Square Will Buy Credit Karma’s Free Tax Prep Service
Credit Karma will sell its tax-prep operation to Square Inc., according to the Justice Department announcement. This follows the February 2020 announcement of Credit Karma’s acquisition by tax software giant Intuit. The Department of Justice simultaneously announced a suit to block the merger and a settlement approving a solution: by divesting Credit Karma Tax to Square, Intuit can avoid violating antitrust regulations.
Credit Karma, which got its start offering consumers free access to their credit scores and reports (the trade-off is that they advertise product recommendations to users), started offering tax preparation services in 2017. It was a notable player on the scene for offering its services for free. Other tax services typically only offer free preparation to filers below a certain income level, by participating in the IRS Free File program.
The ruling to block Intuit from purchasing Credit Karma’s tax service needs to be approved in court. But until the sale of the service to Square is final, it’s unclear what free DIY options consumers will have available next spring.
by Lisa Rowan