The outlet is a good 3-4" below the water. The inlet is 3-4" above the substrate. I put it up that high because its very fine black sand, almost like sugar and I didn't want it getting sucked into the filter. I'll try lowering it some tonight. Everything else seems tight and leaving filter off for a couple minutes, I don't see any water leaking out of the hoses, but I will check it again tonight also. Only other thing that I can think of thats causing it is, I have a tankless hot water tank, and it heats the water so rapidly, it causes the dissolved gasses to expand causing micro bubbles in the tank when doing water changes. But it only takes about a half hour for all the bubbles to clear up.