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Best tax software 2020: Get help with your tax returns

Best tax software 2020: Get help with your tax returns
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Finding the best tax software online can take some of the stress and worry out of a tricky yearly task. After all, few people actually enjoy doing their tax returns, so getting reliable software that does it all for you can be a huge time and anxiety-saver. What's more you can actually save quite a bit of money if you find reliable tax programs that essentially cut out the need for an accountant. Beyond that, some tax software will actually suggest deductions you can make as you're using it, which saves even more cash for you.

However, getting the best tax software isn't all about saving money. Many software packages actually provide excellent customer support, which is often available in realtime or via quick communication methods to help you out with some of the tougher aspects of the return process. While some tax software is completely free, we do recommend choosing the service level you actually need. Paying a few bucks to get a provider that offers features you may need - like the ability to directly import documents, or even having a physical office you can visit if you get really stuck - is important. Some tax software actually partners with large corporations to make returns even easier, and to help you understand the quirks of language associated with these companies.

You may find that paying a little extra for a good piece of software actually saves more money than a free provider. Many modern pieces of tax software provide guarantees on the returns they help you to create, should something go wrong and you're asked to repeat the process or you lose money. If you're under-confident with filing returns, this is essential to. Don't forget that the coronavirus stimulus check depends on your tax return, so you need to get it right.

Best tax software

1. TurboTax: Best tax software overall

TurboTax tax software

(Image credit: Intuit)

TurboTax

TurboTax offers robust functionality and versatile tools to make it one of the nation’s most popular options for filing tax returns

Free: $0 | Deluxe: $60 | Premier: $90 | Self Employed: $120

Free version for basic tax returns
Searches for potential deductions
Easy importing of official documents
More expensive than competitors

The main selling points of TurboTax is its relative ease of use - when compared to other tax filing software solutions - and that it partners with around 1,000 corporations, which enables employees of those corporations to file their taxes by importing their official documents. 

In addition to being a portal for individual tax returns, the program also wins points for actively suggesting and recommending deductions that the user may not previously have been aware of, meaning that using TurboTax is a good way to educate oneself about the tax return process. 

TurboTax has a great range of options, including the free version for basic tax returns, meaning that users can choose the edition that most suits them. For example, the Premier option is designed for people with investments or who own rental properties.

And the functionality and robust features within the software mean that preparing a return is as stress-free as it can be. The paid-for versions are very slightly more expensive than some of their competitors, but the added features and versatility make them worth paying for.


2. TaxSlayer: Best budget tax software

TaxSlayer tax software

(Image credit: TaxSlayer)

TaxSlayer

TaxSlayer offers straightforward and easy-to-use tax return solutions at a hugely competitive price point

Simply Free: $0 Federal, $0 State | Classic: $17 Federal, $29 State | Premium: $37 Federal, $29 State | Self Employed: Federal $47, State $29 | Military: Federal $0, State $29

Very competitively priced
Intuitive interface
Premium users can only submit queries to professionals
No desktop (offline) version

TaxSlayer has a long company history and its transition from bookkeeping into one of the major players in the tax return software industry has been solid move.

TaxSlayer’s prices are a huge selling point, and its comparable packages are consistently more competitively priced than many of its rivals. This makes a notable difference for any level of tax return complexity, but especially at the higher, most advanced levels. There's even a free option for people who have a simple tax situation (Basic 1040), which includes one free state return. Additional state returns will cost $29 per return.

TaxSlayer's software is straightforward and easy to use, and the variety of versions means that the vast majority of tax payers will find one to suit them. 

The levels of included support are slightly lower than those offered by TurboTax and H&R Block, but users can pay extra for one-on-one expertise. Overall, customers will appreciate the value of their packages and the functionality that’s on a par with anything on the market.


