What the Form Is For

Form 1045 is your fast track to getting money back from the IRS when business losses or certain tax situations create an opportunity for a refund from previous tax years. If you suffered a significant business loss in 2015, this form could put cash back in your pocket within 90 days—much faster than the standard amended return process. Here's everything you need to know in plain English.

Form 1045, officially called the "Application for Tentative Refund," is a special IRS form that allows individuals, estates, and trusts to quickly claim tax refunds from previous years. Think of it as a "fast-pass" for getting money back when specific tax situations occur.

The form is used for four main situations:

• Net Operating Loss (NOL) Carryback: This is by far the most common reason people file Form 1045. If your business deductions exceeded your income in 2015—meaning you had more expenses than revenue—you experienced a net operating loss. You can "carry back" this loss to offset income you reported (and paid taxes on) in previous years, typically the two years before your loss occurred.
• Unused General Business Credit: If you qualified for certain business tax credits in 2015 but couldn't use them all because you didn't owe enough tax, you can carry the unused portion back one year to get a refund.
• Net Section 1256 Contracts Loss: If you invested in regulated futures contracts, foreign currency contracts, or certain options and experienced net losses, you can carry these losses back up to three years.
• Claim of Right Adjustment: If you reported income in a previous year, paid tax on it, but then had to pay back more than $3,000 of that income in 2015, you may be entitled to a refund under section 1341(b)(1).

The key benefit of Form 1045 is speed. While a regular amended return (Form 1040X) can take six months or more to process, the IRS must process Form 1045 within 90 days.

When You'd Use It (Late/Amended)

Form 1045 has strict timing rules. You must file it within one year after the end of the year in which the loss or credit arose. For a 2015 NOL, this means you had until December 31, 2016, to file Form 1045. Additionally, you must file your 2015 income tax return no later than the date you file Form 1045—you can't apply for the refund before reporting the loss year on your tax return.

The Alternative: Form 1040X

If you miss the one-year deadline for Form 1045, you haven't lost your chance at a refund—you'll just need to use the slower route. File Form 1040X (Amended U.S. Individual Income Tax Return) instead. With Form 1040X, you have up to three years from the original return's due date to claim your refund. For a 2015 NOL carried back to 2013, you'd have until April 2017 (three years after the 2014 due date for 2013 returns) to file. The tradeoff is that Form 1040X can take significantly longer to process, and you must file a separate Form 1040X for each carryback year.

Late Filing Considerations

Once you've decided to file Form 1045, timing remains important. The IRS will begin its 90-day processing clock on the later of: (1) the date you file your complete application, or (2) the last day of the month that includes your 2015 return's due date (including extensions). This means if you filed for an extension to October 15, 2016, the IRS wouldn't start counting until October 31, 2016, even if you submitted Form 1045 earlier.

Key Rules for 2015

Several important rules governed Form 1045 in 2015:

Carryback Periods

The standard carryback period for most NOLs is two years. This means a 2015 loss would typically go back to offset 2013 income first, then 2014 if anything remains. However, several exceptions apply:

• Farming losses could be carried back five years (back to 2010)
• Eligible losses from casualties, thefts, or federally declared disasters could be carried back three years (to 2012)
• Qualified disaster losses from federally declared disasters occurring before January 1, 2010, could be carried back five years
• Specified liability losses (from product liability or environmental cleanup, for example) could be carried back ten years (to 2005)

Waiving the Carryback

You could elect to skip the carryback period entirely and only carry your NOL forward to future years (up to 20 years). To make this election for 2015, you needed to attach a statement to your timely-filed 2015 return explicitly waiving the carryback under section 172(b)(3). This election was irrevocable, so it required careful consideration of whether you'd benefit more from past refunds or future deductions.

What Doesn't Count

Not every loss creates an NOL. The IRS excludes several items when calculating your NOL, including personal exemptions, excess capital losses over capital gains, nonbusiness deductions exceeding nonbusiness income, and any NOL deductions from other years. These adjustments often mean your NOL is different from (and usually smaller than) the loss shown on your tax return.

Marital Status Matters

If your filing status changed between the loss year and carryback years—due to marriage, divorce, or death—special allocation rules apply to determine how much of the NOL each spouse can claim.

