Last year, my self-employed income was $1044 with $366 in expenses. I started this year by adding my income first: $1883, and Turbotax projected my income to be ~$300. Then, as I went through and added my $879 expenses for the year, the projected refund went down to $156.
I wonder if Turbotax predicts what my refund might be before I add my actual expenses by using the same ratio as the previous year or something? Usually, my refund increases when I add my expenses for the year.
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.
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.
Ah, I see, thank makes a lot more sense! Thank you very much for your insight.
The Refund-O-Meter is only correct at the end when all your income and expenses have been entered and the program is fully operational. With each entry of income or expenses the meter will continue to vary as the program recalculates the return with each step you take. If this annoys you then turn off the meter until the end.