My overall refund goes DOWN as I add advertising expenses. Does TurboTax come at the end and tell me when I should NOT take which expenses to optimize my total rebate?

[riversofbelief]

I have seen my overall refund go DOWN as I add expenses, and read some of the rationale on this website.  Sounds like as you pass through various adjusted income levels the overall tax liability can go the wrong way for the taxpayer entering expenses. 

Does TurboTax come in at the end and tell me when I should NOT take which expenses to optimize my refund?

Is there anything in the TurboTax algorithm that comes in at the end. My fear is that I either won't enter all the items and should have, backing off because I saw it go down part way through the process, OR that I put all the information in and cost myself, and forget to pull something back out after.  Help!

[sampsonmines · Accepted solution]

It is possible that by entering more business expenses into a return that you are affecting your ability to claim Earned Income Credits. The IRS is very adamant however, that if you have a business you "must" list all of your relevant business expenses even if it results in a reduction in the EIC  and hurts your tax position. Turbo Tax will not tell you how to optimize your refund for this event, as the rule is you "must" list your business expenses as are, and you cannot push your expenses into another year. What you can do however, if you have  "new" assets placed in service for 2015 is work on seeing if you are expensing assets too fast by taking certain section 168 or 179 expensing elections on the "new" assets.

[riversofbelief]

Thanks for your response.  It helped me some, and may help others.  My non-business (primary job) income exceeds the EIC limits... but I haven't gotten to that part of the data entry in Turbotax business.  This is my first year also running an LLC.  Perhaps this is happening because I haven't reported the rest of the income yet.  Really would like to know how TT works with optimizing my taxes on this matter.

[riversofbelief]

Figured out my own question after Sampsonmines gave me the key.  TurboTax for Home and Business asks you about your business financial data before your personal.  Within business, it asks for your income before your expenses.

In this scenario, I only had $10K of income (a grant) and started with zero expenses, so my "apparent" refund was based on an Earned Income Credit at that low income level.  Every time I entered an expense, my expense deducted from my income, lowering my AGI, lowering my refund!

The whole picture isn't told until you do your LLC and then your personal taxes.  

Tim

[ferreiramonique]

I am running into the same issue. I was told my a tax rep that my refund number would go up as I add my expenses. I did not see that happening