Step-by-Step (High Level)

Steps

Step 1: File Your 2015 Tax Return

Complete and file your 2015 Form 1040 or 1040NR showing your loss for the year. You cannot file Form 1045 before filing your return for the loss year.

Step 2: Calculate Your NOL

Use Schedule A of Form 1045 to compute your actual NOL. This involves starting with your taxable income (or loss) and making required adjustments. You'll add back personal exemptions, capital losses (beyond capital gains), nonbusiness deductions exceeding nonbusiness income, and various other items that don't qualify for NOL treatment.

Step 3: Determine Carryback Years

Identify which prior years you'll carry the loss back to. For most NOLs, start with the second year before 2015 (tax year 2013), then move to 2014 if needed. Special losses (farming, casualty, etc.) may go back further.

Step 4: Complete the Carryback Calculations

For each carryback year, you'll refigure your taxable income "as if" you had the NOL deduction that year. This means recalculating your adjusted gross income, itemized deductions (if they're based on AGI percentages), exemptions (if subject to phaseout), and ultimately your tax liability. Lines 10-32 of Form 1045 guide you through these computations for each carryback year.

Step 5: Gather Required Attachments

Form 1045 requires extensive documentation. You must attach copies of: your complete 2015 Form 1040 (pages 1 and 2), all applicable schedules from 2015 (Schedules A, C, D, F, etc.), Schedule K-1s from partnerships or S corporations contributing to the loss, Form 6251 (Alternative Minimum Tax) for each loss and carryback year, and any extension requests or reportable transaction disclosures. Forgetting required attachments is one of the most common reasons for delays or disallowance.

Step 6: Sign and File

Sign Form 1045 (both spouses must sign if filing jointly) and mail it to the IRS Service Center for your location. Do not include Form 1045 in the same envelope as your 2015 tax return—it must be mailed separately.

Step 7: Use Schedule B for Carryovers

If your NOL isn't fully used up in the carryback years, complete Schedule B to calculate how much NOL carries forward to future years.

Common Mistakes and How to Avoid Them

Mistake #1: Material Omissions or Math Errors

Form 1045 applications can be disallowed entirely if they contain material omissions or math errors that aren't corrected within the 90-day processing period. Unlike regular returns where the IRS will typically correct simple math errors, Form 1045 places more burden on you to get it right the first time. If your application is disallowed, you cannot sue—your only option is to file Form 1040X within the regular statute of limitations.

How to avoid it: Double-check all calculations before filing. Consider using tax software or a tax professional for complex situations. Verify that numbers from your 2015 return match the numbers on Form 1045, Schedule A.

Mistake #2: Missing Required Attachments

The instructions explicitly warn: "You must attach copies of all required forms... Otherwise, your application may be delayed or disallowed." Many taxpayers forget to include Schedule K-1s, Form 6251 for AMT calculations, or amended forms for carryback years.

How to avoid it: Create a checklist from the Form 1045 instructions and check off each required attachment before mailing. Include both original and refigured versions of forms like Form 3800 (General Business Credit) if applicable.

Mistake #3: Wrong Envelope

The IRS specifically cautions: "Do not include Form 1045 in the same envelope as your 2015 income tax return." These forms go to different processing locations and including them together causes delays.

How to avoid it: Mail your 2015 tax return and Form 1045 in separate envelopes, even if you're mailing them on the same day.

Mistake #4: Missing the One-Year Deadline

You must file Form 1045 within one year after the end of the NOL year. For calendar year 2015, the deadline was December 31, 2016. Missing this deadline means you must use Form 1040X instead.

How to avoid it: File Form 1045 as soon as you've completed your 2015 return. Use certified mail with return receipt to prove timely filing.

Mistake #5: Filing Form 1045 Before Your Tax Return

You must file your 2015 income tax return no later than the date you file Form 1045. You can't jump ahead and claim the refund before reporting the loss.

How to avoid it: File your 2015 Form 1040 first (or simultaneously), then immediately file Form 1045.

Mistake #6: Incorrect NOL Calculation

Many taxpayers incorrectly calculate their NOL by simply using the negative number from their tax return. The actual NOL requires adding back personal exemptions, adjusting for capital losses, and making other modifications that can significantly change the amount.

