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malkaaslp
New Member

Doeas Turbotax subtract taxes owed when showing refund in the screen?

Why did my refund go down when I added my expenses for my business?
2 Replies
pk
Level 13
Level 13

Doeas Turbotax subtract taxes owed when showing refund in the screen?

Well when you add expenses associated with the business / self-employment, your net income changes  and if you have profit in the bussiness/ self-employment, there is a Self-Employment Tax ( equivalent to FICA for wage earners except that it is 15.3%  of most of the net income ) comes into play. The final tax position that you see on your form is the net position -- total tax liability ( after credits ) LESS withholdings & estimated payments.

VolvoGirl
Level 15

Doeas Turbotax subtract taxes owed when showing refund in the screen?

Yes the Refund/Tax Due box is the combined total of everything but that's not why it went down.

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.

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