According to the IRS, you should receive Form 1099-K, Payment Card and Third Party Network Transactions, by January 31st if, in the prior calendar year, you received payments:
- from payment card transactions (e.g., debit, credit or stored-value cards), and/or
- in settlement of third-party payment network transactions above the minimum reporting thresholds of –
- gross payments that exceed $20,000, AND
- more than 200 such transactions
Commonly, self-employed individuals such as Uber/Lyft drivers will receive a Form 1099-K.
According to the IRS, Schedule C (Form 1040) is used to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. Whether the income is received in the form of cash or check, independent contractors in business for themselves should receive a 1099-Misc form from every business from which they receive at least $600 throughout the tax year.
In Credit Karma Tax, 1099-Misc income can be reported by clicking in the Business Income-Schedule C area:
1099 MISC income can also be manually entered in the Less Common Income area:
While using the Schedule C format allows the member the opportunity to enter any applicable expenses or costs of doing business, entering the information directly in the 1099-Misc income area is less complex and many types of freelance or contract jobs have no expenses associated with them.
The IRS categorizes capital gains based on the amount of time that the taxpayer held the investment.
- Short term gains are those gains that result from holding an investment property for one year or less.
- Long term gains result from holding an investment for at least one year and one day.
Please note that these periods of time are calculated within the Credit Karma Tax software based on the info entered for Date Acquired and Date Sold .
There are plenty of taxpayers who will not owe taxes on their Social Security benefits, depending on their income level. That said, some people who get Social Security must pay federal income taxes on their benefits. But, no one pays taxes on more than 85 percent of their Social Security benefits.
You will need to pay taxes on your benefits if:
- You file a federal tax return as an individual and your combined income exceeds $25,000.
- You file a joint return and you and your spouse have combined income of more than $32,000.
- You are married and file a separate return.
A taxpayer receives this form upon receiving proceeds from the completion of the sale or disposition of real estate.
Generally the sale of real estate is a reportable transaction unless the transaction falls under certain exceptions; however, even then it could make sense for the taxpayer to report it.
For most taxpayers, recognizing a gain on the sale of a principal residence is an item that can be excluded from gross income. For joint filers, the exclusion applies for gains up to $500,000. For all other filers the exclusion extends to $250,000.
You can use form 1098 to report mortgage interest of $600 or more paid by you during the year.
- First mortgages
- Second mortgages
- Home equity loans
- Refinanced mortgages.
A home must provide basic living accommodations including sleeping space, toilet, and cooking facilities. Some examples of a home are a:
There is a catch: while you may claim your qualified home mortgage interest on your federal income tax return, you might not have a form 1098. The IRS only requires a lender to issue a form 1098 if the property that secures your mortgage is considered real property.
Real property is defined as, "land and generally anything built on it, growing on it, or attached to the land." This means that if a mortgage is not secured by real property, the lender is not required to file form 1098.
Federal, state, or local governments send you this form if you any of the following types of payments:
- Unemployment compensation
- State or local income tax refunds, credits, or offsets
- Reemployment trade adjustment assistance (RTAA) payments
- Taxable grants
- Agricultural payments
You'll get Form 1099-OID (Original Issue Discount) when you purchase a bond or note for an amount less than face value. The OID is the difference between the bond's stated redemption price (usually its face value) and its issue price (generally the amount the bond or note was first sold by the issuer).
The OID is taxable interest over the life of the bond, which gets reported every year you hold the bond, even if you don't actually receive the interest.
- 1 Child and Dependent Care Credit:
- 1.1 Which Tax Situations Does Credit Karma Tax Cover?
- 1.2 Which Tax Situations Does Credit Karma Fail to Cover?
