Turbo Tax - Sch C Expense Causes More Tax Owed

Ok....While I am sure there is a reason in the tax forms (well...maybe), here is what I encountered using TT online. I am, however, planning on buying the CD so that I can see the forms as I go. Anyway....

As I printed off the MMK reports and went through the general expenses using the T/S% and entering the totals after applying T/S, the "Tax Owed" was around $280. Fair enough....no biggy. It's not a hobby! Profit is good!

I then entered the standard meal allowance using the rates TT had for B/L/D/S/S/S. As I entered that total on the "Other" Sch C expenses, my tax owed INCREASED from the $280!!

I checked by re,oving the food cost, and just entered an additional cost under supplies and the same thing happened.

Would anyone know if there is some sort of tax implication/expense limitation which when entering a Business Expense would cause the Tax Owed to go "up"? Thanks.

[TomCopeland]

The only explanation I can think of is that your Earned Income Tax Credit when down when your expenses went up. This can happen with this tax credit. It sounds goofy, but it is possible for this to happen with this credit. You can't leave out business deductions to get a higher EITC.