After adding the W2 for my side job where I made about $1300 and didn't have most of the taxes withheld, my return decreased by $700. That is huge. What gives?

[JaeB0]

Can someone help me understand why the return decreased so much, even considering that I didn't pay most of my taxes on the side job.

[SweetieJean]

First, be sure you entered the W-2 correctly.  Or was it a 1099-NEC?   Second, any increase in income can lower or eliminate some deductions, credits (such as EITC), and even the stimulus (Recovery Rebate Credit).

[VolvoGirl · Accepted solution]

That's common.  It just looks that way because you put them in as separate W2s and saw the tax due change in between them. If it all was on one W2 you would get the same answer. And each job was withholding like it was your only job.

Because you only get one standard deduction no matter how many W2s you put in. Turbo Tax starts out by giving you the Standard Deduction.  You entered more income when you entered the second W2 but you didn't enter more deductions.  And each job only withheld taxes like it was your only job for the year.  You might want to adjust your withholding.  Also as you add more income you might not be getting as many credits as before like the EIC credit.  And it was probably giving you the EIC credit until you went over.

See,   https://ttlc.intuit.com/community/refunds/help/why-did-my-refund-drop-when-i-entered-a-second-w-2/00...

[JaeB0]

Thank you for the clarification.  What I'm still confused about is that with my first job my income after retirement contributions and other deductions is 60K more than the tiny paycheck ($1300) I got from a side job.  How can my return go down from $1100 to $400 so quickly.