3. H&R Block: Best for support

H&R Block tax software

(Image credit: H&R Block)

H&R Block

H&R Block is a leading brand in tax return preparation that offers extra help via 80,000 tax experts and 12,000 physical offices

Free: $0 ($29.99 for State) | Deluxe: $49.99 Federal, $39.99 State | Premium: $69.99 Federal, $39.99 State | Self Employed: $104.99 Federal, $39.99 State

Live help from over 80,000 tax experts
12,000 physical locations
Help modules cost extra ($49.99 - $89.99)
Built-in online help is limited

H&R Block has a couple of major selling points. Firstly, the long company history and size of its network means that H&R Block can draw on a vast pool of expertise (it has some 80,000 tax experts available to help clients), and their products come with help options that can include one of these experts overseeing and checking the user’s tax return live online.

As well as intuitive, easy to use software, the company can offer help at any one of their 12,000 physical locations, as well as via its website. Its software is slightly cheaper than some of their main rivals, though the help modules do cost extra and the standard, built-in help is fairly limited. However, the interface works well and the amount of back up, should a user need it, will prove valuable.


4. Credit Karma Tax: Good for simple returns

Credit Karma Tax software

(Image credit: Credit Karma )

Credit Karma Tax

Credit Karma Tax offers completely free-to-use tax return software that will suit all but the most complex tax returns

Cost: Free

Completely free
Intuitive interface
Doesn't sell customer data to third parties
Not suitable for complex returns 

Credit Karma is really the only company offering a completely free tax returns service; this is only possible due to its advertising-driven business model. Free usually means that the software is limited or harder to use, but Credit Karma manages to avoid both these pitfalls.

Credit Karma uses the data it has about each user to show them specific credit-related products offered by third parties such as banks. Credit Karma makes money on matching leads to the products most likely to tempt their users, but users are clearly made aware that this is the model.

The biggest selling point by far for Credit Karma is that it is a completely free service, and that includes free auditing protection, which is a great added bonus. The filing process is relatively straightforward, though in terms of robustness, some of the paid services offer more. For instance, Credit Karma is not suitable for anybody filing two sets of state taxes, and it’s not really suitable for any especially complex tax returns, such as those filed by people with investment portfolios or property investments, though it is very suitable for the self-employed. 


5. FreeTaxUSA: Best free-to-use

FreeTaxUSA tax software

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FreeTaxUSA

FreeTaxUSA is a free-to-use, ad free tax filing solution that represents great value for those who are confident with the tax return process

Simple, Basic and Advanced editions: Free (for Federal, $12.95 for State) | Deluxe edition: $6.99 (features extra support options)

Free to use and ad free
Ability to upload previous returns in PDF
Can amend returns after submission to IRS
First-time users may need more in-program help

Given its budget status, the FreeTaxUSA software’s interface and features are somewhat stripped down, but this shouldn’t present too many challenges for experienced tax return users.

It also forgoes the in-program advertising that is part of other free tax return software solutions such as CreditKarma. This makes FreeTaxUSA an especially good value choice, though first time tax return users may want to consider brands with more online or in-program help. 

FreeTaxUSA's free versions all have the same features, and though they are light on very advanced features and exclude some (relatively uncommon) tax situations, most tax filers should find their products suitable. This is particularly true for experienced users who are confident about the tax return preparation process. For customers who would like additional support, the option to upgrade only incurs a nominal further charge, and the Deluxe edition, which comes with support inbuilt, is also extremely competitively priced. Overall, it’s a no-frills, great value product.


6. Jackson Hewitt: Best for advances on tax refunds

Jackson Hewitt Tax Service

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Jackson Hewitt Tax Service

Jackson Hewitt Tax Service offers tax preparation services that are both versatile and good value and backed up by an attractive tax return advance incentive

Free version: $0 | Deluxe edition: $66.98 | Premier edition: $86.98

Good range of products
Free version available
Software interface could be better
Advances must be arranged through a physical office

Jackson Hewitt Tax Service offers advances on tax returns to its customers, something not that common in the market. It offers a good range of tax preparation products at reasonable prices that are around the industry average. This includes a perfectly usable free edition of its software that works well for basic tax returns. Its products are backed up by some 7,400 physical offices across the United States.

