Tax day is quickly approaching. If you’ve procrastinated on doing your taxes, you still have through Tuesday, April 18 to get them done. Filing taxes can be a bit cumbersome, and if you are like me, you worry about making mistakes and the IRS coming after you. When my financial advisor told me there was an option to file a free tax return, I was willing to take the plunge to complete my taxes.
After five years of getting my taxes done by a professional, I wanted to save money. I had experience using Turbo Tax, and their software made doing your taxes easy. Turbo Tax sells the fact that you can file your federal return for free, which I suppose is true. But you also need to file your taxes for the state, and Turbo Tax DOES charge you for filing your state return. It is a sneaky method that worked on me!
So, who did my financial advisor inform me of? The FREE TAX RETURN is available from Credit Karma.
In my post today, I will provide a review of Credit Karma’s two services. First, I will discuss their credit monitoring services, and I will investigate how your credit score is determined. Second, I will provide my review on Credit Karma’s tax filing services.
Credit Karma – credit monitoring services
When I graduated college, I used Credit Karma to monitor my credit score. I didn’t have a credit card until I graduated college; therefore, I had ZERO credit. I wanted a way to track my score while I attempted to build up my credit score. After scouring the internet for free services, I found Credit Karma.
I used their service for a few years to monitor my credit score and I recommend it. Credit Karma didn’t spam me with emails, and I only heard from them when a new score was available. If you are curious, here are the six factors that affect your credit score:
- Credit Card Utilization. This means how much of your available credit are you using. If you have a $10,000 limit on your credit card and you have a $1,000 balance – you are utilizing 10% of your available credit. To improve your score, keep your credit card utilization below 30%.
- Payment history. This one is self-explanatory. Pay your bills on time. If you can’t: stop spending, create and budget, and eliminate your debt!
- Derogatory remarks. Any negative events on your credit history will affect this factory. Examples are bankruptcy, tax liens or a foreclosure.
- Age of credit history. Once your reach an average of seven years of credit history across your accounts you will be good. Any less, and unfortunately it is a black eye on your credit score.
- Total accounts. This one I don’t personally like, but lenders like to see multiple firms giving you credit because it shows you proved trustworthy to them. I like to keep things simple and use one credit card…
- Credit inquiries. How often are you attempting to open a line of credit? Do this too often, and you might look desperate.
Eventually, the bank that I use started a credit monitoring service as part of the “package” I had. So I went with the service my bank provided, and I didn’t login into my Credit Karma account until this year…..
Credit Karma tax return review
Credit Karma makes it easy to file your free tax return. Review over 🙂
You are probably asking how Credit Karma makes money. Credit Karma does provide recommendations for credit cards, auto loans, and general loans based on your credit performance/usage. They make a small commission on any conversions they have on their website for these loans.
I have to admit that I was a little nervous about filing my taxes again. Last year we had a baby, so I was worried that would make taxes more complicated. I was wrong. You list your dependents, and it takes care of everything else for you.
Not sure if Credit Karma will work for you? Here is a link to the list of support forms Credit Karma accepts.
To initiate the tax filing process, you fill out information about you and your family (i.e. date of birth). Next, you input your W-2 information and jump into questions for the Federal portion of your tax return. Then, you complete the deduction section.
Next up is the State tax return section. Finally, and one thing that I like about using Credit Karma, is they provide an analysis to “double check everything.” For me, they reviewed a write off for educational expenses – Lifetime Learning Credit versus American Opportunity credit. It is neat that the software attempts to understand more about your situation and provide extra value by looking for additional ways to help you.
Credit Karma has a dedicated support team. I didn’t need to use them because they made it so simple to file my free tax return, but I’m sure they are fantastic.
I feel that this review isn’t terribly comprehensive, but Credit Karma made it so simple to use that there is nothing else for me to bore you with!
Final note on your credit score
I received a note from my financial advisor and he made a good point on how to strategically pull your credit.
You are entitled to receive your credit report once a year direct from the three main reporting agencies. These reporting agencies are: TransUnion, Equifax and Experian.
The credit report you receive from Credit Karma is a pull Credit Karma does from TransUnion and Equifax. Experian gathers its own data to score your credit.
Instead of pulling your credit report once a year from the reporting agencies, you could pull your credit score three times throughout the year. Therefore, every four months you could pull from one of the reporting agencies and received an accurate pull of your credit more frequently without negatively affecting your credit score.