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Probably because of how some credits are calculated. You are required to claim all business expenses
But be sure it is not your Tax Due that is dropping.
Probably because of how some credits are calculated. You are required to claim all business expenses
But be sure it is not your Tax Due that is dropping.
Claiming expenses, you'd think would help reduce your tax liability not drop your refund, but I found that the income will reduce due to the expenses and if the income is less it could affect your credits; thus affecting your refund.
An explanation is here: https://ttlc.intuit.com/community/taxes/discussion/why-are-all-my-business-expenses-making-my-refund...
Some above posts are correct in that:
Here is a great explanation here:
A self-employed individual is required to report all income and deduct all expenses. Revenue Ruling 56-407, 1956-2 C.B. 564, deals with the issue of taxpayers not taking all allowable deductions in computing net earnings from self-employment for self-employment tax purposes. Rev. Rul. 56-407 held that under §1402(a), every taxpayer (with the exception of certain farm operators) must claim all allowable deductions in computing net earnings from self-employment for self-employment tax purposes.
Net earnings from self-employment are included in earned income for EITC purposes. It is defined by cross-reference to the definition of net-earnings from self-employment under I.R.C. §1402(a). This ruling applies equally to the EITC. CCA 200022051 also provides insight regarding deduction of Schedule C expenses.
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