- 1.3 Public Opinion About Credit Karma Tax
- 1.4 Our Final Thoughts About Credit Karma Tax: Pros and Cons
- 2 Free Tax Filing with Credit Karma Tax
Child and Dependent Care Credit:
You may be able to claim the Child and Dependent Care Credit on your federal tax return if , during the last year, you paid someone to care for your:
The care must have been provided for one or more qualifying persons. A qualifying person is:
- Your dependent child age 12 or younger
- Your spouse
- Other individuals who are physically or mentally incapable of self-care
The care must have been provided so you and your spouse, if you are married filing jointly, could work or look for work.
You, and your spouse if you file jointly, must have earned income from:
- All taxable employee compensation
- Net earnings from self-employment.
Additionally, one spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
The payments for care cannot be paid to:
- Your spouse
- The parent of your qualifying person
- Your dependents
- Your child who will not be age 19 or older by the end of the year
For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses. You may download these free publications from http://www.irs.gov or order them by calling 800-TAX-FORM (800-829-3676 ).
Use this schedule to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:
- Your primary purpose for engaging in the activity is for income or profit
- You are involved in the activity with continuity and regularity
For example, a sporadic activity or a hobby does not qualify as a business. To report income from a non-business activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21.
Also use Schedule C to report:
- Wages and expenses you had as a statutory employee
- Income and deductions of certain qualified joint ventures
- Some income shown on Form 1099-MISC
Form SSA-1099 reports Social Security benefits you received from the Social Security Administration (SSA). Some examples are:
- Retirement benefits
- Disability benefits
- Survivor benefits.
Social Security benefits may or may not be taxable for a given year. Social Security retirement benefits are often not taxable at either the federal or state level.
Whether or not your Social Security income is taxable depends on your total income. If your only income is Social Security, you probably don't make enough money to be required to file a federal tax return.
For those with additional sources of income, the key figure is the Modified Adjusted Gross Income (MAGI). The MAGI includes half of your Social Security, plus other sources of income. Once your MAGI exceeds the base amount for your filing status, part of your Social Security income becomes taxable.
You will receive this form if you:
- Sold stocks, commodities, regulated futures contracts, foreign currency contracts, forward contracts, debt instruments, options, securities futures contracts, etc.
- Received cash, stock, or other property from a corporation that has had its stock acquired
- Exchanged property or services through a barter exchange.
You may be able to deduct expenses on higher education paid during the year for:
You can't claim this deduction if:
- Your filing married filing separately
- Another person can claim an exemption for you as a dependent
- Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return).
- You or your spouse were a nonresident alien for any part of 2016 and the nonresident alien didn't elect to be treated as a resident alien for tax purposes.
You can usually claim the tuition and fees deduction if the following requirements are met.
- You pay qualified education expenses of higher education.
- You pay the education expenses for an eligible student.
- The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return.
The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000!
When you use the funds from a Health Savings Account (HSA), or a medical savings account (MSA), the institution that administers the account must report all distributions on Form 1099-SA.
Only certain individuals are eligible to contribute to an HSA or MSA:
- You must be covered under a High Deductible Health Plan (HDHP)
- You cannot have a non-HDHP health plan
- You cannot be enrolled in Medicare
- You cannot be eligible to be claimed as a dependent on another person’s return.
You will receive this form if you were paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest or a minimum of $600 in:
- Services performed by someone who is not your employee
- Prizes and awards
- Other income payments
- Medical and health care payments
- Crop insurance proceeds
- Cash payments for fish or any other aquatic life
- Cash paid from a notional principal contract to an individual, partnership
- Estate payments to an attorney; or any fishing boat proceeds
This form is used to report certain information about individuals who enroll in a qualified health plan through the Health Insurance Marketplace.
This let’s people:
- take the premium tax credit
- reconcile the credit on their returns with advance payments of the premium tax credit (advance credit payments)
- file an accurate tax return.
Form 1095-B is used to report certain information about individuals who are covered by minimum essential coverage and are not liable for the individual shared responsibility payment.
Minimum essential coverage includes:
- Government-sponsored programs
- Eligible employer-sponsored plans
- Individual market plans
- Other coverage the Department of Health and Human Services designates as minimum essential coverage.
