Credit Karma Tax Review Free Scam or Good Filing?

Has it really been five years since Credit Karma started Credit Karma Tax? Credit Karma tax is a free-ish way to file your taxes for free. While Credit Karma tax started out with some bumps it is now old enough to have chased out a lot of the bugs. And, it is time to update our Credit Karma tax review.

Credit Karma Tax Review

CreditKarma.com offers a free tax return service, so it’s time for a Credit Karma tax review.

The Credit Karma tax scam concerns are pretty much the same as with the original Credit Karma. You are handing over a lot of personal and financial data. The company has been around long enough to have earned some trust, but concerns about all online financial offerings are real. One main difference between Credit Karma and TurboTax, or other offerings, is that you cannot buy and download an offline version. You will fill out all tax forms online and the hidden Credit Karma tax calculator will perform all the calculations online, behind the scenes.

Initial Credit Karma tax reviews are mixed, so let’s take a look. (Make sure you are not on CreditCarma, KreditKarma, or any other variations which have been reported as scams.)

First and foremost, you must sign up for Credit Karma in order to use the free tax filing software option. If you don’t like this, then you’ll need to do your taxes somewhere else. This is also how the Credit Karma free taxes offering makes its money. It is basically, a way to entice people to join and use the traditional Credit Karma system.

The main Credit Karma shows you ads and offers to get credit cards and loans. They also send out periodic emails reminding you to come back and check your free credit score, and market credit cards that you “may qualify for.”

credit karma tax review free filing

Credit Karma Tax Complaints and Concerns

It looks like Credit Karma is ready for some complaints and concerns about its free tax service. The front page attempts to answer some basic questions common to typical free tax filing scams. For example, it calls its service “Truly free tax returns,” and says there are no upsells, no hidden fees, and that it is free for everyone. This is because many so-called free tax offers end up doing one of those things. So far, there should be no Credit Karma tax complaints about any of that.

For example, the original business model for TurboTax online was to let you fill out your return for free, but then charge you to file your return, or to print it. This, of course, means it isn’t free at all, since doing your taxes, but neither filing nor printing them, is inherently useless. This year, TurboTax says, Free to File and Free to Start. Notice what’s missing?

But, this isn’t a CreditKarma tax vs TurboTax review, this is just a Credit Karma tax return review.

The main CreditKarma tax complaint, that I hear, revolves around giving them so much information. In particular, some people don’t like having to give out a phone number. I suppose, if you are willing to hand over your address, your Social Security number, and all your bank information, but NOT your phone number, then this isn’t for you. It seems an odd place to draw the line, but always stick with what you are comfortable with.

So, let’s start with what we can find in bold before we search the fine print. First, it says that you get free federal and state e-filing. It says that they won’t charge any fees on your refund (if you get one). This was an older trick to get people to file for free, and then require that they get their refund on a debit card, or into a certain account, often with a fee. Faster, or rapid, refunds often still have fees, because they are actually loans with your refund as collateral. It doesn’t appear that Credit Karma offers a rapid refund type service.

Who Can Use Credit Karma Tax For Free?

Often times, free tax offerings are limited to the very basic kinds of tax returns. This was another trick of TurboTax, TaxCut, and the like. If you were filling out a 1040-EZ, then your taxes were totally free. Of course, filling out a 1040-EZ takes about 10 minutes and isn’t at all complicated, so it wasn’t worth much. According to Credit Karma they support a pretty wide range of tax returns, so let’s start with what forms Credit Karma does not support when using Credit Karma taxes.

You cannot do your taxes on CreditKarma if you:

  • Need to do multi-state or part-year state filing — This should only really matter if you moved or happen to split time between two states. This is much more common in the Northeast where the states are pretty small and someone can realistically work/live across state lines.
  • Need to report Foreign Income – This can get tricky fast, so I don’t blame them here.
  • Need to file Married Filing Separately, in community property states. – I can’t claim to have any knowledge about what the deal is with this, but if it sounds like you, don’t use Credit Karma tax to do your taxes.
  • You’re also out of luck if you need to file a 1040-PR for residing in Puerto Rico.

