Calories "Earned", Such a Thing? Smartwatch and MFP

Last few months have been slimming down while keeping muscle. Dropped about 4% to 4.5% BF so far.
Have been following my macros and calories closely and using My fitness pal to log everything. Recently got a smartwatch which logs steps and workouts. While nothing is 100% accurate, it seems pretty good.
Now when I look at MFP I see that it adds “calories earned” to my daily diary essentially putting them back in the bank listing that I can take in that amount more. Is this legit?

Example keeping the math simple.
Calorie goal = 1700
Lunch time reading has 900 cals left for day.
Add in steps and workout at 500 cals. and now it says I can have 1400 total left.

On one hand I get that if you burn X amount your body may need amount back to feed the muscles and body. On the other hand by doing this doesn’t it defeat the calorie deficit?

It kinda depends on what your original calorie goal is set at. If 1700 was maintenance levels (which I’m assuming it’s not unless you’re a starving Kenyan) and you burned an extra 500 calories from exercise than you’re in a 500 calorie deficit, which isn’t too bad.

But if 1700 was already, say, a 300 calorie deficit, and you add another 500 to that then you’re under by 800, which is a big cut

What’s your weight and how fat are you? 1700 seems like a low number to be shooting for for someone who trains

43yrs old
5’8"
171lbs 17%bf

3 to 4 times a week weights

Funny you say that it may be low. I have heard that before. Possible that I am taking in too little and hurting both my gains and loss?
Thanks in advance.

Well I actually just looked it up and put your stats in a BMR calculator and it says your BMR is supposedly 1650 kcals. Keep in mind this is the minimum calories your body needs to keep itself alive. This doesn’t include any kind of activity other than just sitting there and existing. So you’re definitely short changing yourself on calories.

Taper your calories up to a point until you’re no longer losing any weight and then taper back down until you’re losing a lb or to a week.

The idea is to keep your calories as high as possible while still losing weight. This way you can keep as much muscle as possible and you don’t leave yourself with nowhere to go when your fat loss stalls

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Thank you very much for the explanation. That makes a lot of sense. Will give it a shot. Wonder if that is also why my weightloss has stalled. Perhaps the body has went into self preservation mode not letting go of calories that easily.
Now to find the happy medium…