Tax season is just around the corner. People are gathering up all of their forms and preparing to file.
The main concern most may be having at this time is which route to go in terms of preparation. While some may choose to go the more traditional route, others take to online services such as TurboTax.
Credit Karma is the latest company hoping to offer its online services to the masses of tax filers who prefer internet filing to using accountants. With just over 60 million users, it has spent the last 10 years offering free credit information and is now moving into the free tax preparation space.
Intuit’s TurboTax Online has 28 million users and H&R Block and TaxAct have around 5 million users a piece. To enter the free tax prep market, Credit Karma acquired a tax software firm and announced the release of its new service, Credit Karma Tax, in Dec. 2016. Just two months after this announcement, the company already has 1.7 million people lined up to use it.
Although this is something that should make its competitors nervous, some are not worried. H&R Block issued a statement to The Wall Street Journal: “H&R Block gives support for complex issues that many taxpayers need, whether one is filing on a desktop, tablet or smartphone.”
To help differentiate itself from the other online tax filing services, Credit Karma has upped the ante through data collection and analysis. Through the collection of tax payers’ income and other details entered in the tax filing process, Credit Karma Tax will recommend credit cards and financial products.
Will openly admitting it’s planning to use people’s financial information to sell products hinder Credit Karma Tax?
Finances are a touchy subject with most people, and there are some that may want a guarantee their information will be kept private. As such, we will likely see the online tax filing industry increase competitive offerings to help vie for the top spot.