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ryanna808
New Member

Why would I get less refund back this year if I made more than last year?

 
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3 Replies
Mkeithddc
New Member

Why would I get less refund back this year if I made more than last year?

There's an algorithm used when calculating how much tax someone should pay. If you were to look at an actual tax chart, you could see the progression/exponential rise of tax to income ratio.

Basically, the more you make, the more they take from you. Sometimes if you're not married and don't have any dependants, and can't itemize your deductions, it doesn't pay to make more money. If you make over say $60k, and are single without kids, you really start paying alot more taxes, it goes into another tax bracket. You always should mark single and zero on your w4 form for your job, to make sure you don't have to pay out/get a return. If you end up owing after claiming single and zero, then you need to add extra money on the w4 form to be taken out of your paycheck. 

AmyC
Expert Alumni

Why would I get less refund back this year if I made more than last year?

Second job or raise would do it. You were making $x and paying y% in taxes. Now, you are making more money and paying z% in taxes. So, the money you made at the lower income did not have as much tax taken out as necessary. If you have a second job, those will never withhold enough and you have to have more taken at your main job. On the W4, there is a box where you can withhold additional money, if needed.

 

Good answer by @Mkeithddc. When your income goes up, so does your tax bracket.

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Why would I get less refund back this year if I made more than last year?

Usually more income = more tax = less refund.  Your withholding didn't increase enough to cover the tax due.  Or some credits you got are reduced because you made more income.

 

And the IRS changed the withholding tables so you got more in your checks during the year instead of a big refund.  Or there are other tax changes.  And any  dependents you have are a year older.  If you made more income that can reduce some credits you got like the EIC.  

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