Credit Karma Tax Review: $0 Federal, $0 State Tax Filing w/ No Last-Minute Charges

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cktax0Tax season is officially here as the IRS has started accepting E-files. For you early birds, Credit Karma Tax is now on its 4th year of offering 100% free Federal AND State tax preparation software with free e-File and no income restrictions. You can have itemized deductions, business income, self-employment tax, and/or capital gains and losses. They now also have a Max Refund Guarantee and Audit Defense if you get audited.

My favorite feature of this product is that there is no “upgrade” version, so there are no upsells and no last-minute fees. Your bill will always be $0 Federal, $0 State. I hate the feeling when you have spent hours (days?!) typing in all that data and you expect a certain price, but at the very end they charge you more. You are just too tired to do it all over again, so you accept, but it leaves a bad aftertaste.


Is this legit? What’s the catch? Yes, they are legit. Credit Karma purchased AFJC Corporation, which was a private-label software provider and previously supplied the online tax software for Jackson Hewitt. They’ve been running this offer since 2016.

The “catch” is that you must also sign up for the main site, which takes your personal information and provides you access to your credit scores and reports from two of the three major consumer credit bureaus. They make money by also using that personal information to show you customized advertisements for things like credit cards, auto/home lending, and insurance products.

What’s included?

  • Free Federal filing with free e-File for 90%+ of filers with no income restrictions.
  • Free State filing with free e-File for 40 states + Washington DC. (Not all states require you to file state income taxes.)
  • Max Refund Guarantee
  • Free Audit Defense
  • Option to print and snail mail if you choose not to e-File.

Here are some popular forms included by Credit Karma Tax that other “Free” options often don’t cover:

  • Schedule C – Profit or Loss from Business (Sole Proprietorship)
  • Schedule D – Capital Gains and Losses (Stock Sales)
  • Schedule E – Supplemental Income and Loss (Rental property)
  • Schedule SE – Self-employment tax

What’s NOT included? Credit Karma will NOT support the following this year:

  • Multiple state filings
  • Part-year state filing
  • Foreign earned income
  • State returns for married filing separately in community property states*
  • State filing without a federal filing

While Credit Karma Tax supports Sole Proprietorships and income reported on Schedule C/E/SE, they do NOT yet support business tax returns for an S corporation, C corporation, partnership or multi-member LLC.

Tell me more about how Credit Karma makes money. Quoted from their site:

When you visit Credit Karma, we show you offers and recommendations (like credit cards or loans) that could save you money. If you take one of these offers, the bank or lender usually pays us. We never charge you a dime. And we never sell your info to marketers.

For example, if they know you have a 4% rate mortgage, they could sell you a 3.5% refinance mortgage. If they know you are older and have a paid-off home (i.e. you pay property taxes but no claim no mortgage interest), they could sell you a reverse mortgage. If they know your income, they can estimate the amount of life insurance you need. You could actually like this customization, be creeped out completely, or simply plan to ignore the ads.

Try before you commit. Nearly all online tax prep software only bills you when you are ready to file. If you’re not sold on a single product, why not sign up and fill out this and a competitor side-by-side in two different browser tabs. It’s a bit more work, but not a lot if you’re doing it simultaneously. That way, you can double-check the calculations. Ideally, you should get the same refund/due amount for both and then you can be confident that you are maximizing your filing (and still file for free).

Bottom line. Credit Karma Tax will give you free Federal and State tax returns. There is no other version, so you will never be hit with a last-minute upcharge. In exchange, you let them show you ads based on your financial data. In terms of technical accuracy, I expect that they are roughly equal to the other major providers. However, you may value the convenience factors offered by competitors (easily import last year’s data, better and/or unlimited phone support, automatic import of 1099-B tax lot data). I like the idea of using two side-by-side.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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  1. I was very surprised this year that they do not carry any information from last years return. You have to refill in your personal info, all your dependents, employer info, etc. I almost decided to go back to taxact and pay the money. After that though the service is really nice and really free.

  2. I remember you did multiple of these online tax filing systems one year as a comparison – was Credit Karma one of the ones you’ve tried? Have you used them? Normally you’d mention if you’ve used a particular service, but didn’t here.

    If you have used them – can you speak to how they compare to TaxAct? I’m getting tired of exactly what you mentioned – TaxAct seems like basically the same service every year – I do use it annually because they offer some comparisons to the prior year, but I’m getting tired of constantly increasing rates – for basically the same level of service.

    • I did try out Credit Karma Tax back in 2016 when it first came out. It was fine and matched up with my TurboTax return. I haven’t used gone through my full tax return in subsequent years.

      Honestly, I know that TurboTax is the most expensive, but I still like TurboTax’s 1099-B direct import feature (they partner directly with major brokerages) and not having to type in all those tax lots. On an hourly rate basis and accounting for the pain avoided, I am still willing to pay for TurboTax. However, I think most people don’t have as many tax lots as I do and can save money with an alternative provider.

  3. Thank you for this information! Can Credit Karma Tax import the year’s data – like dividends, capital gains, etc. – from financial institutions?

    • No, that is not available with Credit Karma Tax. 1099-B imports are one of the extra conveniences offered by competitors like TurboTax (and also why they cost more, but may be worth it to avoid typing in all those tax lots).

  4. Does Credit Karma has all other forms like 8606?

  5. Fred Smyth says

    Started to use it, then got to 1099-int and they require payers federal id. HRB does not nor does the IRS require it and having 32 entries wasn’t worth my time to enter. The free state filing is nice but not that nice.

  6. Let me save some of you some time – If you have a moderate amount of international funds in a taxable account, you qualify for a Foreign Tax Credit (see box 7 on your 1099-DIV for this tax). However, credit karma informed me at the end of this process that they do not support certain forms, including form 1116, Foreign Tax Credit. Unfortunately for me, this tax credit is more than the cost of turbotax. Also, if I wasn’t an accountant, I might have a made a lot of errors/omissions with Credit Karma’s software. The process isn’t as smooth and dummy-proof as Turbo and H&R. Checkout the forms they do not support before you waste your time:

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