Form 1095-C is used if an employer has more than 50 employees. It is filed and furnished to any employee of an ALE member who is a full-time employee for one or more months of the calendar. ALE Members must report that information for all twelve months of the calendar year for each employee.
Form 1095-C is used:
- To report information about each employee to the IRS and to the employee
- In determining whether an ALE Member owes a payment under the employer shared responsibility provisions under section 4980H.
- In determining the eligibility of employees for the premium tax credit.
You will receive this form if you have made a designated distribution or are treated as having made a distribution of $10 or more from
- Profit-sharing or retirement plans
- Any individual retirement arrangements (IRAs)
- Annuities, pensions, insurance contracts, survivor income benefit plans
- Permanent and total disability payments under life insurance contracts
- Charitable gift annuities, etc
1) Log in to your Credit Karma account, and find the “Tax” option at the top of the page
Tip: If you don’t already have a Credit Karma account, you can make one here:
All you’ll need with you is some information about yourself (email, address, income, etc.) and your Social Security Number.
Sign up will take about a minute, and then you’ll be ready to file.
2) Have your Uber income totals ready
If you earned income through Uber in 2016, you will have received one or both of these forms: a 1099-K, and a 1099-MISC. You’ll need to have these income totals ready when you report your Uber income.
- On your 1099-K, you’re looking for Box 1a: Gross amount of payment card/third party network transactions
- On your 1099-MISC, you’re looking for Box 7 - Nonemployee compensation
However, if you didn’t receive a 1099-MISC, you may still have income to report! Uber only sends a 1099-MISC reporting incentive and referral income if you made at least $600, so even if you didn’t receive one, you should check your Uber Tax Summary to see if you received any of this type of income. On your Uber Tax Summary, you’ll see under the “1099-MISC Breakdown” whether you have income to report in addition to the income on your 1099-K. Find this total and have it ready.
3) Have your business expense totals ready
If you’ve been tracking your business expenses, then you’ll want to have all of your documentation at the ready when you go to file.
We recommend having the totals for each kind of expense ready before you file. Here’s a list of deductible business expenses for Uber drivers:
- Car cleaning
- Passenger goodies
- Cell phone accessories (like chargers, car holders, etc.)
- A portion of your cell phone bill
- A new cell phone that you bought for work
- Background checks and vehicle inspections that were required by Uber
- Parking costs
- Un-reimbursed tolls
- Paid apps that you bought for work (ex. A Spotify Premium account that you let passengers use)
- AAA or other roadside assistance memberships
- Car mats and seat cushions
- Food and drink (from extra long workdays only)
- Car loan interest
After you’ve gone through your records, you should know how much you spent on passenger goodies, how much you spent on your cell phone bill (and what percentage of of the bill was due to business), how much you spent on parking, etc.
Here’s an example of what your records should look like when you’ve finished tallying up each deduction category:
Haven’t been tracking your deductions? Don’t worry, you have a few options.
When it comes to mileage, you can start with your Uber on-trip mileage. Here’s a guide on how to take that mileage and find your total business mileage from the past year.
As for expenses: It’ll take some work, but you can still find your business deductions by going back through your records.
The absolute best form of documentation for your expenses would be receipts from the purchases. If you’ve been keeping receipts, it’s time to dig them up and tally up your deductions.
Another way to document your business expenses from the year would be to go through your bank statements, find your business purchases, and then take good notes on what was purchased, what it was used for (as well as notes on if and how the purchase was also used for personal reasons).
If you download Stride Tax, you can link your bank account and go back through your records for the past year (depending on your bank). You’ll also be able to add in detailed notes on each purchase.
1) If you received a 1099-MISC, report that you have 1099-MISC income (if you didn't receive one, you can skip to step 6)
In the “Wages & Income” section of the Credit Karma Tax software, you’ll be asked a few simple questions about the income that you received in 2016.
If you received a 1099-MISC, you’ll answer “YES” when asked if you’ve received Form 1099-MISC.
