Credit Karma Tax Review: Is It Right for You?

By J.R. Duren
HighYa Staff
Updated on: Jan 22, 2020

Credit Karma Tax is a completely free tax software that supports nearly every tax situation and free state tax returns for 40 states and Washington D.C.

The software's main advantage is that it’s a truly free platform. At no time during your tax return will the software require you to upgrade to a paid version. This is an excellent perk, especially if you’re used to using tax sites that surprise you with upgrade requirements.

In this sense, Credit Karma Tax removes one of the most significant pain points during tax season: cost. But just because the software is free doesn’t guarantee it’s the right software for you.

Use our review of Credit Karma Tax the help you understand what it offers and why it may or may not be the best choice and what its pros and cons are.

Pros: Cons:
  • Completely free
  • Audit defense is included
  • Efficient search engine for tax articles
  • No live chat support
  • No phone support
  • No access to CPA’s or tax professionals
  • Doesn’t support expat tax filing

Features and User Experience

Credit Karma Tax software is very easy to use. I filed my taxes with it this past year and found the experience to be a relief because of how intuitive it was.

The software begins by asking you about your marital status and if you have dependents (kids or adults living with you) and then gives you an income page that lets you choose various options for how you earned your income.

Screenshot of Credit Karma Tax software

Then, the software will then present you with a variety of circumstances you select that will influence the deductions you can claim.

Screenshot of Credit Karma Tax software

The income and deduction pages will help the software know which questions to ask you. As it gathers information, the software fills out all the necessary forms the IRS requires from your tax return.

When you’re done with the return, Credit Karma Tax will verify your information is correct, then will ask you to sign your return electronically and submit it to the IRS.

If you have a tax refund coming, you can check its status on the IRS Where’s My Refund site. If you owe taxes, you can contact the IRS to resolve the situation.

At any time during the return, you can navigate back and forth between your income and expenses to add or remove information.

Customer Support

The software has a robust education section with an intuitive search bar. What this means is that you can ask a task question and there’s a very good chance the search results will be exactly what you’re looking for.

This is an excellent benefit if you tend to have questions when you file or your taxes this year are different than last year’s and require a new series of questions for the software.

While the education section of the software is good, the customer support is not. The only way you can reach customer service is through an email. There is no live chat and there is no phone support. The lack of these two support channels is the software’s biggest flaw.

If you have a complex tax return that includes investments, a mortgage, children, retirement accounts, and uncommon deductions and income, the lack of personal service may hinder you if you run into problems.

While the help articles the software provides are good, it won’t meet your needs if you prefer to get your answers from a real person.

Audit Defense

Filing with Credit Karma Tax entitles you to free audit defense. This perk usually comes in three forms: advice only, letter-writing or representation.

The audit defense you get with this software provides all three forms of audit assistance. If the IRS audits you, inform Credit Karma Tax. They will assign you an expert who will:

  • Advise you about why the IRS audited you and what they’ll ask for
  • Write letters and emails to the IRS on your behalf
  • Represent you in hearings with the IRS

The IRS audits less than 1% of tax returns. However, if an audit concerns you, this software’s audit defense is a good value.

However, there are specific situations in which you won’t get audit support:

  • You have a pre-existing audit
  • You aren’t a resident of the U.S.
  • You lie on your tax return
  • You have a return under criminal investigation
  • Audit pertains to foreign earned income or S-Corp income

Maximum Refund and Accuracy Guarantees

If you amend a return via another tax software site and get a higher refund amount or owe fewer taxes, Credit Karma Tax will give you up to $100 in the form of a gift card.

The drawback of this feature is that you’d have to go to another site and file an amended return to get up to a $100 gift card.

This process is a lot of work for a small amount of money, especially if you have a complex tax return that takes an hour or more to complete.

If the software makes a calculation error that results in you paying IRS penalties or interest, Credit Karma Tax will give you up to $1,000 in gift cards.

However, you’ll only get this reimbursement if the error was due to the software and not your information input. Also, you have to file your original and amended return through Credit Karma.

This benefit’s drawback is that Credit Karma Tax limits the amount of money you can get back. You will lose any money above $1,000 that you pay the IRS.

Supported Tax Forms

The software supports nearly every tax form and schedule you’d need to file with the IRS. Therefore, the software is a great fit for simple returns, families, homeowners, investors, freelancers and business owners.

All the forms you’d need to file in the situations we mentioned are supported, including:

  • 1040 and 140X
  • Schedules A, B, C, D, E, F, H, K-1, R, SE, EIC, and 8812
  • Forms 1098 C, E, and T
  • Forms 1099 DIV, G, INT, OID, R, A, B, C, K, MISC, Q, and SA

Who Shouldn’t Use Credit Karma Tax

Though the software covers all major tax scenarios, there’s a small chance you may not be able to file with Credit Karma Tax.

