Expenses

[DCC1966]

Hello, why is it that when entering our expenses, including info about our home since it is a home-based business, the amount that TurboTax shows as a potential refund goes down with each expense I enter?  This happens each year and it baffles me.  Shouldn't entering expenses reduce the amount of tax owed, thereby increasing the refund?

Thank you!

[VolvoGirl]

One reason, By increasing your deductions and expenses it will decease your income and you may not be getting as many credits as before like the EIC credit. You can't go by the refund monitor until you have entered everything in. Also after you reduce your income to zero there is no more refund to get back. But even though your taxable income goes down and you owe less income tax on it, you still owe SE Self Employment tax if you have a Net Profit.