Credit Karma tax filing says it supports all the basics, plus a lot of the more advanced forms as well. Schedule A, for itemized deduction is a must, and it’s supported. There is also Schedule B and D (interest and dividends, and capital gains). Forms for Child Care, HSA accounts, and all of the other “usual” IRS forms I could think of were supported as well.

I pulled up my taxes from last year, and while my return isn’t super complicated, I am usually forced to buy higher-end versions of tax software to complete my taxes. I did find that Credit Karma says it supports all of the Forms I used to file my taxes last year.

Can Small Business Owners or Self-Employed Use Credit Karma?

As a small business owner, no Credit Karma tax review is complete without knowing if I can even use it. This is where most free tax offerings bail out. As a self-employed, freelance writer, with an LLC, I’ve never been able to use a free tax service. In fact, I actually have to buy the more expensive versions to do my taxes, mostly because I use the home office tax deduction.

Credit Karma tax says you can file as self-employed or as a single member LLC. It specifically states that it will do a Schedule C, a Schedule E and a Schedule SE. Dig a little deeper and it does support Form 8829, which is the Home Office tax deduction form, as well as other small business tax forms.

However, you cannot use Credit Karma free tax filings if you need forms used for an S corp, a C corp, partnerships, or multi-member LLC. That means, it’s basically self-employed (just you, and possibly a spouse) only.

What Is the Catch for Using Credit Karma Tax?

So, what’s the catch with CreditKarma tax? The free Credit Karma tax catch is that when you sign up, you agree to let them use the information from preparing your taxes for the rest of their business as well, which is referring you to lenders via targeted offers and ads.

It isn’t really a catch so much, as you have to remember what the company is, and how Credit Karma makes its money. All of CreditKarma.com revenue comes from ads and referrals to lenders. Credit Karma offers you a free credit score so it can pull your credit report. Once it has your credit report, it can use that information to match you with lenders.

For example, if you have crummy credit, it can offer you cards for bad credit. Alternatively, if you have great credit, it can offer you harder to qualify for cards with better rewards.

There are, however, things missing from your credit report. Your income is the biggest one, and it’s also very important to lenders. Also, your credit report shows what your mortgage balance is, and then your mortgage interest tax deduction provides and easy way to calculate the interest rate, so they know what kind of refinancing to offer to you. If you do have a small business, your Schedule C lets Credit Karma know to offer you business credit cards. The amount of revenue and expenses on that Schedule C gives them an idea of which business credit card to offer, and so on.

Using Credit Karma Tax Filing Software

The online Credit Karma tax works pretty much the same as they all do. It starts by asking you questions. Are you married? Do you have kids? Did you do this, or that during 2020, and so on.

As with all tax preparation software, the trick comes when you aren’t really sure about something. Does selling things on the side at eBay count as a small business? Does a new adding machine count as an office supply, or as office equipment, and so on. Theoretically, there are various help options from Credit Karma and everyone else to help answer some of these questions. If you are or are not comfortable using TurboTax, the same probably applies to Credit Karma’s taxes service too.

Once you’ve answered the questions, you start filling in numbers from the various tax forms you have W2, 1099, and so on. Credit Karma does all the math and fills out the forms as it goes. When you are finished you can e-File directly with the IRS, and your state.

You can also print your taxes. I highly encourage you to print your taxes when you e-File them. Keep the paper copy of your taxes for three years. A good high-quality scan is just fine too.

With an online tax service like this, you don’t want to depend on them to keep your data. (This is true for any online tax service.)

Importing TurboTax Into Credit Karma

Credit Karma tax, like most tax software, including TurboTax, TaxCut, H&R Block, and Tax Slayer, will import your previous year tax data from other software, Credit Karma taxes does import from other services, so you don’t have to enter everything manually.

