Review of Credit Karma's tax filing service

Only two things are certain in life; death and taxes. So goes a saying.

Tax filing season is over in the USA.

This time I used a different tax filing service for the first time after nearly 15 years. Following is the review of my experience.

Credit Karma is a credit reporting / monitoring service. They offer free credit monitoring, credit reports etc. Such services are available from other vendors also but Credit Karma is probably the first vendor which provides one-stop-shop for all credit related services. And most of it is totally free. So far so good. I have been using it for last few years to keep an eye on my credit reports, credit inquiries etc.

A few months back, just in time for tax filing season, Credit Karma announced that they would be introducing federal and state tax filing service. 'Completely free' was the pitch and that's what got my attention. There is no free lunch anywhere. That too in America, free??? No chance. That's what I thought and did not pay much attention.

Last month, when it was time to file taxes, I wanted to check out the newly offered tax filing service from Credit Karma. It was pretty good and completely free. So, I ended up using it to file my taxes.

Pros:

- Free. Absolutely free.

- No hidden fees or anything like that.

- No up-sell. Many vendors offer free tax filing which is too basic to be of any use but make a strong pitch to up sell additional services or conveniences. Here no such tactic.

- Simple and easy to use feature.

- Combination of wizard and form interface. Well developed website. Easy to navigate, understand and complete the data entry.

- Correct calculations. I always use multiple vendors to prepare my taxes just to make sure calculations match. Last thing you want is a tax return with wrong calculations.

- Easy to complete the electronic filing.

Cons:

- Completely manual. You have to enter all the data yourself. Many other tax filing services can populate most of the data automatically once you authorize them to access your income data from your employer, interest received data from banks, dividends from mutual funds, stock purchases/sales from your broker, etc. The software gets all that data automatically and your forms are filled, at least 90% filled. With Credit Karma no such facility. You have to manually enter all the data. So it takes at least double the time. Also you have to be doubly, triply sure to ensure no mistakes while entering the data.

I believe it costs at least $75 to file federal and state taxes using other vendors. That's what I have paid in past years. This time using Credit Karma's free tax filing service I saved at least that much. I may have spent more time and taken some risk (i.e. wrongly entered data) but I had time and felt it was fine.

Good job Credit Karma. Very happy to endorse your service. Keep up the good work! Try to automate like other vendors so that we don't have to enter data manually.

And to other tax filing service providers - anything more than $35 to complete taxes is above my threshold level. That's when I become sensitive to how much I need to spend to file taxes. So, something to keep in mind to win back customers like me if you care.