Unsupported Situations

  • You live in more than one state during the tax year
  • You are a nonresident (Form 1040NR)
  • You are married filing separately in: AZ, CA, ID, LA, NM, TX or WI
  • Self-employed and you live in Puerto Rico
  • You’re a member of the clergy
  • You earned income in a foreign country

Unsupported Forms

  • Schedule J (farming and fishing income)
  • Schedule K-1 if you’re claiming trust or estate income
  • Form 1116: Foreign Tax Credit
  • Form 2555: Foreign Earned Income
  • Form 2210: Underpayment of estimated taxes
  • Form 8332: Release Claim to Exemption for Child by Custodial Parent
  • Form 8615: Tax for children who have an unearned income of less than $2,100 a year
  • Form 8864: Biodiesel and renewable diesel fuel credit
  • Form 888: Health coverage tax credit
  • 8903: Domestic production activities
  • Form 8915A: Qualified 2016 disaster retirement plan distributions and repayments
  • Form 8915B: Same as above but for 2017

If you’re a freelancer or self-employed and you have to pay quarterly taxes, you may run into issues with Credit Karma Tax if you’ve underpaid.

Credit Karma Tax vs. Turbo Tax

Credit Karma Tax TurboTax
Free filing Yes Yes
Homeowner filing cost Free $40
Investor filing cost Free $70
Freelancer filing cost Free $90
Business owner filing cost Free $90
State filing cost Free $0 for free filing, $40-50 to for paid version
On-demand CPA/ EA/ Tax expert access No Yes (extra $50 to $90)
Support options Email Video, phone, chat, email
Educational resources Extensive Extensive
Paid access to CPAs and EAs No Yes
Audit services Will give you advice, correspond on your behalf and represent you in IRS audit meetings (free) Will correspond on your behalf and represent you in IRS audit meetings ($39.99)

CPAs

TurboTax’s CPA packages ($50 to $170) are, in most cases, cheaper than what you’d pay a CPA to do your taxes.

If you typically use a CPA but want to try DIYing your taxes, TurboTax is the better fit because it allows you to consult a CPA if you run into any troubles. Also, one of their CPA’s will look over your return before you send it to the IRS.

Audits

Credit Karma Tax is the better choice for audit representation because their audit professionals give you the same level of service TurboTax does but without the $39.99 fee.

Support

TurboTax provides better overall support because they have an excellent combination of community forums where members are eager to answer questions, as well as a substantial education section.

Credit Karma Tax’s educational materials are substantial, too, but their community forums don’t match what Turbo Tax can offer.

Therefore, TurboTax is the better choice if you rely on articles and forums to answer your questions.

User Experience

Both products use an interview-style format that’s user-friendly. Their pages are intuitive and it’s easy to access help articles from any tax return page you’re on. In this area, TurboTax and Credit Karma Tax are very similar.

Living Abroad

TurboTax allows expats to file because they accept the forms associated with overseas living (116 and 2555. Credit Karma Tax does not support these forms.

Credit Karma Tax vs. Popular Tax Preparation Software

Credit Karma Tax FreeTaxUSA TaxAct H&R Block
Free filing Yes Yes Yes Yes
Homeowner filing cost Free Free $29.99 $29.99
Investor filing cost Free Free $39.95 $49.99
Freelancer filing cost Free Free $74.95 $49.99
Business owner filing cost Free Free $74.95 $79.99
State filing cost Free $12.95 $0 for free, filing $39.95 for paid version $0 for free version, $36.99 for paid versions
On-demand CPA/ EA/ Tax expert access No No No Yes (extra $30 to $60)
Support options Email Email, and can have live chat for $6.99 Phone, chat, email Phone, chat, email, in-office
Educational resources Extensive Extensive Extensive Extensive
Paid access to CPAs and EAs No No No Yes
Audit services Will give you advice, correspond on your behalf and represent you in IRS audit meetings (free) Will correspond on your behalf and represent you in IRS audit meetings ($39.99) Will correspond on your behalf but won’t represent you in IRS audit meetings (free) Will correspond on your behalf and represent you in IRS audit meetings (free)

Finding the right tax software for you requires some research and an understanding of the nuances of each software you’re considering.

Once you have a good grasp of what the software offers, you need to compare that to what your tax situation demands:

  • Are you a non-resident?
  • Are you living abroad?
  • Are you comfortable doing your taxes without any chat or phone support?
  • Is saving money what’s most important to you?
  • Do you prefer the help of CPAs and tax professionals?
  • Do you want to know exactly what you’ll pay before starting your taxes?

These questions will help narrow down which tax software will work best for you.

The Bottom Line

Credit Karma Tax is an impressive tax software because it accepts nearly every tax situation and includes free audit defense.

The software’s extensive learning section is easy to navigate and your questions, in most cases, will get the exact answer you’re looking for.

This combination of features and educational articles makes Credit Karma Tax one of the best free or paid tax software you can use.


Customer Reviews

Start your review of Credit Karma Tax:
  • 3 Customer Reviews
  • 67% Recommend This Company
4.0 out of 5
5 star: 66% 4 star: 0% 3 star: 0% 2 star: 33% 1 star: 0%

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Sort reviews by:

  • 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


  • 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


  • Excellent for non-itemizers

    • By Candy H.,
    • Elizabethtown, KY,
    • Feb 15, 2020
    • Verified Reviewer

    I have for the past four years used a paid tax service to file my Federal 1040 form without itemizations and state return. If I had known I could do it for free as I did today with Credit Karma I would have saved myself not only a bunch of money but hours of time. I checked another site for an estimate just to be sure and it was spot on. Will never go back to the other site.

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


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