2) Copy over your 1099-MISC information into CKT exactly as it appears on your form
3) Enter the income from Box 7 of your 1099-MISC into CKT’s “Nonemployee comp” box.
4) Categorize your income as “Income for my business”
5) Name your business. If you drive for multiple rideshare companies, feel free to put “Rideshare driving” so that you can combine your rideshare income.
6) If you received a 1099-K from Uber as well, you’ll need to report that you have income to add to your Schedule C (the form that reports your income and expenses from your rideshare business).
If you reported that you had a 1099-MISC, then a Schedule C was automatically created for you when you reported that you had 1099-MISC income. Now you’ll need to update it with the rest of your income.
If you didn’t receive a 1099-MISC, you’ll still report that you had income from a Personal Business/Schedule C.
7) Fill in your business’s contact information
When you’re self-employed, much of your business information is the same as your personal information. This is where Credit Karma Tax comes in handy--you can auto-fill many of your personal details that are already saved in your account.
Identify your business as Transportation & Warehousing, and choose the description Taxi & limousine service. This is industry standard for rideshare driving.
If you had a business loss from previous years of rideshare driving, you would enter in that information here.
Note: If you’d prefer to carry your loss forward and not back, you’ll have to specify your preference separately from this section. You have the option of either submitting a statement along with your tax return saying that you forego the carryback option. If you have business losses to carry forward or back, we recommend consulting a tax preparer who can advise on your case specifically.
10) Answer a few more classifying questions about your business.
These questions will be automatically filled in for you. For rideshare drivers, the following will automatically be true:
- You did materially participate.
- Yes, all of your investment is at risk.
- You do not need to enter information about your inventory for your rideshare business.
- You used the cash method of accounting.
The only question that you would need to edit is: Did you start or acquire this business in 2016?
11) Report your 1099-K income
The money that you earned in fares from Uber would be classified as “third-party network transactions,” which is why they appear on a 1099-K instead of a 1099-MISC. When CKT asks you for your earnings in “Merchant card and third party network payments,” you’ll enter your gross income from your 1099-K.
12) Deduct Uber’s commission and fees
The gross income reported on your 1099-K includes both the money you received in fares, and the commissions and fees that Uber took on each ride. This total doesn’t match what you actually received.
This means that you’ll need to deduct all of Uber’s fees as a business expense. You can find the exact amount that Uber took in commissions and fees on your Uber Tax Summary.
13) Claim your “Supplies” and “Meals and Entertainment” deductions, if you have them
Any goodies that you purchased for passengers--refreshments, hand sanitizer, tissues, etc.--would be classified as “Supplies” on your tax return.
As for food and drink that you purchased on particularly long workdays or during meetings with potential referrals--you can deduct 50% of those expenses in the “Meals and Entertainment” section.
14) Enter in your vehicle expenses
As an Uber driver, you’ll automatically have vehicle expenses to claim. At the very least, you’ll be able to claim your on-trip mileage as a deduction using the standard mileage deduction.
Fill in the appropriate details about your vehicle, and then enter in your business miles.
If you’ve been tracking your business miles on your own, enter your total in the “Business miles driven during 2016” box.
If you haven’t been tracking your mileage, there are several ways to find your total. The very least amount of mileage that you can claim can be found on your Uber Tax Summary under “On Trip Mileage.”
14) Choose your vehicle expense deduction method
The standard mileage deduction will usually give you the best deduction. However, if you are using the actual expense method and know that your deduction is higher with this method, you can elect to use it here. You may benefit more from the actual expense method if you have higher-than-normal repair costs, or if you drive a gas guzzler.
Note: If you’ve used the actual expense method in the past, you’ve got to stick with it! The actual expense method allows you to write off your car’s depreciation, so if you switch to the standard mileage rate, you’ll be “double-deducting” your depreciation.
15) Your car was likely available for personal use outside of business hours, in which you would answer these vehicle questions according to the picture below. However, feel free to change your answers when appropriate.
