Why does the more expensse I include in the questions for rental property drove UP the Federal Tax Due amount in TurboTax Premier? This is baffling.
I have two rental properties. One has a profit and the second is currently taking a lost. After I put in all the expenses for each property, I have an amount Total tax due of $3,175. I decided to play around with adding more expenses, and I noticed that my Tax due went up. When I removed all the expenses, both properties either show a profit or a larger profit, but the Tax Due went down to $2,765. One would think that if I have more profit from the rental properties, I pay more taxes, and not less. I'm totally baffled.
Can anyone help explain this? Why would I want to report my expenses if it causes me to pay more taxes.
