery Credit if they did not get one or both stimulus checks.
Credit Karma Tax is asking users about their Stimulus Money. If a taxpayer didn’t receive their stimulus checks, Credit Karma Tax will apply for the Rebate Recovery Credit on their behalf. This will either lower their tax burden or increase the size of the filer’s refund check.
Customer Service Experience
Historically, Credit Karma’s downfall has been it’s customer experience and/or various support for specific forms. It only offers technical support, but the software seems to be in good shape this year.
For example, when trying to reach technical support during our testing, our team never got a reply after days of waiting.
If you’re interested in giving Credit Karma Tax a shot this year, be sure to get into the software at least a few days in advance of the filing deadline. If something goes wrong, you may need to bail at the last minute and use another service.
Is Credit Karma Tax Secure?
Credit Karma is a site that’s committed to online security. All users must set up multi-factor authentication, and Credit Karma does not sell your information.
With Credit Karma Tax’s sale to Stripe, we’re not quite sure what will happen to your customer information this year. In the past, your information was used to help refine Credit Karma’s “matching algorithms” that are used to match consumers (that’s you) to credit card and other lenders who want you to apply to their cards. This is not a direct sale of your information, but it is a way in which your information may be used to help Credit Karma make money.
How Does Credit Karma Compare?
Credit Karma Tax supports most tax filing situations. It is incredible to see such a low-cost software that delivers features that rival premium filing services.
$36.99 per additional state
$12.95 per additional state
Retirement Income (SS, Pension, etc.)
Small Business Owner (over $5k in expenses)
$29.99 Fed & $36.99 State
$49.99 Fed & $36.99 State
$84.99 Fed & $36.99 State
Who Should Use Credit Karma Tax In 2021?
In 2021, I am a huge fan of Credit Karma Tax. It built upon prior successes to deliver a better product. The only area where Credit Karma Tax falls short is in its knowledge articles and support options.
Unlike some of the paid software, Credit Karma Tax doesn’t have the option to consult with a tax pro. If that’s important to you (and for many first-time filers it is), TaxHawk with pro-support, TaxSlayer Premium or another upgraded software could be your best bet.
Overall, Credit Karma Tax is a great tax-filing software that will support most users this year. If you need support that Credit Karma Tax doesn’t offer consider these alternatives for the best tax software for your situation.
** Editors Note: due to the high volume of comments and concerns about this software, we left last year’s comments available for readers to see. Please check the dates on comments before making any assumptions.