Credit Karma Tax Review for 2021

This article includes links which we may receive compensation for if you click, at no cost to you.

Credit Karma is a personal financial services company that offers free credit scores, credit monitoring, online tax preparation, and more.

credit karma logoCredit Karma prides itself on putting its customers first. In that vein, all of its services are completely free to customers.

Instead of nickel and diming people by charging them to access their credit scores, for example, Credit Karma earns revenue by selling customer data to other financial services companies, including banks, credit card vendors, insurance companies, and other similar entities.

If you’re wondering whether CreditKarma might be the best place for you to file your taxes, you’ve come to the right place. This post will give you a full overview of CreditKarma’s tax preparation services to help you make the best decision on whether the company’s products are right for you.

Credit Karma Background

Credit Karma was initially founded in 2007 as a free credit score monitoring service. Suffice to say their business model is working quite well. Thanks to a recent $500 million fundraising round that closed in 2018, Credit Karma is valued at a staggering $4 billion.

As of December 16 2019, Credit Karma company has over 100 million members. And to think the company doesn’t even accept payments from customers. An impressive business model, indeed! They also have a really cool background story that you may want to check out.

Credit Karma Tax Overview

credit karma tax reviewLet’s take a look at what Credit Karma has to offer on the tax front. What makes them stand out among the competition is that they offer both federal and state filing for free, with no hidden fees or upsells. Wow, no wonder they made it on our list of cheapest tax software!

Most of their competitors seem to be constantly trying to get you to reach into your wallet. It’s a refreshing difference, to say the least.

Most online tax preparation companies, such as TurboTax, offer a “free edition.” However, the majority of customers will wind up paying to file many common tax forms. Alternatively, like in the case of H&R Block, for example, you can file your federal taxes for free, but you’ll have to chalk up $29.95 to file state taxes.

This is not the case with Credit Karma. Federal and state taxes are 100% free to file, no matter what your tax situation is. Money saved is money earned, never forget it.

Credit Karma Tax Features

Despite the fact that Credit Karma’s Tax Preparation service is free, they offer some pretty impressive features. Let’s take a brief look at each of them.

Audit Defense

Let’s face it, getting audited by the IRS is probably one of the most terrifying outcomes of filing your tax returns each year.

If you find yourself in the unfortunate position of getting audited, Credit Karma’s team of tax professionals will help you through the process. Simply enter some basic info about your situation and Credit Karma will help you take it from there.

ProTip: Looking closer at Credit Karma’s terms and conditions, it appears that their Audit Defense is offered through a partnership with a third-party vendor, Tax Protection Plus LLC. If you’re really worried about getting audited, I recommend closely reviewing these terms to make sure that your tax situation does, in fact, qualify for free audit support.

credit karma defense


100% Accuracy Guarantee

Credit Karma is so confident with the accuracy of their tax software that they guarantee it.

However, upon reading their terms and conditions, it looks like they are only willing to put $1,000 on the line, and if things go wrong, they’ll only reimburse you in the form of a gift card. Even then, it’s probably not going to be easy to prove your case in the event of a mistake.
credit karma accuracy


100% Free

The fact that Credit Karma is 100% free to file your federal and state returns is by far and large their most compelling feature. I even dug around the entire site myself and didn’t see any upsells. It’s pretty amazing, to be honest.

You might be wondering how or why Credit Karma offers this service for free. It’s because they are experts at monetizing your data on the back end. In other words, you’re the product that they’re selling. As Nobel-prize winning economist Milton Friedman famously said, there’s no such thing as a free lunch.
credit karma free

100% Maximum Refund Guarantee

Credit Karma also offers a maximum refund guarantee. However, when you look at the fine print, you’ll most likely be less than thrilled.

According to their terms, they’ll only cover you up to $100, in the form of a gift card, if it’s determined that you owe more money to the IRS.
credit karma max refund


Jumpstart is a convenient data importing feature that appears when you start the Credit Karma tax filing process. Customers can simply upload their prior-year tax returns if filed with another service, and Jumpstart will automatically fill in your personal data and save you some extra steps.

What’s more, if you filed a prior year return with Credit Karma, they will never charge you to access those returns.
credit karma jumpstart

Customer Support

If you have any questions or experience technical issues when filing your taxes, Credit Karma offers a real-time live chat service. Other online tax services such as TurboTax require you to upgrade to a paid plan to access real-time chat.

If you don’t have the time to chat with an agent, Credit Karma also offers a convenient customer support portal with tons of helpful articles. You can also submit a request within this portal and one of their agents will get back to you.

Credit Karma FAQs

Is it Really Free to File Taxes with Credit karma?

Yes. You don’t have to pay anything to Credit Karma. Federal and state taxes are 100% free.

Is Credit Karma Good for Tax Returns?

Yes. Credit Karma is good for filing your tax returns—if you’re looking for a low-cost, self-service platform.