Since you’ll at the very least have your Uber trip logs, you should definitely state that you have written proof.
16) Enter in your “Other expenses”
Deductible expenses that would go in this category include:
- Car cleaning
- A portion of your cell phone bill
- Phone accessories
- Inspections/background checks
- Roadside assistance memberships
- Car mats and seat cushions
17) Enter in any depreciating assets you may have
If you purchased an item that has a useful life of more than 1 year, then you’ll need to depreciate it as a business asset.
These assets may include a new cell phone purchased specifically for rideshare driving, or a dashcam to be used when you’re on-duty.
Enter the following details:
- Asset description (what you bought)
- Asset classification: How long you would typically use an asset determines its classification, or how long you can depreciate the cost over time. A cell phone or dashcam would have the shortest classification of “3 Year Property.”
- Date placed in service (when you started using the asset for work)
- Cost of asset
- Percentage of business use: Especially for items like cell phones that are often used outside of work, you’ll need to declare about what percentage of the time you’re using the asset for work. Keep in mind that making even the occasional phone call to a friend while on duty is considered “personal use”--and it’s pretty easy for the IRS to find personal calls in your phone records during an audit. Play it safe, and put in an honest percentage of time. You can take a look at a typical week’s or month’s phone records to find about what percentage of your usage is attributed to work.
- Section 179 deduction: This is optional, but could be pretty beneficial to you. If you use this asset for work over 50% of the time, then you can elect to deduct the full purchase price from your income. Otherwise, you would depreciate the asset over multiple years.
One note: If you do decide to take the 179 deduction, you would only deduct the cost relative to your percentage of business use. This means that if you bought a phone for $500 and use it 60% of the time, you’d only deduct $300 of that with the 179 deduction.
I'm using Credit Karma for my tax return. I have not received an expected 1099-INT from a bank for an interest amount of $150 so I do not know this banks's federal tax ID number. I am fairly certain that the tax ID number is optional, but Credit Karma claims that it is a required field and will not allow me to continue without it. I have already contacted CK and am waiting to hear back about this issue.
In the meantime, are there any workarounds? Can I report this income elsewhere on my return? Can I just put in a bogus tax ID number (ie 11-1111111)? Or is my best bet to contact the bank and ask them to issue another 1099?
You don't need a tax ID number from a 1099-INT to file on paper or via Free File Fillable Forms, so I'm a bit surprised that there's tax software that requires it somehow. It sounds like your issue is really more one of using the Credit Karma tax software, and their support is going to be more helpful with that than anything anybody here can do.
In general, you should have received a 1099-INT, so it's probably a good plan to contact the bank and see if they've sent it and confirm they have an accurate address on file. While talking with them, they can probably tell you their Tax ID number. Sometimes you can even download the current 1099-INT from their web site (my local bank just started offering this in the past year or two).
Don't put in a bogus tax id. You can often look up the form through online banking, but if not, you can certainly ask the bank to send you a copy of the form, or you could simply ask a service rep at the bank what the tax id is.
Upon calling the bank, I found out that the 1099 had been sent to the wrong address, but since I no longer have an account they claimed to be unable to update my address unless I visited a branch (states away). They also outright refused to disclose their EIN to me.
CK support has not responded in several weeks.
I ended up putting a fake EIN into the software. Combing over the generated forms at the end, I verified that the fake EIN did not show up on the Schedule B or on any other form to be sent to the IRS (thanks @BenMiller) and I was able to submit my return.
Credit Karma Tax is a tax software site offering free returns for nearly every tax situation, including homeowners, freelancers/self-employed and investors. The site does not offer audit defense.
- Review Topic:
- Personal Finance,
- Personal Taxes
Credit Karma Tax is a free online tax software service where consumers in almost any tax situation can file their taxes without paying a dime.
In an industry where most sites have three or four different tiers of paid tax service, Credit Karma certainly stands out for offering its filing services for free.