The software is good for the price and is straightforward and user friendly, though the interface doesn’t quite hold up to the clean user experience of some rivals. The aforementioned big selling point is the fact that Jackson Hewitt offers an interest-free tax return advance of up to $3,200, though this has to be arranged through one of its offices. Overall, the company offers a good value product with good functionality and usability that will appeal to most users preparing tax returns. 


7. TaxAct: Best for accuracy guarantees

TaxAct tax software

(Image credit: TaxAct)

TaxAct

TaxAct offer a range of competitively-priced products that will help all levels of user file their State and Federal tax return

Free edition: $0 | Deluxe edition: $29.95 (Federal) & $39.95 (State) | Premier edition: $39.95 (Federal) & $39.95 (State) | Self Employed edition: $74.95 (Federal) & $49.95 (State)

Five products to cater for all levels of user
Good real time support
Accuracy guarantee with compensation up to $100,000
Free version requires fee for State returns

While its products are on a par with its main competitors in terms of functionality and ease of use, TaxAct differentiates itself by backing up its processing claims with a guarantee of accuracy. This guarantee is backed up in monetary terms, a feature that will appeal especially to users with larger tax bills or more complicated tax return scenarios. TaxAct has five solid tax preparation software products, and its prices compete well with comparable versions on the market. 

The user interface is clean and unfussy, and beyond the free version, the packages include good real-time support options and helpful wizards. One of the biggest selling points though, is the accuracy guarantee that promises compensation of up to $100,000 if the software doesn’t deliver the maximum refund to users - an iron-clad offer that will appeal to those with higher incomes and more complex tax returns.


2020 taxes

When should you have filed your 2020 taxes? 

Tax Day in 2020 fell on Wednesday, April 15. Employers are required to file and postmark W-2 forms by the end of January, so you should receive that information by February.

If you haven’t received your W-2 by now, you may need to contact your employer and request that it be re-sent. You can also contact the IRS at 800-829-1040. You need to provide your Social Security number, address and other personal information. In addition, you need information about your employer and an estimate of how much you earned.

Online tax programs usually release their newest versions toward the end of the previous year. If you used one for last year’s returns, you’ll likely get an email about the service’s update for the new tax filing season.

How we found the best tax software

To find the best tax software we filled out returns using a common scenario. We looked at how easy it was to fill out a return. Filing your taxes can be frustrating, no matter how complicated they are, so we looked for features that make filing your taxes as smooth as possible.

The best programs are easy to navigate, clearly showing you all the steps you need to go through to enter your information. We liked ones that highlight all the most important places you might want to backtrack to. Many now include the option to import your W-2, a time saving feature that ensures your information is accurate.

One of the most crucial things we found was the way each program flags errors. It’s easy to make mistakes – we made a few by putting an income amount in a tax-withheld box. Programs like Turbo Tax and FreeTaxUSA won’t let you proceed if you make an error. They call it out immediately and have you correct it before moving on. Programs like Jackson Hewitt are lacking in this regard. They wait till the end to show errors and, even more frustratingly, make you click back through your return without noting what needs to be corrected.

For most of these programs, filing your state returns is even easier than the federal return. The tax software transfers the information you already entered to complete your state return automatically.

Most of the programs we reviewed offer some type of free return. Usually this is for the most basic type of return, a 1040EZ or 1040A. If you’ve got a complex return, want to itemize your deductions or are self-employed, you’ll likely have to pay for more advanced versions with features for those specific situations.

What else to consider when choosing tax software 

Audit Protection

Audit is a scary word, and most of these programs try to upsell you some form of protection. Often these come bundled with identity theft protection or other services. The typical audit protection means that you’ll get one-on-one guidance from a tax professional. Some audit defense packages include representation from the company, who will gather documents and work with the IRS on your behalf. These protection plans can be expensive, with costs ranging from $44.95 to $6.99.

