After I entered my $1.91 that I got as Interest income from my bank saving's account, the Federal Refund jumped down by 10 dollars! Why am I paying that money?

[mesquitebean]

NOTE:  See the answer I left below.   But if you are still preparing  your return, you should not pay too much attention to the refund meter until all your items are entered.  It can go back and forth as you add things.  But the answer below should explain why it fluctuates like that at times.

[yvbulgakova]

Thank you! That explains it for my case. The last two numbers on my taxable income were 98 so adding the "two dollars" on the interest I got pushed my total taxable income to the next $50 increment. 1.91 is not quite 2 dollars, so it doesn't seem exactly fair, but maybe there's a rule where if the total number would round up in cents to the next $50 increment it counts. Either way, I won't focus on it.

[mesquitebean]

You're welcome.  This time it was to the benefit of the IRS.  But it can work the other way around, too.  For instance, if someone has 40,102 in income, if they find an additional $3 deduction, it might save them $10-11.

[mesquitebean]

That's possible, because the IRS Tax Tables are in $50 increments.   So if you were almost to the next $50 level, the $2 in interest could have put you over into the next $50 bracket.

It's easier to see in this example for a single filer:

Income                                      Tax (from IRS Tax Table)

40,000 but less than 40,050       4,745

40,050 but less than 40,100       4,756

40,100 but less than 40,150       4,767

So if a filer originally had 40,098 in taxable income, his tax would be 4,756.   If another $2 in income, then that would put him at 40,100 in income, and the tax would be 4,767.  So in this example the filer owed an extra $11 in tax because the $2 put him in the next $50 income "bracket."

Depending on where you are in that $50 bracket when you add additional income, the refund meter may go down (or tax due meter go up), or it may not change at all.

You can look and see if that is what happened to you.  The IRS Tax Table begins on Page 67 of this publication of Form 1040 Instructions:

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

NOTE:  Just be aware that the tax calculation that TurboTax uses is not always directly from the Tax Tables.  Some situations require other tax calculation methods and worksheets.   For example, if you have any income from qualified dividends or capital gains, some of your tax may be figured differently, such as on the Qualified Dividends and Capital Gain Tax Worksheet.  So in some situations, the final tax amount won't necessarily be a direct reading from the Tax Tables.