Credit Karma Tax made a good first impression when it debuted four years ago—especially considering that it provides free tax preparation and filing and supports most major IRS forms and schedules. State filing is also free. That makes it a unique offering, and it’s a good-looking tax website with intuitive navigation tools, to boot. You might consider Credit Karma if you have a simple return or are very tax-savvy, as its help content is still insufficient. Free is appealing, especially at tax time, but competitors explain the tax code in much more detail, and that might end up saving you both money and time in the long run. Note that tax season isn’t quite here yet, so this is an unrated preview which we’ll update a little later in the year.
Still, in a year when so many Americans had to file for unemployment or take on side gigs because of the slowing economy, it provides a free path to filing a Schedule C. Competitors, with the exception of FreeTaxUSA and TaxSlayer, charge a lot for self-employment support.
You’ve probably heard of Credit Karma, which was founded in 2007 and claims more than 100 million members. Credit Karma provides free credit scores and reports on a weekly basis, showing the factors that contribute to them, too. The service monitors for suspicious activity and alerts you to potential problems. You do have to sign up for a Credit Karma account to even get access to Credit Karma Tax, which may be off-putting for some. Honestly, however, keeping an eye on your credit is a good idea, and Credit Karma is very good at this.
There are alternatives, though, if your tax situation is simple enough or your budget is tight. Most of the competition offers a free level, and FreeTaxUSA (which provides more guidance and tax tools) is free for the federal return, though it charges $12.95 for a state return. TaxSlayer Classic is only $17 for federal filing, and it supports the lion’s share of IRS forms and schedules.
If you’ve ever prepared taxes by hand, you know what a time-consuming, confusing, and frustrating process it can be—especially if your return requires filing multiple forms and schedules in addition to a 1040. You have to do all of your calculations yourself, and that’s after finding the correct forms, schedules, and tax documents you need. Likewise, you have to transfer the correct figures from the correct documents onto the correct lines on the 1040.
Like all tax preparation services, Credit Karma Tax provides an online alternative to paper-and-pencil tax preparation. It takes control of the whole process like a human tax preparer in an office might do, asking you questions and recording your answers. You simply read the questions on the page and provide answers by clicking buttons or entering data before moving on to the next set.
Credit Karma Tax works in the background as you progress and enters your answers on the correct lines on the appropriate forms and schedules after doing all the necessary calculations. If you run into an unfamiliar concept, there’s often (but not always) help content you can consult. When you finish entering everything that pertains to your federal tax situation, the site transfers the relevant data over to your state return, if you’re required to file one. All personal tax preparation services operate this way.
If you want to use Credit Karma Tax, you first have to sign up for the Credit Karma service, as previously mentioned. You supply some personal details, including the Social Security numbers of anyone whose name will be on the return.
Square’s Cash App (Square recently entered into an agreement to acquire Credit Karma Tax). Cash App launched in 2013 as a peer-to-peer money transfer service and has grown to include access to related financial services for spending, sending, storing, and investing money. Its financial tools include direct deposit, a cash card, and fractional investing in traditional stocks and bitcoin. This connection is optional.
The topics you selected in your first steps appear in Credit Karma Tax’s main home page, which you use to navigate the site. It consists of a series of blocks labeled with their content (such as W-2, Investments, and Home). You can still add topics at this point even if you didn’t indicate earlier that they applied to you. If you haven’t visited a topic yet, there’ll be a button that says Start. If you have, it will say Edit/Review.
H&R Block Deluxe and other websites work similarly. They quiz you upfront about your tax-related situations and organize the rest of the site’s path to make sure they’re covered, giving you the option to go beyond if necessary.
Credit Karma Tax’s user interface is attractive and intuitive, especially considering this is only the service’s fifth annual iteration. It’s simple and clean and uses a pleasing combination of fonts and colors in a well-designed layout. Graphics are minimal and some screens are absolutely unadorned, which probably contributes to its speedy screen changes.
The vertical list of topics on the home page is arranged more or less the way you would work your way through the 1040 and its supporting documentation, similar to the go-it-alone option other sites like Jackson Hewitt offer. No matter where you are on the site, you can click on a link in the upper right to slide out a vertical pane on the right side of the screen that contains several housekeeping tasks, one of which is to return to the tax home page directly. Once you finish a topic, your only option is to return to the tax home page and work on another topic. Some competitors like TurboTax make tax preparation one long continuous process. You can also view PDF versions of all of the actual tax forms on which you’ve entered information at any point in your journey.
TaxAct and other services in that it displays all of the site’s topics on one dashboard instead of providing separate ones for income, deductions, credits, state, and review. This doesn’t affect usability; it’s just different.
A word about W-2s: If you are an ADP or Equifax subscriber, you should be able to import your form data directly. If you’re not, you can either scan your W-2 or take a picture with your phone and upload it. Credit Karma Tax will then move your information to the correct fields. Precision is critical here, and the company stresses that you should always double-check your numbers if you use one of the latter methods. You can, of course, just enter everything manually.
I ran into some problems when I entered my test return. For example, I tried to claim a Dependent Care Credit and was able to enter the provider’s profile. But the next screen wanted me to select the relevant dependent, and that information hadn’t been carried over from the Basic Info section. I had to enter some of that individual’s identifying information again. Also, the site doesn’t support some critical forms, such as part-year or multiple state returns, Form 2210 (Underpayment of Estimated Tax) and Form 8885 (Health Coverage Tax Credit).
After you complete every relevant section, the service reviews all the answers you provided. If Credit Karma Tax finds errors or omissions, it offers to take you back to the offending screens to fix them. This worked OK for me this year, though I was asked to enter my spouse’s name and Social Security number and birthdate, something I would have assumed would have been caught earlier. When I fixed the error, the site popped me back to the review page and told me I was ready to file.
Anyone who has ever prepared his or her own taxes knows that questions always arise, and that getting quality help is absolutely critical. Credit Karma Tax hasn’t had the years (or even decades) to build up the support resources that its competitors have, so the guidance it offers is still sparse in comparison. It does a fairly good job of letting you know what it’s looking for on every screen, but it doesn’t hyperlink complex terms the way TurboTax does, for example. Credit Karma Tax often doesn’t even fully explain the current question or concept.
mobile tax service that is totally free for both federal and state filing that supports all major forms and schedules. The site you experience on your mobile device—even a small smartphone like the iPhone SE—is the same as what you’ll see on your desktop browser (only smaller, of course). Credit Karma does not offer a dedicated mobile tax app. Instead, you can simply access the same site via your browser. I tested this site on iOS and Android devices and found the functionality to be good on both, and the experience to be very similar to what I saw via my desktop.
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