Many services, such as Turbo Tax and H&R Block, have free audit support. This is a scaled-down version of the audit protection you pay for, and the main benefit is that the tax software company will provide an explanation and assistance in preparing for an audit. It doesn’t provide any representation or help with preparing documents.

Audits are rare. Usually only about one in 100 returns are audited. Really, you only need to worry about an audit if you’re filing a complicated return. If you’re filing a Schedule C for self-employment income, you are more likely to be audited. Often audits occur due to a lack of good record keeping, something that audit protection can’t really help with. Audit protection, like accuracy guarantees, generally cover little more than assurance that the return was done correctly, based on information that you provided.

Refund Advances

The most common way to get your tax refund, if you do get one, is either through direct deposit or a check in the mail. Some places may also provide prepaid cards. If you need the refund immediately due to some financial hardship, you may be able to get an advance. H&R Block, Credit Karma, Liberty Tax and Jackson Hewitt are the companies we reviewed that offer advances.

The advance isn’t quite a loan – there’s no interest or fees, only the requirement that you file through the company providing the advance.

The advances are often loaded onto a prepaid card, so be conscious of any fees associated with those cards. Generally the fee is a few dollars per withdrawal, so check to make sure the card has a free ATM network associated with it. Some advances can be direct deposited as well.

Best tax return images

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Free tax services

Are free tax filing services actually free? 

Come tax time, every tax program advertises itself as free, free, free. But what’s the catch? The actual cost depends on how complicated your returns are and which service you use to file your taxes. Below, we look at which companies offer free filing and how you can qualify.

IRS: If you earned less than $66,000 in income during 2019, you may be eligible to file for free through the IRS Free File program. This is a partnership with a variety of tax filing companies that lets you complete your federal and state returns for free.

Credit Karma: Of all the tax programs we reviewed, Credit Karma is the only one with no exceptions to its free filing. No matter your tax situation, you can file your federal and state returns for free.

TurboTax: Whether you can file your taxes for free with TurboTax depends on how complex your return is. If you have a basic return with just a W-2 and the Earned Income Credit, you can file your state and federal returns for free. However, if you have a more complicated return and want to itemize deductions, you need to pay for the Deluxe Edition, which costs $39.99. If you’re self-employed, you may need to pay $89.99 for the Self-Employed edition.

H&R Block: This company has a stronger free version than TurboTax. You can claim more deductions, including student loan interest and child care. Homeowners need to pay for the $29.99 Deluxe Online edition, which lets you deduct mortgage interest. Also, freelancers need to pay $49.99 to file. If you file a non-free federal return, H&R Block charges an additional $36.99 to file your state return.

TaxSlayer: Only the most basic returns are free to file. If you have dependents or a return that requires anything beyond a Form 1040, you have to pay $17 to use TaxSlayer Classic, which lets you access all the forms and deductions. State returns cost an additional $29.

Liberty Tax: There’s no free-file option through Liberty Tax. Basic returns cost $24.95 plus $35.95 for state returns. If you need to itemize your deductions, you have to pay $34.95.

FreeTaxUSA: Federal returns, no matter how complex, are free to file through this service. It cost $12.95 to file state returns. For $6.99, you can purchase a Deluxe edition that provides real-time assistance filing your taxes.

TaxAct: Like many companies, if you just file a basic Form 1040, you can do so for free. If you have dependents or other tax credits, you must pay $9.95 to use the Basic+ edition. If you want to itemize deductions, you need to pay $29.95 for the Deluxe+ edition. State returns cost an additional $19.95.

Jackson Hewitt: The free version works for basic returns with less than $100,000 in income. If you have dependents, you pay $29.99, and state returns cost $36.95. If you want to itemize deductions, it costs $49.99.

