Credit Karma Tax Is Now Cash App Taxes: What Does That Mean For Old CKT Customers? - Forbes

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Updated: Nov 1, 2021, 1:25pm
Did you use Credit Karma Tax to prepare your tax return in 2021? Expect to see changes for the coming tax-filing season as Credit Karma Tax no longer exists.
In November 2020, Square, Inc., the parent company of the financial services app Cash App, announced an agreement to acquire Credit Karma’s free do-it-yourself tax filing service. But why did this happen? And what does this mean for current and former Credit Karma Tax (CKT) customers? We have your answers.
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First, a little history. In February 2020, Intuit, Inc. said it would buy privately held Credit Karma. The purchase allowed Intuit, maker of the DIY tax software giant TurboTax, to further expand into consumer finance and access financial data on Credit Karma’s 100 million members in the U.S., U.K. and Canada.
The U.S. Justice Department (DOJ) effectively said, “Not so fast,” when it filed a civil antitrust lawsuit in U.S. District Court to block the transaction. According to the suit, unless Credit Karma divested its tax business, the acquisition would eliminate competition and likely result in higher prices, lower quality products and services and less consumer choice for digital-do-it-yourself tax preparation.
In 2019, around 1.5 million people used Credit Karma Tax to file their taxes. That accounts for a small fraction of the 34 million consumers who use software to prepare and file tax returns each year.
However, the DOJ generally views any merger that gives a company control of more than 70% of the market as a potential monopoly. As Intuit already controls roughly 67% of the DIY tax preparation market, buying CKT would push them closer to that threshold.
As part of a proposed settlement with the DOJ, CKT entered into a deal with Square, Inc. to sell its tax business. Square plans to integrate CKT into its Cash App platform, giving Cash App the ability to offer free tax filing services.
The acquisition allows Cash App to build a suite of personal financial tools to offer consumers.
Cash App already provides a peer-to-peer payment platform, bank accounts, debit cards, short-term loans and fractional investing in stocks and Bitcoin.
Adding tax preparation services to Cash App’s existing suite of services provides another way to acquire new users and helps the company generate more profit per user. According to Square’s Q3 2020 Shareholder Letter, customers who use two or more products generate three to four times more profit for the company than customers who only use Cash App’s peer-to-peer payments.
The acquisition also provides Square with a platform to build a more robust tax service—perhaps a paid service aimed at its small business customers—in the future.
According to IBISWorld, tax preparation services is an $11.3 billion industry in the U.S. But creating a digital-do-it-yourself tax product from scratch—let alone one that can keep up with the complicated and ever-evolving patchwork of federal and state tax laws—is no easy feat.
Through the end of the 2020 tax filing season, which ended on October 15, 2021, the Credit Karma Tax experience remained the same for users. Customers still had to be Credit Karma customers and log into their Credit Karma accounts to access their CKT data.
Cash App is currently working on integrating the Credit Karma Tax platform, but according to a CKT support page, the tax product will remain the same next year and be 100% free. However, customers will access the tax prep software through Cash App instead of Credit Karma.
If you don’t currently have a Cash App account, you’ll need to install the app (available on Google Play and the Apple App Store) and create an account on your phone to access prior year returns and prepare and file taxes.
However, don’t expect easy access to copies of prior year returns just yet. Previous tax returns filed with CKT won’t be readily available within Cash App Taxes until January 2022.
If you need a copy of a previous tax return in the meantime (for example, if you’re applying for a mortgage or college financial aid application), you’ll have a few options.
Log into your Cash App account on your desktop and submit a case to Cash App Taxes. You will have to validate your identity before getting a copy of prior year returns filed with Credit Karma Tax. This validation involves entering a code sent by email or text, providing your legal name, date of birth, and the last four digits of your Social Security number.
Download Cash App on your mobile and create an account. Then log into your account on a desktop and submit a case.
Complete a Prior Year Return Request Form. One of Cash App’s tax advocates will work with you to validate your identity before sending a copy of your prior Credit Karma Tax return.
You can also get a tax transcript or copy of your tax return from the IRS.

Janet Berry-Johnson is a CPA who writes about income taxes, small business accounting, and personal finance. She lives in Omaha, Nebraska, where she enjoys cooking, reading, and spending time outdoors with her husband, son, and their rescue dog, Dexter.


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