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Why did my refund drop when I entered a second W-2?

SOLVEDby TurboTax2648Updated 4 weeks ago

Most people see their refund go down, sometimes by a lot, after entering a second W-2. Here are a few reasons why that happens:

  • Your total income increased. Your refund meter changes as your numbers change. When you enter a second W-2, you add more income. Generally, more income means more taxes.
  • Your new total income might be in a higher tax bracket. Your second W-2 could have pushed your total income into a higher tax bracket, making it taxed at a higher marginal rate.
  • Your withholding credits may not have increased enough to cover your taxes from the second job. If you have two employers, you probably filed a Form W-4 with each to withhold income tax from your wages. Review your W-4s. If you didn’t already, fill out Steps 3–4 (b) on Form W-4 for only the highest-paying job. Leave those steps blank for the other job. This will increase your chances of having enough taxes withheld from your pay to cover your tax liability.
  • Your new total income may have reduced or eliminated some tax credits. The amount you receive for some credits may drop or you may no longer qualify. These may include:
  • Your new total income may affect your ability to claim certain deductions. Deductions for IRA contributions, medical expenses, and charitable contributions may all decrease when your income increases.

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