Has anyone tried using Credit Karma Tax (now Cash App Taxes)? It's completely free and I've found it does a good job with state tax withholding deductions. I've compared it with both TurboTax and FreeTaxUSA.

I've been doing my own taxes for years and this discrepancy between software is more common than people think. The key thing to understand is that state tax withholding from your W-2 (box 17) is indeed deductible, but only as part of itemized deductions on Schedule A. What's probably happening is that FreeTaxUSA is showing you the itemized calculation upfront, while TurboTax is running both calculations behind the scenes and only showing you the better option. If your total itemized deductions (state taxes + mortgage interest + charitable donations + other qualifying expenses) don't exceed the standard deduction threshold, then you'll get the same final result with both programs. Before you file, I'd recommend manually adding up all your potential itemized deductions to see if you're actually above the standard deduction amount. Also keep in mind the $10,000 SALT cap - if you have significant property taxes on top of your state income tax withholding, that could affect things too.

One thing to consider is that your cost basis isn't just the purchase price - it also includes certain closing costs and any capital improvements you've made to the property. So your taxable gain might actually be less than the simple difference between purchase and selling price. For example, if you bought at $780k but paid $15k in eligible closing costs and put another $20k into home improvements, your adjusted basis would be $815k. If you sold for $840k, your actual capital gain would only be $25k, not $60k.

Don't forget to keep detailed records of everything! I went through a similar work-related move after 16 months and the IRS actually audited my return (though it worked out fine in the end). Make sure you have documentation for: your employer's written relocation request or transfer letter, proof of the distance between your old workplace and new workplace (Google Maps screenshots work), records of all home improvements with receipts and before/after photos, and copies of all closing documents from both your purchase and eventual sale. The IRS was particularly interested in proving that the move was truly work-related and not voluntary. Having that paper trail saved me a lot of headaches. Also, if your company is paying for any moving expenses, make sure you understand which parts are taxable vs non-taxable - sometimes the moving expense reimbursements can affect your overall tax situation. Given all the advice here about basis adjustments and partial exclusions, it sounds like you'll likely come out just fine tax-wise, but good documentation will give you peace of mind!

This is such a helpful thread! I'm dealing with a similar situation but with a twist - we lived in our house for 2 years, then moved out and rented it for 1.5 years, then moved BACK in for another year before converting it to a rental again for the past 2 years. From what I'm reading here, it sounds like only that first rental period (the 1.5 years before we moved back) would count as "non-qualified use" since it happened before our final period of primary residence use. The recent 2-year rental period after we moved out for good wouldn't count against the exemption. Does that sound right? This Publication 523 stuff is so confusing with all the back-and-forth living situations. I'm wondering if I should try one of those services mentioned here to get a proper analysis before I make any assumptions about my tax liability.

I'm a tax professional and want to clarify something important that's been mentioned but might get lost in all the discussion - you absolutely need to keep detailed records of your occupancy periods and rental periods. The IRS can and will ask for proof if they audit this exemption. Beyond just utility bills and lease agreements, consider keeping: property tax records showing homestead exemptions during primary residence periods, insurance changes from homeowner's to landlord policies, any correspondence with property management companies, bank statements showing rental income deposits, and maintenance records that distinguish between personal use improvements versus rental property expenses. Also, while everyone's focused on the non-qualified use rules (which are correctly explained here), don't forget about mixed-use periods. If you ever lived in part of the property while renting out another part (like a basement apartment), those calculations get even more complex and you'll want professional help. The Publication 523 confusion is real - I deal with CPAs who misunderstand these rules regularly. When in doubt, get a professional opinion before you file, especially if your gain is substantial. An audit on a six-figure gain exclusion is not something you want to wing.

2 Did your settlement include any punitive damages? That part is definitely taxable! My cousin didn't realize this and ended up with a huge tax bill the following year.

Just went through this myself last year after a car accident settlement. The good news is that most of your settlement should indeed be tax-free! The key thing to look for is how your settlement agreement breaks down the payments. In my case, the settlement document clearly stated amounts for medical expenses, pain and suffering, and property damage - all of which were non-taxable. However, there was a small portion listed as "lost income compensation" that I did have to pay taxes on. One thing that caught me off guard was that my lawyer's fees were deducted from the gross settlement amount, but the IRS still considers the full gross amount as the settlement for tax purposes. So make sure you're looking at the right numbers when determining what's taxable vs non-taxable. Also, definitely get a 1099-MISC if your settlement is over $600 - even though most of it won't be taxable, you'll still need it for your records. My advice is to consult with a tax professional just to be 100% sure, especially since you're dealing with a significant amount of money. Better safe than sorry!

I've been using Taxcaster for a few years now and I'd say it's decent for a rough estimate but definitely not perfect. The biggest issue I've found is that it doesn't handle more complex tax situations very well - like if you have multiple income sources, itemized deductions, or any unusual circumstances. That said, a $10.5k refund does sound like you're significantly overwithholding! Even if Taxcaster is off by 20-30%, you're still probably getting way more back than you should be. I'd recommend starting conservatively - maybe adjust your withholdings to reduce your expected refund by half rather than trying to zero it out completely. That way you still get some extra money in your paychecks but have a safety buffer. Also, definitely double-check your inputs in Taxcaster and consider running the numbers through the IRS Withholding Calculator as well. Having two different estimates can help you feel more confident about making changes.

I've been using Taxcaster for about 3 years and my experience has been that it's usually within about $500-800 of my actual refund, which is pretty good for a free tool. However, $10.5k does seem quite high - that suggests you're definitely overwithholding by a significant amount. One thing I learned the hard way is to be really careful about entering your current withholdings correctly in Taxcaster. Make sure you're looking at your most recent paystub to get the exact federal tax withheld year-to-date, not just estimating. Also, if you've had any major life changes this year (marriage, divorce, new baby, buying a house), those can significantly impact your tax situation. My recommendation would be to run your numbers through both Taxcaster AND the official IRS Withholding Calculator, then split the difference between what they recommend. That way you're not putting all your eggs in one basket with a single estimate. I did this approach last year and ended up with a small refund of about $400 instead of the $3k I was getting before - much better for my monthly budget!