How to avoid it: Use Schedule A of Form 1045 line-by-line, following the instructions carefully. The NOL is rarely the same as the loss shown on your tax return.

What Happens After You File

The 90-Day Processing Window

Once you submit a complete Form 1045, the IRS has 90 days to process it, starting from the later of your filing date or the last day of the month containing your 2015 return's due date (including extensions). During this period, the IRS reviews your application and calculations.

Tentative Refund

If everything appears in order, the IRS will issue your refund within the 90-day window. This is called a "tentative" refund because—and this is crucial—receiving the refund does not mean the IRS has accepted your application as correct. The IRS can (and does) audit Form 1045 claims after issuing refunds.

Request for Additional Information

The IRS may contact you or your authorized representative (such as your accountant) for additional information during processing. If you want to designate someone to handle these communications, attach Form 2848 (Power of Attorney and Declaration of Representative) to Form 1045.

Potential for Adjustment

The IRS retains full authority to examine your claim. If they later determine that you overstated deductions, overvalued property, or made other errors, they can demand repayment of the excess refund. This can include penalties for negligence or substantial understatement of tax, plus interest compounded daily. The IRS can bill you for excessive amounts "as if it were due to a math or clerical error on the return," meaning collection can happen quickly.

No Right to Sue

If the IRS disallows your Form 1045 application (in whole or part), you cannot challenge the disallowance in court. Your recourse is to file Form 1040X within the normal three-year statute of limitations. With Form 1040X, if the IRS disallows your claim, you can sue within two years of the disallowance.

Impact on Prior Year Returns

The carryback doesn't change your actual prior-year returns; it creates an adjustment that generates a refund. Your original return remains on record, but the IRS applies the NOL deduction to recalculate your tax liability for that year.

FAQs

1. Can I use Form 1045 if I'm self-employed?

Yes. Self-employed individuals are among the most common users of Form 1045. If your business expenses exceeded your business income plus other income sources in 2015, you likely have an NOL that can be carried back. You'll report your business loss on Schedule C and use that information to complete Form 1045, Schedule A.

2. What if I had an NOL but already filed my 2015 return without claiming a carryback?

You can still file Form 1045 as long as you're within the one-year deadline (by December 31, 2016, for tax year 2015). Form 1045 is filed separately from your original return. However, if your original return didn't reflect the loss properly, you might need to file an amended 2015 return first.

3. How does Form 1045 affect my Alternative Minimum Tax (AMT)?

Carrying back an NOL can trigger AMT liability in carryback years, even if you didn't owe AMT when you originally filed those returns. You must complete Form 6251 for each carryback year using your refigured income to determine if AMT applies. This is one reason the instructions require you to attach both original and revised Form 6251 for each year.

4. Can I carry back part of my NOL and carry forward the rest?

No. If you choose to carry back your NOL, you must carry back the entire amount to the earliest year possible. You can't split it strategically between carryback and carryforward years. Only the unused portion after applying it to all available carryback years can be carried forward (up to 20 years).

5. What happens if I filed joint returns in some years but not others?

Special allocation rules apply. If your marital status changed between the NOL year and carryback years, you'll need to determine each spouse's share of the NOL and modified taxable income. The instructions include detailed steps and worksheets for these situations. Generally, only the spouse who sustained the loss can benefit from the NOL deduction, and refunds may be limited based on each spouse's contribution to tax payments in joint return years.

6. Is Form 1045 faster than Form 1040X?

Yes, significantly. Form 1045 must be processed within 90 days, while Form 1040X can take six months or longer. However, Form 1045 has a strict one-year filing deadline, while Form 1040X gives you three years. Additionally, Form 1040X gives you the right to sue if your claim is denied, while Form 1045 does not.

7. What records should I keep after filing Form 1045?

Keep all records related to the NOL year and all carryback years for at least three years after you've fully used the NOL or until the carryforward expires (whichever is later). This includes your tax returns, Form 1045 with all attachments, proof of mailing, and documentation supporting your loss (receipts, invoices, financial statements). If the IRS examines your claim years later, you'll need this documentation to support your refund.