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t16nls1
New Member

Why is my refund so much smaller than last year?

Our situation and income is the same as last year.  did I miss something?
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1 Best answer

Accepted Solutions
MichaelDC
New Member

Why is my refund so much smaller than last year?

It's possible, although sometimes a small increase in your 2016 income may have reduced – even eliminated – some deductions and credits you got on your 2015 return, not to mention putting you in a higher tax bracket.

Strangely enough, an income decrease can sometimes reduce your refund. One example is losing the Earned Income Credit (EIC) because you didn't have any earned income this year, which you need to qualify for the EIC.

Without examining your return, it's impossible to say exactly what caused your refund to decrease. However, there's a high probability that at least one reason is listed below.

If your refund is wildly off, you may want to check for a typo. An extra digit here, a missing number there, or something as insignificant as a misplaced decimal point can affect your refund.

The surest way to see is to compare your last year return with the current year, line by line. Here are some things to compare:

  • Line 7: Wages
  • Lines 8-21: Other types of income may have increased.
  • Line 40: Your itemized deductions may have decreased.
  • Lines 50-53: You may have lost a credit.
  • Lines 57-62: You may have been assessed other taxes based on other tax forms.
  • Line 64: Your withholding may have gone down.
  • Line 66: As you income increases, your earned income credit may have decreased.

Here are some other that may or may not apply to your situation:

Changes in your income or tax rate

  • You (or your spouse) took on an additional job (especially non-wage income which is taxed at the higher self-employment tax rate);
  • Your salary or wages increased but your W-4 stayed the same;
  • You sold investments but didn't take out any taxes from the sale;
  • Your filing status changed from last year;
  • You started receiving Social Security benefits or Roth IRA distributions;
  • You received taxable unemployment income;
  • You had gambling winnings;
  • You're paying a penalty for not having health insurance coverage in 2016.

 

Loss of credits or deductions

  • Your child turned 17 in 2016, causing you to lose the $1,000 Child Tax Credit;
  • Your child turned 19 in 2016 (or 24, if a full-time student) and no longer qualifies as a dependent;
  • You paid off your mortgage and can no longer deduct mortgage interest;
  • You took the itemized deduction last year (for example because of high medical bills) but got the standard deduction this year;
  • You didn't qualify for the Earned Income Credit this year;
  • You paid off your student loan and can no longer deduct the interest;
  • You're no longer eligible for certain education credits (or you took a different credit this year)
  • You didn't contribute to a Traditional IRA (or couldn't take the full deduction because your income was too high).

You can read more here:  https://ttlc.intuit.com/questions/1901008




View solution in original post

1 Reply
MichaelDC
New Member

Why is my refund so much smaller than last year?

It's possible, although sometimes a small increase in your 2016 income may have reduced – even eliminated – some deductions and credits you got on your 2015 return, not to mention putting you in a higher tax bracket.

Strangely enough, an income decrease can sometimes reduce your refund. One example is losing the Earned Income Credit (EIC) because you didn't have any earned income this year, which you need to qualify for the EIC.

Without examining your return, it's impossible to say exactly what caused your refund to decrease. However, there's a high probability that at least one reason is listed below.

If your refund is wildly off, you may want to check for a typo. An extra digit here, a missing number there, or something as insignificant as a misplaced decimal point can affect your refund.

The surest way to see is to compare your last year return with the current year, line by line. Here are some things to compare:

  • Line 7: Wages
  • Lines 8-21: Other types of income may have increased.
  • Line 40: Your itemized deductions may have decreased.
  • Lines 50-53: You may have lost a credit.
  • Lines 57-62: You may have been assessed other taxes based on other tax forms.
  • Line 64: Your withholding may have gone down.
  • Line 66: As you income increases, your earned income credit may have decreased.

Here are some other that may or may not apply to your situation:

Changes in your income or tax rate

  • You (or your spouse) took on an additional job (especially non-wage income which is taxed at the higher self-employment tax rate);
  • Your salary or wages increased but your W-4 stayed the same;
  • You sold investments but didn't take out any taxes from the sale;
  • Your filing status changed from last year;
  • You started receiving Social Security benefits or Roth IRA distributions;
  • You received taxable unemployment income;
  • You had gambling winnings;
  • You're paying a penalty for not having health insurance coverage in 2016.

 

Loss of credits or deductions

  • Your child turned 17 in 2016, causing you to lose the $1,000 Child Tax Credit;
  • Your child turned 19 in 2016 (or 24, if a full-time student) and no longer qualifies as a dependent;
  • You paid off your mortgage and can no longer deduct mortgage interest;
  • You took the itemized deduction last year (for example because of high medical bills) but got the standard deduction this year;
  • You didn't qualify for the Earned Income Credit this year;
  • You paid off your student loan and can no longer deduct the interest;
  • You're no longer eligible for certain education credits (or you took a different credit this year)
  • You didn't contribute to a Traditional IRA (or couldn't take the full deduction because your income was too high).

You can read more here:  https://ttlc.intuit.com/questions/1901008




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