Going though TurboTax at this time and it says I have a $550 refund. Last year I had a $2000 refund. What in the world is going on? Last year I was a student and paid my own way. I did work full time starting in Mid July. My tax status is the same this year as last (single, filing status of 1) and besides making more money, I dont know why my refund is so small. Do you?
Bottom Line Not What You Expected
One of the most frequently asked questions here at TurboTax is, "Why is my refund different this year?" Well, there are lots of reasons why your taxes may have changed, and lots of variables. However, there are a handful of factors that are pretty common, whether you use TurboTax, a tax store, or the family accountant to prepare your taxes. We've gathered some of the most common reasons here to help you understand why your refund or your tax bill may be different this year.
The Making Work Pay Credit
Part of the government's American Recovery and Reinvestment Act, this credit was designed to put more money in taxpayers' pockets by taking less money out of their paychecks throughout the year. With less money being withheld, fewer people are getting large refunds. Remember, getting a tax refund means you've given the government too much and now you're getting your money back. Since the government took less, you have less to get back.
Lower Withholding Compared to Last Year
If you had less money withheld from your paycheck, you might see a smaller refund, or even a tax bill this year. That's the bad news. The good news: Lower withholding means you've been able to hang onto your money throughout the year instead of handing it over to Uncle Sam.
Bigger Income Compared to Last Year
Your income increased over last year but your withholding didn't cover the tax on the bigger income.
No Longer Taking Certain Credits
If your tax situation has changed since last year, you may not be eligible for certain tax credits anymore. Common credits include the child tax credit, the credit for child and dependent care, and certain education credits.
Fewer Deductions Than Last Year
Similar to taking fewer credits, if you didn't have as many deductions this year you might see a smaller refund, or even a tax bill.