Up until the launch of its tax filing division in 2017, Credit Karma was known for basic reviews of credit cards, free credit score checks, and credit card recommendations. That year, though, they launched their free tax filing.
We’re guessing that the site’s free service is what is most appealing to you, and rightly so. TurboTax will charge you $89.99 for their freelancer/self-employed package. Why pay nearly $100 for something you can do for free on a different site?
From a financial perspective, it makes sense. But smart consumers will take a step back and answer the important questions:
- Which situations does Credit Karma’s free filing cover?
- Which situations does it not cover?
- What do the existing reviews say about the service?
At the end of our review, we’ll give you our thoughts on the site’s pros and cons.
Normally, we’d compare Credit Karma Tax to the four leading tax sites: TurboTax, H&R Block, Tax Slayer and TaxAct. These comparisons are usually based on price so there isn’t much comparison for us to do.
However, we’ll include a table of those four sites’ prices just to give you a sense of what you’ll be saving:
Which Tax Situations Does Credit Karma Tax Cover?
Credit Karma Tax is available to nearly every taxpayer but there are certain situations and forms that they don’t process. It’s not a matter of paying more to have your situation accepted; either you can do your taxes with them or you can’t.
To help clear that up, the site lists forms that are eligible for their free service. The reason this list is important is that the tax filing tiers you see in the chart above are really just a mix of certain forms that are included in that price.
So, when TaxAct says they have a Freelancer tier, what they basically mean is that you can use that price point to file a Schedule C, which is a business form that most freelancers and small business owners.
In a general sense, there are three types of filing statuses most often addressed by tax websites:
- Owner of investments (properties, stocks, etc)
Each group has their own collection of forms. We’ll review each of these groups in the next few sections.
Whenever you own a home, you get special deductions for various aspects of owning a home. The main deduction is given based on the amount of mortgage interest you paid over the course of the year.
You can also get a tax credit for some of the interest you paid. For example, in the state of Florida, there’s a mortgage credit program that gives a tax credit up to $2,000 depending on how much interest you paid.
Each of these situations is covered because Credit Karma accepts the 1098 mortgage interest form and the 8396 form for mortgage interest credits.
Both of these forms produce a deduction or credit number that you add to Schedule A. As a side note, “schedules9rdquo; are collections of various deductions you calculate via “forms.9rdquo; The total deduction amount from your schedules is then entered into your 1040.
Self-Employed, Business Owners and Freelancers Can File
The schedule that is most important to the freelancer and the self-employed worker is the Schedule C, which is known as the Profit or Loss from Business form. It’s with this form that you list all the deductions you get for being your own business.
One of the popular forms that you’ll use for your tax return is Form 8829, which what you’ll use to calculate your home-office deduction, perhaps the most popular deduction for freelance workers.
You can also use the form to deduct rent you pay for your place of business or a mortgage.
All the necessary forms you’ll need to fill out, including 1099s like the 1099-K you receive for earning more than $20,000 on freelancing sites are also good to go with Credit Karma Tax.
Business owners and freelancers who registered as an S-Corp will be able to file Schedule K-1, which is what you’ll use to report income and dividends earned from your business.
This final filing group is comprised of people who have investments in stocks, retirement accounts, rental properties and other entities.
All of the important forms you’d need for to report your dividends, incomes and losses are included:
- 1099-B: Capital gains and losses
- 1099-DIV: Stock dividend payouts
- 1099-INT: Interest earned on accounts
- 1099-R: Payouts from retirement-related accounts
The site also covers rarer investment-related forms like the 1099-OID and 1099-Q.
Most Everyone Else Can File, Too
You don’t have to fall into one of the categories above to file your taxes with Credit Karma Tax. You can be a combination of all three, two of three, or none of them.
The great thing about the site, from a free filing perspective, is that the four most popular sites have restrictions on who can file free. In some cases, those restrictions exclude average American families whose adjusted gross income is more than $54,000. Not so with this site; there are no limits on income.
However, that doesn’t mean that everyone can file with Credit Karma Tax.
