Credit Karma Tax Review: Is It the Ideal Tax Software for You?

By J.R. Duren
HighYa Staff
Published on: Feb 9, 2018

Credit Karma Tax is a free online tax software service where consumers in almost any tax situation can file their taxes without paying a dime.

In an industry where most sites have three or four different tiers of paid tax service, Credit Karma certainly stands out for offering its filing services for free.

Up until the launch of its tax filing division in 2017, Credit Karma was known for basic reviews of credit cards, free credit score checks, and credit card recommendations. That year, though, they launched their free tax filing.

We’re guessing that the site’s free service is what is most appealing to you, and rightly so. TurboTax will charge you $89.99 for their freelancer/self-employed package. Why pay nearly $100 for something you can do for free on a different site?

From a financial perspective, it makes sense. But smart consumers will take a step back and answer the important questions:

  • Which situations does Credit Karma’s free filing cover?
  • Which situations does it not cover?
  • What do the existing reviews say about the service?

At the end of our review, we’ll give you our thoughts on the site’s pros and cons.

Normally, we’d compare Credit Karma Tax to the four leading tax sites: TurboTax, H&R Block, Tax Slayer, and TaxAct. These comparisons are usually based on price so there isn’t much comparison for us to do.

However, we’ll include a table of those four sites’ prices just to give you a sense of what you’ll be saving:

Credit Karma Tax TurboTax TaxAct TaxSlayer H&R Block
$0 Deluxe: $39.99 Plus: $29.95 Classic: $17 Deluxe: $34.99
$0 Premier: $59.99 Freelancer: $44.95 Premium: $35 Premium: $54.99
$0 Self-employed: $89.99 Premium: $59.95 Self-employed: $55 Self-employed: $74.99

Which Tax Situations Does Credit Karma Tax Cover?

Credit Karma Tax is available to nearly every taxpayer but there are certain situations and forms that they don’t process. It’s not a matter of paying more to have your situation accepted; either you can do your taxes with them or you can’t.

To help clear that up, the site lists forms that are eligible for their free service. The reason this list is important is that the tax filing tiers you see in the chart above are really just a mix of certain forms that are included in that price.

So, when TaxAct says they have a Freelancer tier, what they basically mean is that you can use that price point to file a Schedule C, which is a business form that most freelancers and small business owners.

» For Further Reading: 9 Common IRS Tax Forms Explained

In a general sense, there are three types of filing statuses most often addressed by tax websites:

  • Homeowner
  • Self-employed/freelancer
  • Owner of investments (properties, stocks, etc)

Each group has their own collection of forms. We’ll review each of these groups in the next few sections.

Homeowners Can File

Whenever you own a home, you get special deductions for various aspects of owning a home. The main deduction is given based on the amount of mortgage interest you paid over the course of the year.

You can also get a tax credit for some of the interest you paid. For example, in the state of Florida, there’s a mortgage credit program that gives a tax credit up to $2,000 depending on how much interest you paid.

Each of these situations is covered because Credit Karma accepts the 1098 mortgage interest form and the 8396 form for mortgage interest credits.

Both of these forms produce a deduction or credit number that you add to Schedule A. As a side note, “schedules” are collections of various deductions you calculate via “forms.” The total deduction amount from your schedules is then entered into your 1040.

Self-Employed, Business Owners and Freelancers Can File

The schedule that is most important to the freelancer and the self-employed worker is the Schedule C, which is known as the Profit or Loss from Business form. It’s with this form that you list all the deductions you get for being your own business.

One of the popular forms that you’ll use for your tax return is Form 8829, which what you’ll use to calculate your home-office deduction, perhaps the most popular deduction for freelance workers.

You can also use the form to deduct rent you pay for your place of business or a mortgage.

» For Further Reading: 12 Best Tax Tips for Freelancers

All the necessary forms you’ll need to fill out, including 1099s like the 1099-K you receive for earning more than $20,000 on freelancing sites are also good to go with Credit Karma Tax.

Business owners and freelancers who registered as an S-Corp will be able to file Schedule K-1, which is what you’ll use to report income and dividends earned from your business.

Investors Can File

This final filing group is comprised of people who have investments in stocks, retirement accounts, rental properties and other entities.

All of the important forms you’d need for to report your dividends, incomes and losses are included:

  • 1099-B: Capital gains and losses
  • 1099-DIV: Stock dividend payouts
  • 1099-INT: Interest earned on accounts
  • 1099-R: Payouts from retirement-related accounts

The site also covers rarer investment-related forms like the 1099-OID and 1099-Q.

Most Everyone Else Can File, Too

You don’t have to fall into one of the categories above to file your taxes with Credit Karma Tax. You can be a combination of all three, two of three, or none of them.

