Credit Karma Tax Review 2021

No one looks forward to doing their taxes – and worse, no one wants to pay for it. Credit Karma Tax offers a free solution for both federal and state returns that will allow most people to file for for free.

Their free version covers a wide range of situations and includes audit defense, which is not a free feature you’ll see elsewhere. They also include an extensive catalog of help articles and a chat feature for customer support.

Table of Contents
  1. What is Credit Karma Tax?
  2. How Much Does Credit Karma Tax Cost?
  3. Who Can Use Credit Karma Tax
    1. State Returns
  4. Key Features of Credit Karma Tax
    1. Guarantees
    2. Smart File
    3. Great Support
  5. Positives and Negatives
    1. Pros
    2. Cons
  6. Credit Karma Tax Alternatives
    1. Turbo Tax
    2. TaxAct
    3. H&R Block
  7. Summary

What is Credit Karma Tax?

Credit Karma Tax will guide you through the process of filing your tax return for free. It covers the most common tax forms as well as 1099 income, itemizing (schedule A), business profit and loss (schedule C), child tax credit, and earned income credits.

There are some other fundamental features of Credit Karma Tax:

  • Credit Karma Tax can be used for both federal and state taxes, and you can do so even on the free version of the app. This is rare – most other tax filing apps will make you pay for this extra functionality.
  • Credit Karma Tax can be used by both students and freelancers, and can greatly simplify the process of filing taxes for these groups.
  • The app is also encrypted to keep your personal information safe, so you don’t have to worry about your details falling into the wrong hands.

Besides helping you handle your taxes, Credit Karma is also considered a leading credit monitoring tool, as it provides features including a spending tracker, credit simulator, and financial reports. Just like its tax services as well, Credit Karma provides completely free credit services with no hidden fees, which alone helps it to stand out from competitors such as LifeLock and Privacy Guard. 

How Much Does Credit Karma Tax Cost?

Arguably the most attractive feature of Credit Karma Tax is the price tag – the app is totally free. Including the filing of state taxes, which is surprising as most tax software will charge extra for state returns.

For those who have used similar apps before, that will be surprising. Credit Karma Tax offers plenty of functionality on a free account, which will handle everyone but those with the most complex tax situations. 

However, if you start filing and don’t qualify for the free version there is no upgrade to a paid account. You’ll simply not be able to use Credit Karma Tax and will have to start over with another service.

Who Can Use Credit Karma Tax

Those looking to use Credit Karma Tax to calculate and file their taxes should bear in mind that there are some basic requirements for using the app:

  • You’ll need to be 18 or older
  • You’ll also need to be a U.S. resident or resident alien
  • If you have to file a state return you’ll have to have earned all your income in the state you currently live in

Credit Karma Tax supports an extensive number of forms, many of which are not included in other free plans. These include 1099 income, itemizing, HSAs, business income (schedule C), and plenty more. Here’s the full list of covered forms.

It does not cover foreign income, income from an estate or trust, or the health coverage tax credit. Here’s the full list of forms that are not included.

State Returns

Credit Karma has some quirks when it comes to state returns.

You can file returns in 40 states for free, but you can’t file a state return with Credit Karma Tax unless you also file a federal return. You can file just a federal return if you want, as some states don’t require returns to be filed.

Also, Credit Karma Tax can’t file multiple state returns, part-year state returns, or non-resident state returns. This means you will have had to earn all your income for the year in one state – and it has to be the state you live in.

There are also state return restrictions for those who are married filing separately.

Here’s a full list of state return restrictions and forms not supported by Credit Karma Tax.

Get started with Credit Karma Tax

Key Features of Credit Karma Tax

There are some key reasons to choose Credit Karma Tax:


Credit Karma Tax offers two guarantees in relation to the calculation of your taxes. The first is a refund guarantee, through which you are assured that you will receive the maximum refund due to you. If another service finds you a bigger refund, Credit Karma will refund you the difference, up to $100.

The second guarantee covers the accuracy of your tax liability. If the Internal Revenue Services finds that there are errors in your calculations, and sends you an unexpected bill, Credit Karma will refund you an amount up to $1,000.

Smart File

Credit Karma Tax also offers a system called “Smart File”. This is a highly adaptive filing system that changes to meet your circumstances – so that you won’t see questions and windows about parts of your return that you don’t have to fill out.

Great Support

Audit defense support, in which Credit Karma will help you if you are audited. This is included for free when you file using Credit Karma Tax. For members of Credit Karma (those with a paid version of Credit Karma) you get audit defense support no matter where you file your taxes.

Finally, Credit Karma offers great live support, which most reviews indicate is staffed by knowledgeable, friendly staff.

Positives and Negatives

Credit Karma Tax offers some advantages for those looking to file their own taxes, but does have some drawbacks as well:


  • Free and easy to use
  • Covers more tax situations than most free plans
  • Good level of customer support


  • Can’t file multiple state tax returns
  • The app can’t handle every tax situation and doesn’t have an upgrade paid version
  • There is currently no support for foreign incomes or nonresident aliens

Get started with Credit Karma Tax

Credit Karma Tax Alternatives

There are several alternatives to Credit Karma Tax. These alternative apps have been around for a while, and are highly trusted by their customer base.

The primary competitors to Credit Karma right now include TurboTax, H&R Block, and Tax Act. While each of these options is also free for simple and W2 filers, none of them are free for homeowners, investors, state returns, and the self-employed:

Turbo Tax

Turbo Tax offers both free federal and state returns but does not cover any business income or 1099 income outside of 1099-INT and 1099-DIV.

The free version of Turbo Tax also doesn’t cover itemizing, stock sales, income from rental property, or income and deductions covered on Schedules 1-3.

Here’s our full review of Turbo Tax.


With TaxAct, it’s free to file your federal return but state returns cost extra. The free version will cover simple tax situations such as W-2 income, retirement income, child tax credit, and earned income tax credit.

The free version does not include situations such as business income, itemizing, capital gains, dividends, or HSAs.

Here’s our full Tax Act review.

H&R Block

H&R Block offers both federal and state filing for free. Again, the free version only covers simple tax returns which include W-2 income, retirement income, earned income credit, and student loan payments and interest.

It does not include investment income, self employment or business income, rental income, or HSAs.


Overall, Credit Karma Tax a great free tax return app. It’s highly recommended for individuals looking to simplify their calculation, and for people running a small business.

If your own tax situation is extremely complicated, however, you might want to pay for an account with an alternative provider, or even hire an accountant.

Credit Karma Tax


Product Rating



  • Free and easy to use
  • Covers more tax situations than most free plans
  • Good level of customer support


  • Can’t handle every tax situation
  • Can't file multiple state tax returns

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About Ashley Barnett

Ashley Barnett was born with a passion for personal finance. Even as a kid she would read anything she could find about money. When personal finance blogs started popping up on the internet she jumped on board, starting a personal finance blog in 2008.

In 2013, she pivoted to freelance editing where she spends her days trying to create the best personal finance content on the internet.

She lives in Phoenix with her husband and two children and you can usually find her sitting in her backyard re-reading Harry Potter for the millionth time.

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