Strangely enough, an income decrease can sometimes reduce your refund. One example is reducing or losing the Earned Income Credit (EIC) . Your earned income goes down every time you enter a business expense. Your EIC is based on your earned income (gross income less expenses), so as your income goes down, so does your refund.
- Note: Per IRS: You are required to enter all of your income and expenses. It is illegal to omit legitimate expenses that reduce your income so as to maximize your refund.
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