How much does it cost to have taxes prepared professionally? 

Taxes can be daunting, and the idea of having a professional do them for you is very appealing. It can be expensive though, with standard returns costing around $100 and returns with itemized deductions costing upward of $200. If you’re self-employed and need to file a Schedule C, it can cost even more, up to $400. You can use an online tax program for free if you have a simple return, though a more complex return can cost between $40 to $80 to file, depending complexity.

If you itemize your deductions or have a lot of business or investment income, you may want to find an accountant or tax preparer. Most online tax software includes the option to have a professional review your return.

If you choose to have your taxes prepared by a professional, know that they can only charge a flat fee. Avoid anyone who charges a percentage of your return. Also, tax preparers can’t charge contingency fees, except in rare circumstances.

Professional tax preparers may also charge more during peak season – if you try to get your returns done at the last minute, it can be more expensive, sometimes costing as much as $100 extra. You also must pay an additional fee if you need a return expedited or need to file an extension.

How to file if you don’t get a W-2 

Generally, if you work a job, taxes are withheld from each paycheck and you receive a W-2 at the end of the year. However, freelance and contract work is becoming more common. In fact, an NPR/Marist University poll shows that one in five American workers are contract employees. Some experts estimate that within a decade, more than half of all workers will be employed on a contract basis.

While freelance positions give you flexibility and control, you’re also on the hook for your own taxes. You’ll get a form 1099-MISC that documents the income you received, but as part of your returns, you’ll need to figure out the taxes yourself. Because income, Social Security and Medicare taxes aren’t taken out by the person who paid you, you have to deduct them yourself. In some cases, the IRS may expect you to make quarterly income tax payments.

Fortunately, there are also many deductions you may be eligible for, which can potentially reduce the amount you pay. For example, you can deduct your home office, travel and other expenses. If you work for a ride share, you can deduct your mileage, car insurance and other expenses.

One drawback of having to file taxes as a self-employed person is your returns will be more complex, which is why most online tax programs don’t support free filing for self-employed workers. As such, you’ll have to pay to use those services.

How your taxes change

Life changes that can affect your taxes 

Your tax status can change a lot depending on what happened in your life the preceding year. Here’s how some common major life events can affect your taxes:

Getting Married

This has one of the greatest effects on your taxes. When you get married, you can choose to file jointly or separately. Most often, people file jointly because doing so gets you a larger standard deduction, and you end up paying less in taxes. You also become eligible for other tax benefits like a student loan interest deduction. It’s rare, but there are occasions where you may be better off filing separately.

Having a Child

Having a baby, adopting or otherwise claiming a dependent gives you many other opportunities for tax benefits. You can claim the child tax credit, which is worth $1,000 per qualifying child. If you adopt, there’s a separate tax credit you can claim. Also, you can claim a deduction for out-of-pocket child care costs.

Buying a Home

There are some tax deductions available to homeowners. Chief among them is the mortgage interest deduction, though it is usually only an option if you itemize your deductions. Deductions may be available for mortgage points and property tax payments.

Going Back to School

There are a variety of deductions you can claim on your education costs when you go back to school. You can deduct tuition, fees, supplies or other expenses, but you can’t claim more than one tax break for the same expenses in the same year.

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What documents do you need?

What documents do I need to file my taxes? 

The documents you need to complete your tax form depends on where you work, if you own a home and various other factors. Here are a few of the documents you may need as you start to file your taxes this year:

W-2

This is the most common form, and it shows the income you received from your place of employment.

Form 1099

This type of form supplies information about additional income. There are specific 1099 forms for cancelled debt, foreclosed homes, dividends, rental income and many other types of miscellaneous income not covered by W-2s. The most common of these forms is probably the 1099-MISC – it covers self-employed income and is the form most commonly used by freelancers and gig-economy workers. The threshold for needing to fill out a 1099-MISC is $600.

