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Level 1

Why did refund amount drop 45% when I entered $6,500 in retirement income?

 
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Level 11

Why did refund amount drop 45% when I entered $6,500 in retirement income?

When you enter one taxable transaction, you can't just watch the monitor.  You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction

Like for example it increased your AGI and that would decrease some deductions if you itemized on Schedule A.  And by increasing your AGI it might reduce some credits you were getting like EIC.
2 Replies
Level 11

Why did refund amount drop 45% when I entered $6,500 in retirement income?

When you enter one taxable transaction, you can't just watch the monitor.  You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction

Like for example it increased your AGI and that would decrease some deductions if you itemized on Schedule A.  And by increasing your AGI it might reduce some credits you were getting like EIC.
Level 1

Why did refund amount drop 45% when I entered $6,500 in retirement income?

Thank you, VolvoGirl, for your quick reply. I guess I'll have to pay my tax accountant to get the best refund. She's great at juggling numbers.