How We Filed Our Taxes (For Completely Free)

I hate doing my taxes. It is so complicated and time consuming. Every time I sit with my husband next to the computer screen, I daydream about all the better things I could be doing with my time. Unfortunately, since I am a resident of the United States doing taxes comes with the territory. For the last ten years my husband and I have done our taxes online. We have used multiple programs that let us file Federally for free, but we have always had to pay to file state taxes. We will often run the numbers through multiple online programs to make sure the numbers are correct. This year we heard that Credit Karma had purchased a tax software company and was allowing members to file both federal and state taxes for free. We were very skeptical and almost did not try it. Here is the story about how we were able to file both federal and state taxes absolutely free.

(There are currently no affiliate links, I am not CPA or Financial advisor. I just wanted to share my experience. )

We Almost Filed With a Different Tax Software Company

As I mentioned earlier, we have e-filed our taxes for many years. We feel comfortable using Turbotax. In past years we have used both Taxact, and H&R Block software, but found Turbotax was more thorough and cost effective. We put our information into Turbotax in mid January, and discovered it would only cost around $70 to file state taxes (filing federal taxes typically is free) if we did so before February 15th. The problem was that we had to wait for some of my husband’s stock forms to arrive before we could file. My husband receives stock options occasionally as a bonus for his job, and will sell some of his options throughout the year. This year he did have a capital loss on some of his stocks, and a capital gain on others. Since we currently don’t know a lot about stocks (we are learning), we were confused about how this would affect our taxes.

When we finally received all of the forms needed to file taxes, we were clueless about how to enter the information on Turbotax. We also itemized deductions, so we had to figure out the best way to put in the information. My husband spent a lot of time doing research, and consulting Turbotax in order to figure things out. Finally (after hours and hours of confusion and frustration) we were able to enter all the information correctly, and knew what we were getting back.

The Experiment

Credit Karma is great for checking credit scores, but would it be great for filing taxes? Even though we have used Credit Karma for years, we were skeptical to let them do our taxes. After going back and forth whether or not to use it, I suggested we just run the numbers to compare results. We didn’t have to actually file with Credit Karma if we didn’t feel comfortable. We ran the numbers, and it was actually easier than Turbotax. The questions (especially when it came to stocks) were much easier to understand. We able to enter all of our information in less than an hour, and it yielded the same results as Turbotax!

We Filed Both Our State and Federal Taxes for Completely Free!

We decided to go ahead and file with Credit Karma! It was completely free! We would have had to pay $70 with Turbotax. I know $70 isn’t a large amount, but when you are trying to pay off debt, every penny counts!

We got our federal refund back within two weeks. We are still waiting to receive our state refund, but everything seems to be going smoothly.

I really trust Credit Karma and since I have been using it to check my credit scores, I have had no problems. I am not saying nothing could happen. You should always be careful who you give your information to. From personal experience I believe Credit Karma is a reputable company, that really offers free financial tools that can be extremely helpful.

If you are still worried about how safe and effective Credit Karma is, check out this article I found.

What’s the Catch? How Does Credit Karma Make Money?

Credit Karma offers free credit scores from two of the three bureaus (TransUnion and Equifax), now it also allows people to file taxes for free. Credit Karma has to pay to get the information for you. How do they make money? The simple answer, ad revenue. When you use Credit Karma you get personal offers from partnering companies based on your credit score.

Why Taxes?

The reason they now offer taxes is because your credit score does not paint the entire picture. I once heard from a banker, that he met a homeless man with a credit score of around 800. If Credit Karma can see your income and financial situation they can pre-qualify you for offers and target you more effectively.

Only Do Your Own Taxes If You Feel Comfortable

You should only ever do what you are comfortable with. If you run a business, and have a complicated estate, you might be better off using a CPA. We own a home, have stocks, have a 401k, have student loans, medical bills, and give to charity, and we feel comfortable doing our own taxes. If you have never done taxes yourself, try using the software. You don’t have to actually file anything if you don’t feel confident you did it right. I encourage people to try it, but to NEVER do anything they are uncomfortable with. If it gives you a piece of mind to file your taxes with a CPA, go for it. I am just trying to help people save money everywhere they can.

The Results

I am definately happy with the results from using Credit Karma. I know that they are going to target me for offers through their partnering companies, but I am ok with that. I can choose to accept or decline offers freely. I am really happy with how easy the process was, and how quickly we got our refund (obviously the refund times are up to the government not Credit Karma).

I do wish we got less of a refund back. It would be better if we got more money throughout the year to pay debt, instead of getting a lump sum at the end of the year. Plus the government pretty much gets and interest free loan. We will adjust our withholdings and hopefully find a good balance!

Do you have experience with Credit Karma? What do you think? Do you have any questions or concerns? 

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