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Credit Karma Tax vs TurboTax: Here's how the tax filing services compare on price, ease of use, and refunds

turbotax live expert platform
TurboTax connects users with real human experts to answer tricky tax questions.
Courtesy of Intuit

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TurboTax is the longtime market leader when it comes to filing your taxes yourself using your computer. But a few years ago, Credit Karma Tax emerged as a no-cost competitor. Alongside competitors H&R Block and TaxAct, these four tax software packages account for the vast majority of DIY filing.

This year, I kicked the tires on both Credit Karma Tax and TurboTax with my own taxes to see which worked better and which I should use to file.

I'm happy to report an overall great experience with both tax filing methods. However, depending on your situation, one may be better than the other. In general, I found Credit Karma Tax works great for those with the most common tax situations. TurboTax reigns supreme for more complex situations, such as owning a business or moving to a new state during the tax year.

Here's how to decide which one will work best for you.

Costs and fees: Credit Karma Tax vs TurboTax

Credit Karma Tax and TurboTax start to look different when you examine the price.

Through the IRS' Free File program, taxpayers with an adjusted gross income (AGI) of less than $36,000 can file for free with TurboTax. If you earn more than the Free File limit, you can still file with TurboTax at no cost by navigating directly to the company's website. Just be very careful about where you start so you don't get stuck like I did!

The free version gives you mostly just a W-2 form entry from your employer. If you have more income to report, the paid versions include Deluxe for $60, Premier for $90, and Self-Employed for $120, plus state filing fees. Deluxe adds deductions, credits, and features for homeowners. This is the most popular version, according to TurboTax.

The Premier version adds support for investments, rental properties, and cryptocurrencies. Self-employed gives you everything from the cheaper versions plus support for the forms and deductions used by freelancers, contractors, and other small business owners.

That online software isn't the final price, however. You'll pay an extra $50 for each state filing and you may run into other fees along the way. 

Credit Karma Tax is free to use regardless of your tax situation. Credit Karma Tax supports state filings, plus filings for investments, rental properties, and cryptocurrencies its free version, making it the clear winner when it comes to price.

Winner on price: Credit Karma Tax

Ease of use: Credit Karma Tax vs TurboTax

Credit Karma Tax and TurboTax both give you intuitive guidance to ensure you don't miss a tax form. Both are software companies, so it's no surprise that they do a good job at putting these platforms together.

For anyone with a full-time or part-time job, your W-2 form likely makes up the bulk of your tax return. Here's a glance at what they look like at TurboTax and Credit Karma Tax respectively:

TurboTax W-2 entry form:

TurboTax W 2 form
TurboTax - The W-2 form can be imported from some employers, or you can copy your form information into this simple web form.

Credit Karma Tax W-2 entry form:

Credit Karma Tax W2 form
Credit Karma Tax has a similarly easy entry form. It also supports uploading a photo of your W-2 for automatic importing.
Credit Karma

Both platforms give you an easy way to search for specific forms you want to enter or a guided tax entry experience. If you can handle things like email on a computer, you should be just fine with either program.

Winner on ease of use: Tie

Financial results: Credit Karma Tax vs TurboTax

Both TurboTax and Credit Karma Tax come with a guarantee that they will give you the maximum refund and accurate results. For most filers, these claims are true on both sides. That is what led me to use the free Credit Karma Tax last year over TurboTax, which I used the previous year.

I hopped onto a few financial forums at Reddit and found users there mostly reported that they had identical results at Credit Karma Tax and TurboTax. In those cases, the users reported that they went with the free tax option over the one that costs money.

One user, however, said they had an issue with their business form at Credit Karma Tax, which happens to be what led me back to TurboTax this year myself. In my case, it looks like the new 20% pass-through deduction didn't get added in Credit Karma Tax. TurboTax did include it, which made a significant difference in my own results.

So the verdict isn't as clear as the categories above. If you have fairly normal taxes that include things like W-2 or 1099 income, investments, a mortgage and property taxes, and common deduction and credit situations, both stand equal. For business owners, it seems that TurboTax has an edge.

Winner on refunds: Credit Karma Tax for most personal filers, TurboTax for business filers

Which one makes the most sense for you?

Everyone has to file taxes every year, and I love the philosophy that Credit Karma Tax takes toward income taxes: If you have to do it every year by law, you shouldn't have to pay for it.

However, if you own a business, you could find that TurboTax yields better results. At the end of the day, it's all about saving the most money on taxes. You have to take both taxes and the tax prep option into account. In my personal case, going with TurboTax this year was better, even though I had to pay for it. Last year, I used Credit Karma Tax for free as my results were the same.

In either case, it's a lot cheaper than hiring a human accountant. I used to do that myself, but I realized after a few potentially costly errors by my accountant that I know my own money better than anyone else.

If you are confident with your money, you should be in good shape with either Credit Karma Tax or TurboTax. If you're unsure, you can prepare your taxes with both and file using the one that gives you the best final numbers. But if you want to save time and don't own a business, you will probably find things work perfectly at the no-cost Credit Karma Tax.

This article was originally published in 2019. It was updated on March 18, 2020 to include new pricing information.

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