Why is my refund smaller with 2023 1099 Mortgage Interest deduction?
Hey tax folks, I'm really confused about my 2023 tax refund. The numbers just aren't adding up like last year and I'm wondering if I'm missing something. For 2022, my income was $86,202 with $9,582 in federal taxes withheld. My mortgage interest deduction was $10,544 (from my 1099 form). That year I got a federal refund of $458. Now for 2023, my income dropped to $81,568 with only $7,906 in federal taxes withheld. My mortgage interest deduction from the 1099 only changed slightly to $10,311. But now TurboTax is showing my refund as only $101! I'm scratching my head here. Shouldn't I get more of a refund since I made less money this year? The mortgage interest deduction is almost the same, so I'm not understanding why my refund dropped so much. Is it just because I had less withheld proportionally, or is something else going on? Anyone run into something similar with their mortgage interest deduction this year?
18 comments
Join the conversation
Zainab Ismail
The change in your refund makes sense when you look at the whole picture. The key factor isn't just that you made less money, but that your withholding dropped proportionally more than your income did. Your income decreased by about 5.4% (from $86,202 to $81,568), but your federal withholding decreased by about 17.5% (from $9,582 to $7,906). That larger percentage decrease in withholding is the main reason your refund is smaller. Think of it this way: your tax liability is calculated based on your income, deductions, and credits. While your income went down slightly and your mortgage interest deduction stayed nearly the same, you had significantly less tax withheld throughout the year. The withholding is like making advance payments on your tax bill - when you withhold less, there's less to potentially get back as a refund.
0 coins
Connor O'Neill
•But wouldn't lower income mean lower taxes overall? I'm in the same boat and don't understand why making less money would result in owing more (or getting less back). Shouldn't the tax brackets work in your favor when you make less?
0 coins
Zainab Ismail
•Lower income does mean lower taxes overall, you're right about that. But your refund isn't just about how much tax you owe - it's about the difference between what you owe and what you've already paid through withholding. Let me use a simple example: If you owe $10,000 in taxes and had $10,500 withheld, you get a $500 refund. If the next year you owe $9,000 in taxes but only had $9,100 withheld, your refund would only be $100 - even though your actual tax liability went down by $1,000. The key is that your withholding went down by even more ($1,400).
0 coins
Yara Nassar
I had the exact same issue until I discovered taxr.ai (https://taxr.ai) after dealing with my mortgage interest mess. I uploaded my 1099 mortgage interest statements from both years and it immediately highlighted that while my interest deduction was similar, my withholding had changed dramatically as a percentage of my income. The tool actually compared my effective tax rate year-over-year and showed me that even though my refund was smaller, I was actually paying less in total taxes. It was just that my withholding throughout the year had been lower, which meant less money coming back at tax time. The analysis saved me from making withholding adjustments that would have just resulted in giving the government an interest-free loan.
0 coins
Keisha Robinson
•How does this compare to the mortgage interest analysis in TurboTax? I've been using that for years but sometimes feel like it doesn't clearly explain year-over-year changes. Does taxr.ai actually show you specifically what changed with the mortgage deduction impact?
0 coins
GalaxyGuardian
•I'm skeptical about these tax tools. Does it actually explain WHY your refund changed beyond just showing numbers? And is it secure? Last thing I need is my mortgage docs getting leaked somewhere.
0 coins
Yara Nassar
•It's much more detailed than what TurboTax shows. TurboTax just tells you the bottom line, but taxr.ai actually breaks down how each component (like the mortgage interest deduction) impacted your taxes compared to last year. It shows the exact tax benefit you received from the deduction each year and explains how changes in your income affected that benefit. As for security, they use bank-level encryption and don't store your actual documents after analysis. I was concerned about that too, but they explain their security process clearly on the site and all the data processing happens instantly.
0 coins
Keisha Robinson
Just wanted to update after trying taxr.ai with my mortgage documents! It actually explained exactly what happened with my refund decrease. Turns out my withholding was WAY off this year compared to my actual tax liability. The analysis showed that even though my mortgage interest deduction was basically the same as last year, I had less tax withheld as a percentage of my income. The coolest part was seeing how the mortgage interest deduction actually saved me slightly more this year percentage-wise, but my withholding was set too low. I've already adjusted my W-4 for 2024 based on their recommendations. Definitely worth checking out if you're confused about year-to-year changes!
0 coins
Paolo Ricci
After spending FOUR HOURS on hold with the IRS trying to understand why my mortgage interest deduction wasn't resulting in the refund I expected, I finally found Claimyr (https://claimyr.com). They got me connected to an actual IRS agent in under 20 minutes who explained everything about how my 1099 mortgage interest was being calculated differently this year. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent explained that even though my mortgage interest deduction was similar to last year, my overall tax situation had changed enough that the impact of the deduction was different. They also helped me understand how my withholding affected my refund amount. Totally worth it after wasting an entire afternoon trying to get through on my own.
0 coins
Amina Toure
•How does this service actually work? Are they just calling the IRS for you or what? Seems weird that they could get through faster than regular people.
0 coins
Oliver Zimmermann
•Sounds like a scam. The IRS doesn't have some special line for certain callers. I bet they just keep you on hold themselves and then charge you for the privilege.
0 coins
Paolo Ricci
•They use a technology that navigates the IRS phone system and holds your place in line. When they're about to connect with an agent, you get a call to join. It's not a special line - they're just doing the holding for you so you don't have to stay on the phone for hours. They don't interpret tax info or give advice - they literally just connect you with an actual IRS agent who can officially answer your questions. I was skeptical too, but after wasting half my day on hold, I was desperate enough to try it and it actually worked exactly as advertised.
0 coins
Oliver Zimmermann
OK I have to eat my words here. After my skeptical comment I decided to try Claimyr because I've been trying to reach the IRS about my mortgage interest deduction for THREE WEEKS with no luck. Not only did I get through to an agent in about 15 minutes, but they were able to explain exactly how my mortgage interest deduction was being calculated and why my refund was different this year. Turns out there was actually an error in how my mortgage company reported my interest on the 1099 form, which the IRS agent caught immediately. The agent even helped me file a correction request right there on the phone. I would have NEVER figured this out on my own, and would have just accepted the smaller refund. Worth every penny to talk to a real person who could actually help.
0 coins
Natasha Volkova
Have you compared your marginal tax rates between the two years? Even small changes in income can push you into different brackets. Also, tax brackets and standard deductions change each year with inflation adjustments. One thing to check: are you itemizing deductions both years? If your mortgage interest and other itemized deductions are close to the standard deduction threshold, you might have benefited from itemizing in 2022 but not as much in 2023, especially since the standard deduction increased for 2023.
0 coins
Miguel Silva
•I double-checked and I'm definitely itemizing both years. My mortgage interest, property taxes, and charitable contributions put me well above the standard deduction. But you've got me wondering about the marginal rates - I didn't consider that the brackets shift each year. How much did they adjust for 2023?
0 coins
Natasha Volkova
•The tax brackets for 2023 were adjusted upward by about 7% for inflation. For example, the 22% bracket started at $44,725 for single filers in 2023, up from $41,775 in 2022. This means you need to earn more in 2023 to reach the same tax bracket as 2022. Another factor to consider is that your withholding decreased more than your income did percentage-wise. So even though your tax liability may have gone down due to lower income, your withholding went down even more, resulting in a smaller refund. Remember, a refund just means you overpaid throughout the year.
0 coins
Javier Torres
Anyone know if mortgage interest is still worth itemizing in 2023? My mortgage is pretty new so interest is high, but I've heard the standard deduction is so big now that itemizing doesn't make sense for most people? I've got about $11,200 in mortgage interest for 2023.
0 coins
Emma Davis
•For 2023, the standard deduction is $13,850 for single filers and $27,700 for married filing jointly. So if your TOTAL itemized deductions (mortgage interest + property taxes + charitable contributions + other eligible deductions) don't exceed those amounts, then you're better off taking the standard deduction. With $11,200 in mortgage interest alone, you're close to the threshold for single filers. Do you have property taxes or charitable donations that would push you over the standard deduction amount?
0 coins