Cash App Taxes: How the Free Tax Return Service Works & Who It’s For

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With tax season upon us, you might be tempted to press the "panic" button and hide underneath a rock until April, especially if you do your tax returns on your own. Filing your own tax returns using free tax filing services can make a stressful process less overwhelming and sometimes even easy.

Cash App Taxes is one of many tax services that can help you file your federal and state taxes for free. We'll explain how Cash App Taxes works, how it stands up against similar tax filing platforms, its pros and cons and how to use it to file your returns this upcoming tax season.

What Is Cash App Taxes?

Cash App Taxes (formerly Credit Karma Taxes) is now in its third year of offering free tax filing and continues to have the super-efficient product model Credit Karma Taxes was known for.

Here are some notable features of Cash App Taxes:

• Free state and federal returns filing: If you DIY your taxes, you can file state and federal returns for free. Cash App Taxes can help you prep and file the most common tax forms and schedules without paying a cent.
• Basic support for standard or itemized deductions: The free online filing service can also help you determine what deductions you qualify for and whether you should opt for a standard or itemized return.
• Import from other tax filing services: If you've used H&R Block, TurboTax or TaxAct in the past to file taxes, Cash App Taxes gives you the ability to import last year's data and personal information.

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How to Use Cash App Taxes

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Here's how to use Cash App Taxes:

1. Download Cash App
2. Create an account
3. Import your prior year's tax information
4. Fill out your current tax year data
5. File and submit your returns

Cash App Taxes imports your tax information from the year prior. Once you upload your 1040 form, the app will pull your adjusted gross income and personal data from the form.

You can also prep your taxes for federal returns and some state returns on your smartphone. Features include:

• Itemizing deductions and filling out your 1040
• Submitting payment
• Setting up direct deposit for your tax refund or post-dating a direct deposit of taxes you owe

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Pros and Cons of Cash App Taxes

Pros

Here are the main benefits of using Cash App Taxes:

• File for free: The major draw of using Cash App Taxes is that you can file your state and federal returns for free. Plus, you won't be pressed to purchase any expensive add-ons.
• Get your tax refund early: You can receive your refund up to six days quicker because you can receive direct deposits within the software as soon as they're received. Sign up for direct deposit, and they’ll drop a max of $25,000 into your account per direct deposit and up to $50,000 within a 24-hour period.
• Maximum refund guarantee: Say you originally filed your federal tax return through Cash App Taxes. Then, you file an amended federal tax return through another tax filing service. Cash App Taxes will refund you up to $100 of the difference if you owe less on your taxes or get a larger return through the other tax filing service.
• Free audit defense: Should you be flagged for a potential audit, Cash App Taxes will connect you with a qualified case manager to help you gather documents for your case, draft written correspondence to tax authorities on your part and respond to inquiries.

Cons

Now, let's take a look at some of the disadvantages of Cash App Taxes:

• Need to use the mobile app: While you can prepare and file your taxes on your computer, you need to download the Cash App Taxes app to log in or create an account. After that, you can hop back onto your computer to continue the process. This isn’t a major deal, but it could dissuade app-weary folks.
• Limited customer support: Since Cash App Taxes is entirely free, there's limited customer support. Plus, unlike some of its competitors, there's no option to work with a tax professional.
• Can't file foreign or multiple state returns: Currently, multiple state returns, part-year state filings or foreign-earned income aren't supported.

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Cash App Taxes vs. the Competition

H&R Block

While all tax preparation services help you prepare and file your return, they’re not all created equal. Here’s how a few tax filing services compare. 

H&R Block

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Straightforward and easy-to file tax prep that comes with accuracy and maximum refund guarantees, H&R Block can also handle complex tax needs. Additional support is available from brick-and-mortar locations if needed. Even those opting for the free tier can enjoy robust features, including state filings at no additional cost.

Whereas Cash App Taxes is a 100% free tax filing service, you can also file a simple return (Form 1040, plus Schedules 1 and 3) for free through H&R Block. The company employs a team of tax professionals available to walk you through the process and answer any questions you have (for an added fee). Plus, H&R Block's ability to import information and forms, and connect to external accounts, is more sophisticated than Cash App Taxes.

TurboTax

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TurboTax shines when it comes to customers who have more complex tax returns. The Deluxe option helps maximize tax deductions and credits, while Premium covers investments—including cryptocurrency and and stock activity—and rental properties. Plus, you can easily import your investment income automatically with TurboTax.

Similar to H&R Block, TurboTax has an option to file for free with TurboTax Free Edition (disclaimer: ~37% of taxpayers qualify for TurboTax Free Edition. Form 1040 + limited credits only).

This option lets you to file state and federal taxes for free for simple tax returns, which could benefit those with W-2 income who take the standard deduction. With Cash App Taxes, you can file an itemized deduction if you prefer to go that route.

TaxAct

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TaxAct has a robust accuracy and refund maximum guarantee that eclipses most competitors. Its no-frills tax service is easy to use and simple to navigate. It really shines with its Xpert Assist help service, which allows filers across all tiers to consult a tax expert, though the service now comes with a fee.

TaxAct offers free filing on federal tax returns on simple returns (aka W-2 forms) and some credits and deductions. While you can file both state and federal returns for free through Cash App Taxes, TaxAct charges a fee for each state tax return. Cash App Taxes has limited support and no phone support, while TaxAct has phone and chat customer support available daily.

Who Is Cash App Taxes Best for?

Cash App Taxes is best for those who want a relatively simple way to file state and federal taxes without needing to pay for a tax preparation service or tax professional. This includes:

• Nine-to-fivers (aka those with W-2 tax forms)
• Business owners 
• Freelancers, gig economy workers and self-employed folks

If you are disabled, have student loans or are a retiree, the tax filing service might also be a good fit for you.

Cash App Taxes is not best for those who:

• Live and work in multiple states 
• Need to file multiple state returns 
• Need to file a part-year state return 
• Need professional support for complicated tax situations

Cash App Taxes could be a solid choice if you're comfortable going fully DIY or looking for an option to file your taxes for free without needing to purchase add-ons.

FAQs

• Does Cash App Taxes have an accuracy guarantee?

  Yes. Should you get dinged with a penalty or interest from the tax authorities due to a calculation error made by Cash App Taxes, you'll get reimbursed up to $1,000 through gift cards.

• Can Cash App Taxes file your taxes for free?

  You can file both your federal and state returns for free through Cash App. There are no upsells or pricey add-ons.

• Do I need to download Cash App to use Cash App Taxes?

  Yes. You need to create an account or log in via the app. Once you've logged in, you can prep and file your taxes from either your computer or smartphone.

• Is Cash App Taxes secure?

  Cash App Taxes complies with the IRS's privacy, security and business requirements. Cash App uses security measures such as 128-bit encryption, two-factor authentication and an on-site security team.