Cash App Taxes Review: Free and Convenient Filing
Quick Take: Cash App provides a simple, secure and free tax e-filing alternative. Taxpayers with relatively simple returns will benefit from its easy-to-use interface.
How did we calculate this?
- Free service, with no upgrades charged
- Fast refund processing
- Guarantees accuracy
- Provides free audit defense if needed
- Not suitable for more complex returns
- Requires sign-up for Cash App service
- Limits refund on accuracy to $1,000
- Lacks phone customer support
Cash App Taxes Overview
The complex and time-consuming drudgery of yearly tax filing got a little easier with the coming of the internet and electronic filing. The Internal Revenue Service began accepting e-filed tax returns in 1986, when 25,000 returns were uploaded by five tax preparation services. By 2021, about 100 million taxpayers were using e-file services every year to streamline the filing process and get faster refunds.
Cash App has been offering an electronic tax filing service since November 2020, when its parent company, Square, acquired and rebranded the tax service provided by Credit Karma.
Cash App Taxes Features
We measured four essential attributes of tax e-filing services — cost, simplicity, security and accuracy — and came up with a rating placing Cash App among the leaders in this personal finance category.
No taxpayer wants the e-filing process to add to the financial burden of paying taxes. Although many authorized e-filers claim to offer a free-of-charge experience, many upsell their services in the case of more complicated returns. Cash App Taxes stands apart for charging no fees for additional schedules or higher levels of service.
Cash App does not charge upgrades for:
- Itemized deductions listed on Schedule A
- Investment income listed on Schedule B
- Self-employment income listed on Schedule C
Competing services also may charge for e-filing of state returns, while Cash App allows one free state return. As of March 2022, Cash App supported state returns for 40 states and the District of Columbia. One caveat: Users must file federal returns in order to get state returns filed.
Taxes are complicated and confusing enough, so an important feature of any e-filing service is its ease of use.
Cash App offers its tax filing from a button placed directly on its home screen. The app guides users through a series of basic questions about their employment, income and expenses. Users respond by clicking on buttons or entering figures.
The app then creates a series of IRS forms with the appropriate numbers filled in. Users may review the forms on the screen or download them as PDF files. The app displays the resulting balance owed or refund amount before uploading the forms directly to the IRS.
Also making the process easy for former Credit Karma tax e-filers, Cash App allows access to previous returns on request.
A major concern when doing any sort of personal financial business on the internet is security. Tax returns, of course, are chock full of data useful to hackers, including Social Security numbers, addresses, phone numbers, employment information and a myriad of financial details. E-filers need to make sure all of that information is kept confidential.
The first step is to locate an e-file provider authorized by the IRS. The agency provides a convenient tool that allows taxpayers to search these providers by the taxpayers’ ZIP codes. In larger urban areas, the list will run to dozens of accounting, tax and other financial firms.
The IRS sets detailed security standards for these authorized providers, one of which is Cash App. The company uses 128-bit encryption. This is the standard used by the National Security Agency to protect secret information. Cash App has a dedicated security team, while third parties monitor the site for possible vulnerabilities and malicious actors. The app also requires two-factor authentication every time a user logs in.
The accuracy of any tax return is a big concern of taxpayers, who know that even experienced tax pros sometimes have trouble navigating and understanding the federal tax code. A mistake on a return can be aggravating, especially if the mistake results in a higher tax bill or smaller refund.
The Cash App tax service claims to guarantee 100% accuracy. The service supports its claim by guaranteeing users the largest possible refund. If a larger refund is worked out through an amended return filed through another tax service, Cash App will refund a minimum of $25 and a maximum of $1,000 to the taxpayer in the form of a gift card.
Cash App does provide a free consultation in the case of an IRS audit of a tax return filed through the app.
A Five-Star Service
Performance in these four important categories earns Cash App a five-star rating for those with simple and straightforward tax situations. Some taxpayers may need a more robust e-filing service, as Cash App doesn’t support the foreign tax credit, K-1 forms for those with income from a trust or partnership, or foreign earned income of more than $600. Cash App also doesn’t provide tax experts for consultation.
Users can expect a free, simple and secure experience on Cash App while also taking advantage of faster refunds than is possible through mailed returns. Although Cash App can’t guarantee when the IRS will complete the process, the service draws on 2020 data to claim an average five-day improvement over traditional banks between filing and refund receipt. Also, by setting up a direct deposit on the app itself, a refund from the IRS becomes available immediately — in contrast to a typical two-day wait for a bank to process the received funds.
Cash App does require that tax users download and sign up for the app. It also works best for those experienced with doing their own taxes, as the e-filing feature also lacks phone customer assistance. With those caveats, Cash App is now providing one of the best e-filing services available.
Good To Know
Taxpayers who moved during the tax year may need to file more than one state tax return. They’ll need to find an alternative to Cash App, as the service does not support e-filing of more than one state return.
Cash App Taxes Competition
Cash App vs. TurboTax
TurboTax has been around for 25 years and earns good reviews for its detailed and thorough walkthrough interview, which guides the taxpayer to all possible deductions, credits and exemptions. It also provides expert assistance should the user have a question on tax rules. But it’s an expensive product, with price points from $59 to $89 for increasingly complex service levels. Cash App beats it for value for taxpayers with relatively straightforward returns and a good knowledge of their tax situation.
Cash App vs. H&R Block
Familiar nationwide as the neighborhood tax shop, H&R Block offers an online tax service that is accessible and free for those with simple tax returns. There’s a MyBlock mobile app that, according to several reviewers, works best if the user can get online to complete the return and e-file. Also, if itemized deductions are on the table, the price increases to $50. A consultation with a tax professional, either online or at a physical location, bumps the charge to $70.
Cash App vs. TaxAct
The TaxAct package is probably Cash App’s closest competitor. It has a free option that will work for the simplest returns, and service levels priced up to $69, with all offering live expert assistance as well as an accuracy guarantee worth up to $100,000. TaxAct promises to reimburse users for any penalties or fees levied by the IRS on returns filed with its platform. Another nice feature is the ability to import a prior year’s tax return from another tax service.
How To Apply
Getting the app and an account is necessary if you want to try the Cash App tax feature. It’s a simple matter of downloading the free app to your mobile, either through an app store or by scanning a QR code on the website’s home page. Once that’s done, you’ll need to sign up for an account.
Simply launch the app by tapping on its icon. Then enter your phone number or a valid e-mail address. The app sends a numeric code by email or text. This verification code is then entered back into the app, which also will need debit card information to link the app to your bank account.
The tax feature can be accessed directly from the home screen on the mobile app. You also can get everything done online through the Cash App website.
Cash App provides a convenient and no-cost way to file a personal tax return. With plenty of other features and services available, it also will simplify your financial life by moving your banking to a mobile platform while avoiding yet another tax platform’s signup, login, password and security worries.
Editorial Note: This content is not provided by Cash App. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Cash App.
This article was republished on April 26, 2022. Information is accurate as of April 8, 2022.
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