For the 30 years I’ve been in the TV news business, I’ve been telling viewers and readers how to get their income taxes done as inexpensively as possible. And every year I’ve been amazed at how the big tax preparers rip Americans off by charging them tons of money to prepare their taxes and/or sell them software when they’re well-aware those Americans could get their taxes done for nothing.
For many years now, we’ve written articles like “6 Ways to Get Your Taxes Done for Free,” explaining that volunteer tax preparers are waiting to do your taxes absolutely free, provided your income is $57,000 or less. This year is a little different — because of the pandemic, some locations are understaffed or closed, but you can check the status of thousands of destinations nationwide for this service.
If you make $72,000 or less, you can get free software from the IRS Free File program, a partnership between the IRS and makers of commercial tax-preparation software.
Purveyors of in-person tax preparation and/or software, however, aren’t legally required to disclose they’re charging for services they know are available for nothing, so they keep their mouths shut and ring the register.
Now there’s free tax prep for everyone
Now there’s another free option that takes all comers, no matter their income or the complexity of their return. It’s Credit Karma, the personal finance site known for offering free credit scores and monitoring, as well as credit cards, loans and other financial products. They began offering free tax prep several years ago, presumably to attract new members.
Credit Karma tax prep will work in nearly every situation, not just simple ones. You can itemize and even file business returns. There are situations, however, it can’t accommodate, such as foreign tax credits, multiple state returns and certain types of trusts.
The way it works
You can use Credit Karma tax prep on a desktop, laptop or mobile device. Just answer a few questions, and the service will help you do everything from determining your filing status to completing your federal and state returns.
To start the process, you can also upload your prior year’s Form 1040 from most of the major software companies, including TurboTax, TaxAct and H&R Block. You can also use your smartphone or tablet to take pictures and upload documents.
The service is easy to use, with a clean, simple and intuitive interface.
Like most decent software, when you’re done, the app will review your return and look for potential problems. It even offers audit defense as well as guaranteeing to get you the maximum refund.
In short, this is a robust program at the best possible price: zero. This is a genuinely free product.
What’s the catch?
As I said above, Credit Karma is presumably providing this free service to attract new members. You’ll have to sign up for the site to get the tax-prep benefit, and signing up means getting periodic offers for things like car loans, personal loans, mortgages and credit cards.
Another potential drawback: While they do provide an online help center, as well as email support for their tax product, they don’t provide phone support.
While signing up for most sites, including this one, is as simple as providing an email address, signing up for Credit Karma requires your name, address, date of birth and the last four digits of your Social Security number. The site should, however, be safe: They say they use bank-level encryption. They also offer two-factor authentication.
The bottom line
If there’s one thing I can’t stand, it’s watching people pay for things they could get free. Now tax returns are one more thing to add to the list.
If you’re confident enough to file a tax return using software, try Credit Karma.