Why did my refund go down from last year?
An increase in your 2015 income may have reduced – even eliminated – some deductions and credits you got on your 2014 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, it's possible you simply mistyped a dollar amount somewhere. An extra digit here, a missing number there, even something as seemingly insignificant as a misplaced decimal point can have an eye-popping effect on your TurboTax refund.
- 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 2015.
- Your child turned 17 in 2015, causing you to lose the $1,000 Child Tax Credit;
- Your child turned 19 in 2015 (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).