If a return has generated a Net Operating Loss (NOL) in the current year, there will be a Green Alert in the return titled Green Alert - Net Operating Loss. The NOL amount will be reflected on Line 25 of Form 1045 Schedule A-NOL.  Instructions to review/modify the information and then print the schedule in the TaxACT program are provided below followed by information on how to carry back that loss (if you do not elect to carry the loss forward).  Note that if there was any gain in the return excluded under section 1202 on the sale or exchange of qualified small business stock that would need to be entered as a positive number on Line 17 of Form 1045 Schedule A-NOL.

********************************************************************

To review the current year NOL information on Form 1045 Schedule A:

TaxACT Online Users: 
  1. Click Forms & Topics below the Filing tab 
  2. Expand the FEDERAL Forms folder and then expand the Forms and Schedules folder
  3. Click on Form 1045 - Schedule A--NOL 
  4. Click Form and the schedule will appear. Fields with a green entry (or 0) are user entered fields where you would determine if any amount needs to be entered in that field and enter it. Fields with a blue entry (or 0) are either program calculated fields or, if you click on the field and a yellow manila folder appears to the side, entries transferred from supporting forms. Click on the manila folder and you will be able to view/modify the supporting form that populates that field.
To print the schedule:
  1. Click the My Return button in the top right corner
  2. Click Print Center, and then click Custom Print
  3. Check the box next to Federal Form 1045 - Application for Tentative Refund Schedule A--NOL 
  4. Click the green Print button and then click the blue PDF link. The item will appear in a PDF read-only format. At that time you can click the printer icon on the screen to actually print, or close the window without printing.
NOTE: If, after you click Custom Print in Step 3 above, you see the message "No forms (or documents) available to print," you will need to click View/Pay your return fees which will bring you through the Paper Filing steps. Continue through those screens until you have processed the payment for your product fees. 
 
TaxACT Desktop Users:
  1. Click the Forms button in the top left corner
  2. Expand the Federal folder and then expand the Forms and Schedules folder
  3. Double click Form 1045 - Schedule A--NOL 
  4. The schedule will appear on the right side of your screen. Fields with a green entry (or 0) are user entered fields where you would determine if any amount needs to be entered in that field and enter it. Fields with a blue entry (or 0) are either program calculated fields or, if you click on the field and a yellow manila folder appears to the side, entries transferred from supporting forms. Click on the manila folder and you will be able to view/modify the supporting form that populates that field.
  5. Click the pink Printer icon in the blue toolbar 

In the print dialog box that appears you are able to choose if you wish to send the output to a printer or a PDF document. If you wish to only print preview the document, check the Print Preview box. Once the print preview window opens, click the Print button to actually print the document.

********************************************************************

How to carry back the NOL:

If you choose to carry the loss back to a prior year for a refund, you would complete Form 1045 Application for Tentative Refund in the TaxACT program. This form would NOT be sent with your income tax return, but would be mailed separately to the IRS.

To complete Form 1045 Application for Tentative Refund  in the TaxACT program:
  1. Check the appropriate box at the top of the form to indicate the carryback period as this will complete the information in the column headings regarding which tax years you are entering carryback information for.
  2. Complete the questions at the top of the form.
  3. Enter the loss amount (as a positive number) from Line 25 of Form 1045 Schedule A-NOL on Line 10 in the “After carryback” column for the earliest year the loss is being carried back.
  4. Complete the first column “Before carryback” based on the originally filed return for the year listed at the head of the column
  5. In the tax return for that year, enter the entire loss on Line 21 (this will recalculate the prior year return for you)
  6. From that re-calculated return, enter the information for the second column “After Carryback”
  7. If the taxable income (Line 15) in the “Before carryback” column is not greater than the NOL deduction being carried back, proceed with the steps below to complete Form 1045 Schedule B – NOL Carryover to calculate the amount of loss remaining to carry to the following year. If it is greater, the carryback loss will be exhausted in that carryback year.

To complete Form 1045 Schedule B - NOL Carryover in the TaxACT program:
  1. Enter the loss amount (as a positive number) from Line 25 of Form 1045 Schedule A-NOL on Line 1 NOL deduction for the earliest year the loss is being carried back.
  2. Complete the first column, referring to the IRS instructions for assistance on each line.  
  3. Line 10 of each column (NOL carryover) is the remaining amount of the loss to carry to the following year and will automatically be transferred to Line 1 of the next column.  This amount should also be entered in the appropriate "After carryback" column on Form 1045 and the previous steps 4-7 followed for that carryback year (to complete the "Before carryback" and "After carryback" columns).

To enter/review/modify the information in these forms in your TaxACT program:

TaxACT Online Users:
     
  1. Click Forms & Topics below the Filing tab 
  2. Expand the FEDERAL Forms folder and then expand the Forms and Schedules folder
  3. Click on Form 1045 Application for Tentative Refund or Form 1045 Schedule B--NOL Carryover
  4. Click Add to create a new copy or Form to review a form already created and the form/schedule will appear. Fields with a green entry (or 0) are user entered fields where you would determine if any amount needs to be entered in that field and enter it. Fields with a blue entry (or 0) are either program calculated fields or, if you click on the field and a yellow manila folder appears to the side, entries transferred from supporting forms. Click on the manila folder and you will be able to view/modify the supporting form that populates that field.
TaxACT Desktop Users:
  1. Click the Forms button in the top left corner
  2. Expand the Federal folder and then expand the Forms and Schedules folder
  3. Double click Form 1045 Application for Tentative Refund or Form 1045 Schedule B--NOL Carryover
  4. The form/schedule will appear on the right side of your screen. Fields with a green entry (or 0) are user entered fields where you would determine if any amount needs to be entered in that field and enter it. Fields with a blue entry (or 0) are either program calculated fields or, if you click on the field and a yellow manila folder appears to the side, entries transferred from supporting forms. Click on the manila folder and you will be able to view/modify the supporting form that populates that field.
  5. Click the pink Printer icon in the blue toolbar 
 

In the print dialog box that appears you are able to choose if you wish to send the output to a printer or a PDF document. If you wish to only print preview the document, check the Print Preview box. Once the print preview window opens, click the Print button to actually print the document.

Alternatively, you can file Federal Form 1040X Amended US Individual Income Tax Return (also available through TaxACT) which would be mailed to the IRS with copies of the schedule or form that shows the year in which the loss or credit occurred. If you choose to file an amended return, attach a computation of the NOL, using Form 1045, for each year affected.

********************************************************************

What if the loss is not entirely used in the two carryback years? If the loss is not entirely used in the carryback years, any remaining loss (reflected on line 10 NOL carryover of the last column completed on Form 1045 Schedule B-NOL Carryover) would be used to complete the worksheet in IRS Publication 536 Net Operating Losses (NOLs) for Individuals, Estates and Trusts to calculate the amount to carry forward to Line 21 of Form 1040 in the first year following the loss.  Use the worksheet on page 16 (instructions on page 15) to calculate the amount. If there are NOLs being carried forward from multiple years, you must calculate each amount separately and then add them together to enter on Line 21 of Form 1040.
 
********************************************************************

Due Dates: Form 1045. Generally, you must file Form 1045 on or after the date you file your tax return for the NOL year, but not later than one year after the end of the NOL year. If the last day of the NOL year falls on a Saturday, Sunday, or holiday, the form will be considered timely if postmarked on the next business day. For example, if you are a calendar year taxpayer with a carryback from 2012 to 2010, you must file Form 1045 on or after the date you file your tax return for 2012, but no later than December 31, 2013.

Form 1040X. If you do not file Form 1045, you can file Form 1040X to get a refund of tax because of an NOL carryback. File Form 1040X within 3 years after the due date, including extensions, for filing the return for the NOL year. For example, if you are a calendar year taxpayer and filed your 2010 return by the April 15, 2011, due date, you must file a claim for refund of 2007 tax because of an NOL carryback from 2010 by April 15, 2014. Attach a computation of your NOL using Form 1045, Schedule A, and, if it applies, your NOL carryover using Form 1045, Schedule B, discussed later.

********************************************************************

Additional Information:

IRS Publication 536 Net Operating Losses (NOLs) for Individuals, Estates and Trusts explains how to figure an NOL, when to use it, how to claim an NOL deduction and how to figure an NOL carryover.

Other related forms and worksheets:
Form 1045 Application for Tentative Refund
Form 1045 Application for Tentative Refund Additional Forms
Form 1045 Schedule A--NOL (form listed in the instructions above)
Form 1045 Schedule B--NOL Carryover
Form 1045 Net Operating Loss Classification Worksheet
Form 1045 Detail and Notes - Detail and Notes Worksheet
Note that the link above is updated each year automatically and will take you to the most recent IRS version of this publication at the time it is accessed.

Was this helpful to you?