Question

Tax due goes up the more expenses I enter

Forum|Forum|2 years ago
January 30, 2024
2 replies
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I have a rental property that was rented for 7 months of 2023. As I enter each expense (advertising, maintenance, repairs, supplies, and utilities), my tax due increases. For science, I entered expenses into Form E manually, taking my $2,288 Income to a $7,000 loss and my tax due went up even more. This makes no sense.

Carl11_2

As just one example of why this happens:
A married couple filing separate returns does not qualify for the EIC regardless of income.

If your income is to low, you do not qualify.

Most likely, since you're in the rental section, you've not yet entered any other income such a W-2's. Therefore the program can only work with what it has "right now" at this specific point in time. Things will probably change as you continue to enter data into the program, once you are past the rental section and start entering personal income, along with other deductions and the such.

Basically that dollar amount you see while you are entering data means one thing, and one thing only; "The Program Did Something". That's pretty much it. That dollar amount means nothing else and don't matter until "after" you have completed your tax return in it's entirety and are ready to file.

C

Chappie73Author

I have already entered my W-2s. What are other reasons this might happen? The farther I go into the program, the more it seems I should not take these expenses.

Carl11_2

The farther I go into the program, the more it seems I should not take these expenses.

There are more potential reasons that one can possibly cover in a single post. Understand that you are "required" to take your expenses. I can't find where it states that at this time. But I've read it either in IRS Pub 427 or some other pub related to business income/expenses.

Just be aware that number means absolutely nothing until your taxes are complete. For me with rental income from 3 rentals, self-employment income, investment income and W-2 income, that number is "literally" all over the place while I'm in the process of entering data and making selections.

M

mcintyre210

I'm having this exact same issue. I entered Rental Income and now I'm entering all my expenses and my tax owed keeps going up and up with each expense. Something doesn't seem right. This hasn't happened in the past. Nothing in my tax return has changed from previous years.

T

ThomasM125

You may have credits that decrease as your income decreases, such as the earned income credit in some instances. I suggest you look at your Schedule 3 and see what is changing as you enter expenses.

To view your form 1040 and schedule 1 to 3: