Adding expenses lowers your Adjusted Gross Income (AGI). There may be credits or deductions on your return that decrease as your AGI goes down. For example, the Earned Income Credit (EIC) or the Qualified Business Income (QBI) deduction.People often don't realize that every entry causes an entire recalculation of your tax return and can often cause unexpected results. Source:Anita01

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tripp6

Question

When adding rental mortgage interest, my federal tax due increases. This seems to be an error, is anyone else having this problem?

Forum|Forum|6 years ago
February 23, 2020
1 reply
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HelenC12

Adding expenses lowers your Adjusted Gross Income (AGI). There may be credits or deductions on your return that decrease as your AGI goes down.

For example, the Earned Income Credit (EIC) or the Qualified Business Income (QBI) deduction.

People often don't realize that every entry causes an entire recalculation of your tax return and can often cause unexpected results.

Source:Anita01

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rall

I am facing the same situation. i.e adding rental expenses (taxes, property manager fees, repairs...) INCREASE my FEDERAL TAXES.

Even if this is true, is it legal not to report expenses? I can still report all the rental income, but what if I do not report all the related rental expenses. (if that saves me federal taxes).

Thanks

tripp6Author

I'm glad someone else is having this issue. I find the previous response from the "tax expert" unsatisfactory. Even if she is correct, the explanation is poor. Why does reducing AGI increase tax liability?

I believe tax law does require you to report all of your eligible expenses. But I am not an expert, you should do your own research to be sure.

I think this will be my last year with TurboTax.