I have repair and maintenance expenses for my rental property. However, when I enter those in turbo tax, my tax liability is increasing. I would find that strange as I thought if I have expense against rental property, it would reduce my tax liability. Why are expenses going against the favor?
It turns out there is a qualified business Income deduction of 20%. Since, I had loss from rental property from previous years, my income from rental property offsets my expenses and rental income is zero. However, if I take expense for maintenance and repair, I am lowering my income. In turn, I am lowering my credit.
In the process of entering your data into the program, the refund-o-meter means only one thing. *The program did something*. That's basically it.No more. No less. That number has absolutely no meaning what-so-ever until you have completed your tax return in it's entirety. Until then, that refund-o-meter will be all over the place.
Most likely your EITC (which is calculated and paid on a bell curve, and is based on AGI as well as Earned Income) has gone down. But you are required to claim all of your rental expenses.
It turns out there is a qualified business Income deduction of 20%. Since, I had loss from rental property from previous years, my income from rental property offsets my expenses and rental income is zero. However, if I take expense for maintenance and repair, I am lowering my income. In turn, I am lowering my credit.