I am entering expenses for my wife's self employed Notary work. I discovered that if I decreased supplies expenses then refund for fed and state go up! What gives?

[planthead667]

Net income is 3k positive so what would cause the refund to go down if I include supplies expenses?

[Vanessa A]

If your refund goes up when you enter expenses, you were at a point where you were getting some type of credit that was higher when you had more income.  Some credits are on a bell curve.  This means, when your income is low the credit is lower, as your income goes up, your credit increases until it hits the peak, then it will drop back down.

The best way to figure out why your refund is dropping is to keep checking the numbers on your 1040 as you make the changes.  To do this click the following after logging back into your return if you are using TurboTax Online:

• Tax Tools
• Tools
• View Tax Summary
• Preview My 1040

If you are using the desktop version you can see your 1040 in forms mode or if you have already paid for the product you can preview the pdf version. You will see the changes on line 16 or after most likely, however, you do want to compare all numbers on the 1040.