Schedule C

If you own your own business, you fill out a Schedule C to report your profits or losses from the preceding year.

Form 1098

This form has information about expenses you might be eligible to deduct. The standard Form 1098 is for mortgage interest. A form 1098-E covers student loan interest, and a 1098-T applies to tuition costs. If you’re a student, you may get these forms and be eligible for various deductions.

Form 2441

This form allows you to deduct between 20 and 35 percent of your child care expenses up to $3,000. The amount you can deduct depends on your income. You need to provide information about the care provider.

How to file an extension

Taxes are always due April 15, unless that day falls on a weekend or holiday. In that case, they’re due the following Monday. If you haven’t finished your tax returns in time, you can fill out a form and request an extension from the IRS. You don’t need to provide any justification – the IRS will grant the extension regardless of why you need it. When you file an extension, you have an additional six months to complete a return. If you are out of the country on tax day, you can file for a two-month extension.

To get an extension, you usually need to fill out a Form 4868. On the form, you need to provide an estimate of your tax liability, how much you expect to pay and the balance of those two amounts. You don’t need to be 100 percent accurate, but get as close as you can. If you use Free File, you can request an extension through it. Most online programs, including TurboTax, let you request extensions as well.

It's critical to remember that while the extension gives you an additional six months to file your return, it doesn’t give you longer to pay whatever you owe. That’s why you need to be as accurate as possible when filing your Form 4868 and pay whatever you owe before the April 15 deadline. You will still owe any outstanding balance. In addition, you will be assessed a 0.5-percent-per-month late payment penalty and possibly have to pay additional interest. One reason to file an extension is to avoid the 5-percent-per-month late filing fee.

How do withholdings affect your taxes? 

Taxes can be complicated, and withholdings add to that. A W-4 form tells your employer how much tax to deduct from your paycheck based on the number of allowances you claim. The more allowances you claim, the less money is deducted from your paycheck and the likelier you are to have to pay taxes. Claiming fewer allowances increases the likelihood of getting a refund. Claiming zero allowances means your employer will withhold the maximum amount possible.

Generally, the allowances you claim depend on your marital status, how many dependents you have and whether you can be claimed as a dependant. If someone claims you, selecting zero or one on your W-4 is ideal. Similarly, if you’re single, claim one or two. If you’re married with one dependant, claim two. For each additional dependant, you can add one more allowance. The IRS has a calculator that can help you figure out how many allowances to claim on your W-4.

Be aware that it’s possible to have too little withheld from your paycheck, in which case you might end up paying penalties and interest. If the IRS finds you claimed allowances you shouldn’t have, you may have to pay a $500 penalty.

Due to tax code changes in 2017, withholding tables have changed, which increased paychecks but reduced refunds. With this in mind, the IRS recommends looking through your withholdings and reducing your allowances.

Which deductions and credits have been eliminated? 

The Tax Cuts and Jobs Act passed in 2017 significantly changed an already complicated tax code. Some changes adjusted tax brackets and enlarged the standard deductions. Other changes removed specific tax deductions and credits. Here are some of the most popular deductions and credits that are no longer available:

Personal Exemptions: One of the biggest changes removed the personal exemption. This popular exemption allowed you to claim a deduction for yourself, your spouse and every child living in the home. In 2017, this exemption was around $4,000, so a large family could see a significant reduction in their tax bill. It was thought that the standard deduction increase would compensate for removing the personal exemption, but large families can expect to see a higher tax bill.

Moving Expenses: In previous years, you could deduct moving expenses if you moved for a job or were self-employed. That deduction was eliminated, so you can’t recoup those expenses at the end of the year. If you need to move, you may want to look for ways to save money in the process such as by using moving containers instead of hiring a moving company.

Home Equity Loan Interest: If you have a home equity loan, you used to be able to deduct any interest from it. This year, there are more restriction on this deduction. You can only deduct the interest if you use your home equity loan to buy, rebuild or improve your home.

