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 in the TaxAct program. This form is NOT sent with your income tax return; mail it separately to the IRS.

To complete Form 1045 in the TaxAct program:

1. Check the appropriate box at the top of the form to indicate the carryback period (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 Schedule A--NOL within Form 1045 on Line 10 under After carryback column for the earliest year the loss is being carried back.
4. Complete the first Before carryback column 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 in the Other Income section (this will recalculate the prior year return for you).
6. From that re-calculated return, enter the information for the second After carryback column.
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 Schedule B--NOL Carryover within Form 1045 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 Carryoverin the TaxAct program:

1. Enter the loss amount (as a positive number) from Line 25 of Schedule A--NOL within Form 1045 on Schedule B--NOL Carryover, 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:

Online Navigation Instructions

1. Sign in to your TaxAct Online return.
2. Click Tools to expand, then click Forms Assistant.
3. Expand the FEDERAL Forms folder, then expand the Forms and Schedules folder.
4. Scroll down and click Form 1045 Application for Tentative Refund or Form 1045 Schedule B--NOL Carryover.
5. Click Add to create a new copy or Form to review a form already created and the form/schedule will appear.
6. Green numbers (or 0) are user-entered fields where you would determine if any amount needs to be entered in that field and enter it. Blue numbers (or 0) are either program-calculated fields or, if you click a field and a yellow manila folder appears to the side, entries transferred from supporting forms. Click the manila folder to view/modify the supporting form that populates that field.

Desktop Navigation Instructions

1. Click Forms in the top left corner,
2. Expand the Federal folder, 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 schedule will appear on the right side of your screen. Green numbers (or 0) are user-entered fields where you would determine if any amount needs to be entered in that field and enter it. Blue numbers (or 0) are either program-calculated fields or, if you click a field and a yellow manila folder appears to the side, entries transferred from supporting forms. Click the manila folder to view/modify the supporting form that populates that field.

Alternatively, you can file Federal Form 1040-X Amended US Individual Income Tax Return (also available through TaxAct). If you choose to mail your 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 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 8 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income in the first year following the loss. Use the worksheet on page 9 (instructions on page 8) 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 8 of Schedule 1 (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 2020 to 2016 you must file Form 1045 on or after the date you file your tax return for 2020, but no later than December 31, 2021.

Form 1040-X. If you do not file Form 1045, you can file Form 1040-X to get a refund of tax because of an NOL carryback. File Form 1040-X within three 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 2018 return by the 2019 due date, you must file a claim for refund of 2018 tax because of an NOL carryback from 2020 by April 15, 2024. 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 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. 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.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.