The great thing about the site, from a free filing perspective, is that the four most popular sites have restrictions on who can file free. In some cases, those restrictions exclude average American families whose adjusted gross income is more than $54,000. Not so with this site; there are no limits on income.

However, that doesn’t mean that everyone can file with Credit Karma Tax.

Which Tax Situations Does Credit Karma Fail to Cover?

Based on our research, we believe that Credit Karma’s free tax filing covers a large majority of taxpayers. There are specific situations and specific forms, though, that would disqualify you from filing with them.

Lived/Worked in Multiple States

One of the biggest ones is someone who has earned income in multiple states in one year or lived in more than one state during the year.

Lived Abroad and Want Deductions

Another situation they don’t cover is the U.S. citizen who lives/lived abroad and wants the Foreign Tax Credit (Form 1116) or the Foreign Earned Income Credit (Form 2555).

Basically, these are two forms expats often use to get big deductions for taxes they’ve paid in the foreign country in which they live and deductions for living outside of the U.S. for at least 330 days.


Credit Karma says they can’t process returns for ministers, pastors, priests and other members of the clergy. Their situations require specific tax rules about self-employment tax, parsonage allowances and other factors.

Other Situations

Aside from what we’ve listed above, there are a few other tax scenarios that the site’s free filing doesn’t cover:

  • Form 8332
  • Form 8615
  • Form 1040NR
  • State/Estate/Trust Schedule K1

The site also notes that you can’t use it to file state taxes but not federal taxes.

Other Factors to Consider

One of the key advantages of using TurboTax, H&R Block, TaxSlayer and TaxAct is that you have the opportunity to get audit support should you get an audit notice from the IRS.

While less than 1% of returns are audited, it helps to have the peace of mind that a tax professional has your back.

Credit Karma Tax does not offer audit support. If you’re one of the unlucky ones who gets audited, you’re on your own.

Another thing you won’t get with this site is a review from a tax pro, a feature you can pay for on TurboTax and H&R Block.

» For Further Reading: Tax Software vs. Accountant: Which Is Best for Your Situation?

Public Opinion About Credit Karma Tax

Credit Karma’s free tax software was a pretty big deal when it launched in 2017. As a result, many of the top tech sites wrote reviews on what it was like to use the software.

After reading through these reviews, here are some insights we observed:

  • Support was lacking
  • Issues with forms
  • Some deductions were hard to find
  • Navigating the software was hard
  • Error messages occasionally popped up

In general, we believe that Credit Karma Tax is going through the growing pains that any new software or app would experience.

Our Final Thoughts About Credit Karma Tax: Pros and Cons

In our opinion, the obvious advantage to using this tax software platform is that it’s free. Every major site has a free option but those options are very restrictive and don’t cover homeowners, freelancers/self-employed or taxpayers with investments and/or rental properties.

While it’s hard to say there’s a downside to free tax software, we do think there are some things you should watch out for.

First, there have been multiple reports that the platform has some bugs and inconsistencies in it that could make filing a frustrating process. There’s no guarantee that you’ll face these quirks but know that you might run into a problem because the software is still new.

Second, you won’t get audit defense and you don’t get the luxury of complementary or paid return reviews by a tax pro.

Finally, Credit Karma Tax isn’t a good fit for expats who want to claim popular foreign tax credits and deductions.

If you want to learn more about the leading tax sites, take a look at our comparison of TurboTax, H&R Block, TaxAct, and TaxSlayer. We compare each site’s pricing tiers and talk about what they offer. We also give recommendations on which site is best suited for which taxpayer.

Read 2 Credit Karma Tax Customer Reviews and Complaints

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Average Customer Rating: 3.5
Rating Snapshot:
5 star: 1 4 star: 0 3 star: 0 2 star: 1 1 star:  0
Bottom Line: 50% would recommend it to a friend
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  • Will not file with Credit Karma next year!

    • By Michelle M.,
    • Oklahoma,
    • Feb 13, 2019
    • Verified Reviewer

    Although Credit Karma was very easy to input all of my info to file my taxes, if I had a question about something there's no way to physically talk to somebody from Credit Karma on the phone. I tried emailing Credit Karma for my questions and received the reply back the next day that was not helpful at all.

    Bottom Line: No, I would not recommend this to a friend

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  • 5 out 5 people found this review helpful

    Credit Karma Tax

    • By M M.,
    • Arkansas,
    • Feb 4, 2019
    • Verified Reviewer

    I've JUST filed with them and it was absolutely free including state, but yes they do offer audit defense. It tells you before you file and after that they "have your back if you get audited," and it doesn't cost extra. Just thought I'd let you know that yes they offer audit defense.

    Bottom Line: Yes, I would recommend this to a friend

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