Which Tax Situations Does Credit Karma Fail to Cover?
Based on our research, we believe that Credit Karma’s free tax filing covers a large majority of taxpayers. There are specific situations and specific forms, though, that would disqualify you from filing with them.
Lived/Worked in Multiple States
One of the biggest ones is someone who has earned income in multiple states in one year or lived in more than one state during the year.
Lived Abroad and Want Deductions
Another situation they don’t cover is the U.S. citizen who lives/lived abroad and wants the Foreign Tax Credit (Form 1116) or the Foreign Earned Income Credit (Form 2555).
Basically, these are two forms expats often use to get big deductions for taxes they’ve paid in the foreign country in which they live and deductions for living outside of the U.S. for at least 330 days.
Credit Karma says they can’t process returns for ministers, pastors, priests and other members of the clergy. Their situations require specific tax rules about self-employment tax, parsonage allowances and other factors.
Aside from what we’ve listed above, there are a few other tax scenarios that the site’s free filing doesn’t cover:
The site also notes that you can’t use it to file state taxes but not federal taxes.
One of the key advantages of using TurboTax, H&R Block, TaxSlayer and TaxAct is that you have the opportunity to get audit support should you get an audit notice from the IRS.
While less than 1% of returns are audited, it helps to have the peace of mind that a tax professional has your back.
Credit Karma Tax does not offer audit support. If you’re one of the unlucky ones who gets audited, you’re on your own.
Another thing you won’t get with this site is a review from a tax pro, a feature you can pay for on TurboTax and H&R Block.
Public Opinion About Credit Karma Tax
Credit Karma’s free tax software was a pretty big deal when it launched in 2017. As a result, many of the top tech sites wrote reviews on what it was like to use the software.
After reading through these reviews, here are some insights we observed:
- Support was lacking
- Issues with forms
- Some deductions were hard to find
- Navigating the software was hard
- Error messages occasionally popped up
In general, we believe that Credit Karma Tax is going through the growing pains that any new software or app would experience.
Our Final Thoughts About Credit Karma Tax: Pros and Cons
In our opinion, the obvious advantage to using this tax software platform is that it’s free. Every major site has a free option but those options are very restrictive and don’t cover homeowners, freelancers/self-employed or taxpayers with investments and/or rental properties.
While it’s hard to say there’s a downside to free tax software, we do think there are some things you should watch out for.
First, there have been multiple reports that the platform has some bugs and inconsistencies in it that could make filing a frustrating process. There’s no guarantee that you’ll face these quirks but know that you might run into a problem because the software is still new.
Second, you won’t get audit defense and you don’t get the luxury of complementary or paid return reviews by a tax pro.
Finally, Credit Karma Tax isn’t a good fit for expats who want to claim popular foreign tax credits and deductions.
If you want to learn more about the leading tax sites, take a look at our comparison of TurboTax, H&R Block, TaxAct, and TaxSlayer. We compare each site’s pricing tiers and talk about what they offer. We also give recommendations on which site is best suited for which taxpayer.
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Free Tax Filing with Credit Karma Tax
We’re partnered with Credit Karma Tax to connect you with an easy (and entirely free!) way to get your taxes done.
It’s a simple online tax software that lets you file your federal and states taxes for free. They’ll never charge you to use their service, even for itemized deductions.
If you get stuck, they have a dedicated support team ready to answer your questions.
How Credit Karma Tax Works
Here’s what they offer:
● All the common forms and schedules, including 1099s. If your taxes aren’t supported, they’ll let you know
● Free state and federal filing
● The ability to file multiple 1099s
● Free filing for business expense deductions
● A simple interview format that walks you through filing sections and provides recommendations on choosing the standard mileage rate or the actual expenses method
To start filing:
Grab your business expenses, mileage information, and 1099 forms (if you have any).
If you have questions, they’ve got you covered with great resources (like their guide to filing a 1099 and common rideshare deductions). If you can’t find what you need on their help center, their dedicated support team is on hand to help out.