I am confused on what I am doing wrong on my tax return that it is constantly taking money away

Hi,

Here's what happens with these programs - they are doing some calculations in real time, while they have already done several that will save you money. This leads to a very misleading perception that you're "losing" money during the process, when that's really not the case.

The software works with the information you've already provided, and takes new information into account as you go along. With federal income taxes, some of your first deductions are already calculated just from your filing status, and the fact that you can claim yourself on your return. These are some of the first questions you answer in TurboTax. As the software starts with these deductions in mind, you are essentially starting not at having $0 of taxable income, but actually with -$XX,000 (depending on your filing status and how many dependents you have).

This usually means that your first entries into the software come back and give you a large refund, one much larger than you actually qualify for. As you start to enter more information, the equation used to determine how much tax you owe, and what sorts of credits and payments offset that amount, becomes more complete and accurate, and thus you see the refund number start to shrink.

When I prepared taxes for others, I used different software, but would intentionally hide the refund tracker because of how misleading it is. It's fun to watch it shoot up, but sucks to watch it trend downward. The sad truth of it all is that until you have finished entering all information on your return, no number that refund tracker provides you is accurate.

To try to make an example, let's imagine that you are asked to do the following equation: 10 - 1 - 1 - 1 - 2

The answer to this is 5... But if you just looked at the first part of it (10 - 1), you would think the answer was 9. The software is working with what you've given it, and it isn't an accurate equation until you're completely done.