Why do I have a smaller refund this year?
Last year my refund was a lot bigger. Why is my refund so much smaller this year?
Answers
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There are many reasons why a refund may drop from one year to the next.
Income changes, children getting older, or there are differences in the amount your employer withholds. We recommend comparing your returns side by side, and taking note of the differences.
Follow these steps:
1.) Print both returns. You can download and print a working version of your current year return before filing by clicking View Form 1040 in the right hand column.
2.) Compare the Income lines to see where there are differences. For example, maybe your wages are lower but you also have self-employment income this year.
3.) Note the amount on the line that reads Adjusted Gross Income and the line that says Standard deduction or itemized deduction
4.) Check the section labeled Tax and Credits for all changes, but especially on the line labeled Tax and the line labeled Other Taxes, including self-employment tax.
5.) Check your credit amounts for differences and take note of those.
6.) Finally, check the payment section (especially the Federal income tax withheld items) for differences. Insufficient withholding is often the problem. For example, if you got a 10% raise, your federal income tax withheld should likely increase by a similar 10%.
Pro support can also help you pinpoint why your refund dropped or why you owe and help suggest changes.
Related article: Why Do I Owe Taxes? - FreeTaxUSA Community