This is particularly useful for things that are carried over from year to year, but not such a big deal if you have a simple return. Still, it is important to note for this CreditKarma tax review.

Other Free Tax Filing Services

Keep in mind that if you have a simple return, and make less than $64,000, you can already use the IRS own Free File Software. Yes, you have to give them all your financial information too, but let’s face it, they already have it anyway.



27 thoughts on “Credit Karma Tax Review Free Scam or Good Filing?”

  1. Pingback: Dividend Stocks Dividend Yield - Investing - The Finance Gourmet

  2. Do NOT use Credit Karma Tax. I have found two bugs, one major and one minor.
    The major bug completely ignores Part III of Schedule B – there is simply no way to answer these required questions. I was told by support, “That is because we no longer have that portion on the software
    Credit Karma Member Support
    7:12 PM”
    The minor flaw applies to Michigan state returns. MI allows a deduction of state tax refunds from AGI, but again, there is no way to enter this information in the CKT system.

  3. Honestly, I love using Credit Karma tax. It’s actually free. Which wasn’t deceiving like turbotax when you aren’t filing a simple 1040EZ. Everyone else seems to be commenting such negative reviews, but I’ve filed my taxes 3 years in a row with no problems. I actually filled out my taxes on turbotax and credit karma both one year and found my taxes were EXACTLY the same, regardless of which program I chose. So I chose free.

    1. Most of the complaints come from people with more complex returns, and especially those who tried to do state returns in certain states. If you have a basic return with just W2s and some of the common deductions, Credit Karma tax probably will be fine for you.

  4. Do not file taxes with credit karma. I filed my 2016 taxes with them to try it out because it was free, big mistake! We just received a letter of deficiency that we owe a lot more taxes with penalties and interest because they miscalculated. I am now realizing we arent alone and credit karma will not be accepting any liability. I will never use them again!

  5. Great service as long as your return isn’t rejected by the IRS. My form has been locked for over a week and Credit Karma support isn’t very helpful. Working into week two… Hopefully it gets resolved before the April deadline.

  6. I filed with credit karma today. My return was right at $6000. I logged back in tonight and it had been dropped to $1000. I can’t get in touch with them other than sending an email and I’m quite distraught as I depend on that money. Has anyone else had this sort of issue? If so, did credit karma correct it?

  7. Be wary of Credit Karma Tax filing. My computer had a glitch and shut down in the middle of it as i was reviewing my fed and state taxes…when my computer came back online, they had already submitted the taxes. There is nothing they can do and simply state that hopefully, the irs will reject the submission. There should be additional safeguards in place so that the taxes are not submitted automatically… They do not provide a back door to cancel a submission even if the taxes are pending acceptance. I will go back to turbo tax next year…much simpler and more willing to correct a problem.

  8. DO NOT USE CK TO FILE!
    I used CK to file my 2016 return. All went well. My return was an easy one, no deductions, straight w2 etc. According to their computation I owed the IRS a small amount. I paid it immediately. IRS cashed the check.

    Fast forward one year and I am ready to buy my first dream home. The mortgage company sent for my returns – they were able to get all but 2016! The one I filed using CK. Called the IRS, not on file. Called my state – not on file.

    Being that I am trying to buy in January , with the new tax season I was informed I have to re submit on paper and it will be weeks before it can addressed.

    I lost my chance on the home of my dreams.

    1. You lost your chance because you didn’t print out your taxes. Don’t blame them for your own inefficiencies. I’m glad your not my book keeper.

  9. After using Turbo Tax for several years, I was attracted to the Credit Karma Tax platform. I already had an account with Credit Karma, so I decided to try it for 2016, loving the thought of filing my return totally free. I will not be using Credit Karma to file taxes ever again due to my experience.

    I filed my 2016 taxes with Credit Karma Tax in February, and shortly after, I received an email from them that my return had been submitted. Minutes later, they sent another email with the subject “Here’s an Update on Your Federal Tax Return.” The message was accidentally marked as “read” in my inbox, and I never read it. Today, May 9, 2017, I discovered the mistake. The email said that the IRS had rejected my return due to an incorrect value in the AGI section. My tax return had never been filed because I had neglected to read that email. I blame my own negligence first, but I also blame Credit Karma Tax for not making the email seem more urgent with a more appropriate subject title, such as “Your Return was Rejected.”

    Today, I have spent hours trying to correct my mistake by re-filing or re-submitting through Credit Karma Tax, but their online “Help” link did not offer me an appropriate category in the drop down box for my problem. When I chose a random option from the drop down menu in hopes of finding a person whom I could contact, I was sent to an unhelpful part of the site I had already viewed. A thorough search of the site and several Google searches did not allow me to find ANY phone numbers I could call for support.

    I have now re-filed my taxes through Turbo Tax, and I advise any readers do the same!

  10. Marshall Moran

    I received poor tech support on my 2016 return. I filled out schedule D and E multip!e times and each time the information disappear s. I send emails get nonsense replies that correct nothing to address the problem. The company needs to be hire software people who know what they’re doing. My taxes are overstated by$4,000 due to their incompetence.

  11. It was simple to enter my information – Social Security income and some payments for freelance work. But when I got to the end it wasn’t clear whether Credit Krama had submitted my bank information for the payment.

    So I submitted a request to Credit Karma asking if they had submitted my payment.

    I got a reply explaining how long I would be before I got my refund.

    Way to go Credit Karma – hire people who don’t know the difference between a Payment and Refund!

    So asked again… in all, about 3 more emails, and they told me that they didn’t submit my payment information and I needed to mail a check. So I did. The check cleared on April 11.

    Then on April 18, an identical amount was charged against my checking account by the IRS because Credit Karma did submit the payment information.

    Now instead of doing anything to help me, they keep telling me I have to take care of it myself.

    I am 76 years old, half blind, and dealing with “post polio fatigue,” so it isn’t easy for me to deal with this kind of thing.

    Remember the old saying: You get what you pay for. If you pay nothing, it is worth….

  12. Hey Finance Gourmet,

    Working on ideally filing today with Credit Karma. I know you mentioned home office deduction in your post, but do you have any insight on where to report it on CK? This is my first time working as an independent contractor and the hardest to file to date…hence the procrastination.

  13. I did my taxes using TurboTax Deluxe first and then Credit Karma. The federal tax eventually matched, but I needed to double check and correct a few of the trickier entries in CK. However, my Massachusetts state Tax presented substantial (and uncorrectable) discrepancies. CK does not take into account that MA allows an interest exemption of $100 ($200 filing jointly) and it also doesn’t take into account that interest earned in MA banks is taxed at a different rate than interest earned in other states. Both of these items were uncorrectable using the CK program and both resulted in a higher tax due.

    1. I am in MA and tried the same thing to see if the returns would match. I’m sure we have different deductions, credits, etc. but I had the opposite problem. I eventually got my state refund to match (with much digging) but not my federal. All the numbers at the review matched up (AGI, deducts, credits) but there was some hidden calculation somewhere that cause the federal returns to be off about $150. Turbo Tax Deluxe had the $150 better return and according to Amazon would cost about $35 to download. It’s $20 to efile a MA return but could have been mailed for free. Of course I waited too long so I just submitted using Credit Karma. Next year I think I’ll stick with Turbo Tax Deluxe because it seems more reliable

  14. I cannot get the Schedule E to work. It let me complete the entire schedule , calculated a loss, but then won’t deduct it from my total income. Possibly a glitch?? I don’t know but very frustrating after filling out the complete form.

