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Tax due increased when I entered legal and professional fees expense

I entered a $10.00 expense for an annual membership in a professional association, and when I did so, my Federal Tax Due increased by $1.00. Why did this happen? (Under Business Income and Expenses: Legal and Professional Fees)

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3 Replies

Tax due increased when I entered legal and professional fees expense

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.

Tax due increased when I entered legal and professional fees expense

I just entered expenses under Supplies as well. When I entered the first item, the tax due monitor went down, and when I entered the second item, it went up. I understand that the eventual calculation and the tax due or refund due is based on all data taken together, but it's still strange to see the tax due increase when I enter an expense. It gives me the impression that something isn't being calculated properly.

 

Whether it's related to income tax or SE tax, I don't see how entering an expense should ever increase the tax due. At worst, an expense might not be deductible, leaving my tax due where it was before I entered the expense. I don't see why the software would ever think an expense is going to increase the tax due, even temporarily, before it has taken other factors into account. (Unless, as you said, the reduction in my income based on that expense would make me ineligible for a particular credit.)

 

By the time I've entered everything and the program makes a final calculation, I'll have no way of knowing whether those expenses were calculated properly and whether entering them helped me or hurt me.

Tax due increased when I entered legal and professional fees expense

Don't watch the monitor until you are done entering everything.  Be sure to review your return before you file.

 

Before filing,  You can preview the 1040 or print the whole return

https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

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