Employment Expenses: In previous years, you could deduct expenses that have not been reimbursed, so long as they are related to your job and exceeded 2 percent of your gross income. This deduction is no longer available, so push harder to get your employer to cover those expenses.

Should you itemize your deductions? 

One question that comes up each year when it’s time to file your taxes is whether you should itemize your deductions. In previous years, one in four taxpayers benefited from itemizing their deductions, either by getting a refund or paying less to the IRS. The math may be different this year – the 2017 changes to the tax code nearly doubled the standard deduction, so it’s less likely you’ll be able to itemize. In addition, other changes to the law lifted limits on the amount of itemized deductions you can make.

The standard deduction for 2020 taxes is $12,000 for individuals filing by themselves or $24,000 for married couples filing jointly. To itemize, your other deductions need to exceed those amounts.

Your mortgage interest is a good starting point for itemizing your deductions. Your lender will send you a Form 1098, which lists the interest you paid on your mortgage as well as the amount you paid for points to reduce your rate. If this amount exceeds your standard deduction, itemizing is a good choice, and anything else you itemize will only add to your deductions.

Other deductions you can itemize include income taxes paid to your city and state. You can also deduct medical expenses if they exceed 7.5 percent of your adjusted gross income – so if you earned $50,000, you won’t be able to deduct the first $3,500 of your medical expenses.

Next to your mortgage interest, charitable giving is one of the best ways to itemize your deductions. Most donations you make can be deducted, provided they are to a 501 (c) (3) organization. You need to have a receipt or cancelled check to document any deductions you make, so keep those on hand.

State rules and filing in multiple states

How do state and local taxes affect your federal returns? 

State and local taxes vary wildly depending on where you live. Some states have no income taxes at all, some have a flat tax and some have tax structures that mimic the federal government with graduated structures and different tax brackets. Some cities in certain states also apply their own taxes, which also vary in structure.

You can deduct your state and local taxes from your federal returns. This includes not only income tax, but also property tax and sales tax if you don’t deduct any local taxes. This is often referred to as the SALT deduction. Like many aspects of U.S. tax codes, this was significantly changed with the 2017 Tax Cuts and Jobs Act, which takes effect on your 2018 tax returns. Prior to 2018, you could deduct all of your state and local taxes, including property taxes from your federal taxes, with no limit. In states with high state income taxes and property values, like California and New York, this was a generous benefit that cut down significantly on an individual’s federal taxes.

Going forward, this deduction of state and local taxes has been capped at $10,000. So if you pay $7,000 in state taxes and $5,000 in property taxes, you can only deduct $10,000 of that $12,000 total. If you’re married but filing separately, the limit is $5,000. With the increase of the standard deduction, this is yet another deduction that is less likely to be used because fewer people may opt not to itemize.

How to file in multiple states

If you moved or worked in more than one state, your state tax returns can make tax season more complicated. This doesn’t affect your federal return, but you could end up filing more than one state return. And while the process isn’t much more complex, you may need to give yourself more time to fill out your returns. Here a few scenarios that may require you to file multiple state returns:

The most common reason for filing multiple state returns is moving. If you moved to another state during the tax year, no matter the reason, you need to file part-year returns for both states. Depending on the state, you may have to file a completely separate form for a part-year return or just fill out the regular return.

Often when you move, you work at a new job with it's own W-2, and you just fill out each state’s return with the W-2 from the job you worked in that state. However, if you moved but still work for the same company, you only get one W-2 and need to allocate the income to each state based on how much time you lived there or using payroll data from your company. Most tax programs have tools to help you do this.

If you commute to work in another state, you need to file a non-resident return in the state you work in and a resident return in the state you live in. This doesn’t necessarily mean you’ll be double taxed – you get a credit in the state you live in that usually counteracts the amount you pay to the state you work in, though variances in each state’s tax rate may complicate this.