  15. My Draft Review of Of Credit Tax/Support goes something like this;
    My $400 refund using Tax Karma from NY state was denied and a complete explanation was sent with the state paper.
    Scanning that and sending it into the taxsupport@creditkarma.com meant getting canned, scripted replies like. “you got married from last year” etc.
    Nobody home and I am out $400 using they program while I am now on the mailing/email for more of they crappy product.

  16. Well, I did my taxes with them for the first time and there was a small glitch. Seems credit karma does not yet have all the banks in their data base. When I filed my state, deturn, it came back with an error message saying my state does not accept international banks. i have had this bank for 17 years and my state accepts tbjs ba k for direct deposit for the last 11 years. There is notbing more tben some FAQ’s for support. I will not use them again. No confidence at all in. credit karma

  17. People filing a federal and state return, such as Iowa, where the most beneficial filing status filing status on federal is not the most beneficial status on the state should not use Credit Karma for filing both. When both spouses have some income, say five thousand or so, a married filing separately is best for Iowa and a joint return is best for federal.
    A free Credit Karma return would have cost me $400 had I used it for Iowa.
    Mine was a simple return. Don’t use this crap!

  18. I had issues with the NYS tax return. The software forced me to take a college tuition credit, rather than allowing me a college tuition deduction – which was better for me. I sent several inquiries and received emails saying they were working on it, but they never got back to me after two weeks! They have no telephone number which is infuriating. I ended up doing the state return myself and sending it in- I wish I had just done it myself to begin with. I thought the federal return was OK, BUT then realized that the software had put my NY state solar panel carryover credit onto my federal return rather than the state return, so I have to file an amended 2016 federal return! I am very sorry that I used this service.

  19. I would disagree that you can use Schedule D. It may be there, but they don’t fully support it. CK may SAY that they support all of those forms, but in reality they don’t fully support at least 2 of them – Form 8949 and Schedule D, used for reporting Sales of Capital Assets, which are not uncommon forms. I sold a mutual fund that I had acquired in 2005 – well before basis reporting to the IRS was required (starting in 2011). As such, the basis was not reported to the IRS. However, CK does not allow you to indicate that the basis for the sale was not reported to the IRS. I complained, they escalated the issue, and after 3 weeks, they finally got back to me, saying “Your issue has been resolved.” In fact, my issue had not been resolved – all they had done was add a disclaimer to their Capital Gains Input worksheet that says “Long-term items entered (held longer than a year) will be reported as “Box D checked” on your Form 8949 and Schedule D.” That doesn’t resolve the issue at all – it just tells me that they don’t fully support Form 8949 or Schedule D, despite the fact that it says on their list of supported forms that they do. Maybe they are operating from a list of alternative forms?

  20. Thank you for this article. For the past three years, I’ve been doing my taxes through TurboTax. My plan was to do the same this year, but then I got an email from Credit Karma about their tax filing option. Since I already had an account with Credit Karma, I decided to try it. I (electronically) “signed” the document saying that they could have access to my information and then I realized that I had to manually fill-in all of my information. I went through the online help service to cancel the service. I told them that I had already started my taxes through another website and that I was going to use Credit Karma Tax, but I wasn’t able to import my information. In response, I got an email saying this:

    I’m sorry to hear you want to cancel your account.
    Canceling your Credit Karma Tax account also cancels your Credit Karma account. Keep in mind that if you cancel your accounts, you won’t be able to create new accounts for six months.

    I just started my account with them in November 2016. I’ve lived without them before, so I have no problem with living without them again. I’m just mad at myself because I normally do my research before giving out my information. My thought was, if they have all my credit history, then I should be able to trust them with my tax information…and it’s free! I don’t knock their service as Credit Karma, but in my opinion, it’s a waste of time to input all of your tax information for their tax service when other sites just transfer it. Hopefully my story will help other people.

    1. Thanks for your information. This was my issue as well. I’ve got piles of stuff already in TurboTax, entering it manually is both time consuming and error prone. Maybe they’ll add an import feature next year.

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