If you’d like to speak with a tax advisor or meet with one in person, you should probably look into another provider such as H&R Block or Liberty Tax. That said, those competitors charge significantly more money to file your taxes.

How Long Does it Take for Credit Karma Tax Return?

The IRS determines how long it takes you to get your tax return. According to the Credit Karma website, you could receive your refund in as little as 21 days. However, some tax situations will take more time to process, so if your taxes are a bit more complicated than the average person’s, you may wind up having to wait longer.

Again, Credit Karma doesn’t make this decision, the IRS does.

Pros & Cons of Credit Karma

Pros of Credit Karma

100% Free

  • If you are comfortable filing federal and state taxes on your own and don’t want to pay any money to do so, Credit Karma is probably the best choice for you. The only competitor I have seen that offers free federal and state returns is TurboTax. However, TurboTax’s free edition only covers a small range of very simple tax situations.

Growing, Tech-Savvy Company

  • Credit Karma is now valued at $4 billion and their tax preparation service is a relatively new offering. I would not be surprised if the company is heavily invested in improving the technology and features behind their tax preparation service.

User-Friendly Online Experience

  • Credit Karma offers a pretty slick online platform for preparing your taxes. With features like Jumpstart and real-time chat with customer support, they take a lot of the legwork out of filing your taxes.

Cons of Credit Karma

Weak Guarantees

  • For a company valued $4 billion, I’m surprised they don’t offer a more robust accuracy guarantee (which is only $1,000). TaxAct, for example, offers a $100,000 accuracy guarantee. What’s more, Credit Karma only offers a maximum refund guarantee of up to $100. Again, TaxAct backs their max refund guarantee up to $100,000.

No Phone Support

  • If you simply want to call into a customer support line, you won’t be able to do that with Credit Karma. But who knows? They may end up offering that feature down the line.

No Brick-and-Mortar Branches

  • If you’d feel more comfortable working face to face with a certified tax professional, you’ll have to find another company to work with, such as H&R Block or Liberty Tax.

Not All Tax Situations Covered

  • Credit Karma does not offer support for quite a few tax situations and forms.**

**As of the time of this writing, here are the tax situations that Credit Karma does NOT cover:

  • Part-year and multiple-year state returns
  • Non-resident state returns
  • State taxes cannot be filed if you are married and filing separately in Arizona, California, Idaho, Louisiana, New Mexico, Texas or Wisconsin. However, you can still file federal taxes for free.
  • If you resided for part of the year in New York City or Yonkers, you cannot file with Credit Karma.
  • If you are self-employed and residing in Puerto Rico, you cannot file with Credit Karma.
  • You can only file your state taxes if you have filed your federal taxes with Credit Karma
  • You cannot file your state taxes if you have filed your federal taxes with another service

Tax Filings Credit Karma Doesn’t Do

As of the time of this writing, here are the tax forms that you are NOT able to file with Credit Karma:

  • Earned Income Credit with Non-Dependents
  • Clergy Member Tax Filing
  • Schedule J: Income Averaging for Farmers & Fishermen
  • Schedule K-1: Estate and Trust Income
  • Form 1040NR: Non-Resident Alien Federal Tax Return
  • Form 1116: Foreign Tax Credit
  • Form 2555: Foreign Earned Income
  • Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts
  • Form 8332: Release of Claim to Exemption for Child by Custodial Parent
  • Form 8615: Tax for Certain Children Who Have Unearned Income
  • Form 8864: Biodiesel and Renewable Diesel Fuels Credit
  • Form 8885: Health Coverage Tax Credit
  • Form 8903: Domestic Production Activities Deduction
  • Form 8915A: Qualified 2016 Disaster Retirement Plan Distributions and Repayments
  • Form 8915B: Qualified 2017 Disaster Retirement Plan Distributions and Repayments

For the most up-to-date list of the forms and situations that Credit Karma supports and doesn’t support, go here:

Is Credit Karma Tax Right For You?

Credit Karma is one of the newer tax preparation services on the scene, but I expect them to rapidly gain momentum in this market. They offer a slick online platform, decent customer support, and some interesting features.

If cost is your number one concern—did I mention that it’s 100% free!?—it will probably be hard to find a more compelling tax preparation service to work with. On the other hand, if customer support is your number one concern, you might want to look into a more established provider.

What’s more, if you have a complicated tax situation, it might be worth hiring a CPA to handle your returns or looking into a more robust platform such as TurboTax, TaxAct, or H&R Block.

At the end of the day, only you can decide which service is best for you. It all depends on your unique tax situation, your budget, your patience levels, and your risk tolerance. No one ever said that filing your taxes is going to be easy or stress-free, but Credit Karma’s new tax service might just make the process a little easier.

I hope this post has helped you decide if CreditKarma is right for you. Thanks for reading and here’s to a hassle-free tax season!

Leave a Reply

Your email address will not be published.

In This Article