Tax forms can feel overwhelming, but Form 1045 serves a straightforward purpose: getting money back into your pocket faster. If your business suffered losses or you have unused tax credits from 2021, this form could help you receive a quick refund from taxes you paid in previous years. Here's everything you need to know about Form 1045 for the 2021 tax year, written in plain English.

What Form 1045 Is For

Form 1045, Application for Tentative Refund, is the IRS's fast-track mechanism for getting refunds when certain financial situations occur. Think of it as an express lane—while regular amended returns can take many months to process, Form 1045 must be processed by the IRS within 90 days.

Who can use it? Individuals, estates, and trusts can file Form 1045 to request a quick refund in four specific situations:

• Net Operating Loss (NOL) Carryback: If your business expenses exceeded your income in 2021, creating a loss, you might be able to carry that loss back to earlier profitable years and reduce the taxes you paid then. However, a critical 2021 rule applies: generally, NOLs from 2021 can only be carried forward to future years, not backward—unless you have a farming loss, which can be carried back two years.
• Unused General Business Credit: If you qualified for certain business tax credits in 2021 but couldn't use them because you didn't owe enough tax, you can typically carry those credits back one year to get a refund.
• Net Section 1256 Contracts Loss: This applies if you had losses from certain regulated futures contracts or foreign currency contracts. These losses can be carried back three years.
• Claim of Right Adjustment: If you received income in a previous year, paid tax on it, but had to repay that income in 2021, you might qualify for a refund under section 1341(b)(1).

About Form 1045, Application for Tentative Refund - IRS

When You’d Use Form 1045 (Late/Amended Filings)

Timing matters with Form 1045. You must file this form within one year after the end of the tax year in which the loss, unused credit, or adjustment occurred. For calendar-year taxpayers with a 2021 loss or credit, the deadline was December 31, 2022.

Here's an important rule: You must file your 2021 income tax return no later than the date you file Form 1045. You cannot file Form 1045 before filing your regular tax return—they go hand-in-hand.

There's an alternative approach: instead of using Form 1045, you can file Form 1040-X (Amended U.S. Individual Income Tax Return) or an amended Form 1041 for estates and trusts. The key difference? Form 1040-X doesn't have the 90-day processing guarantee that Form 1045 has, but it does offer you the right to file suit in court if the IRS doesn't process it within six months or if you disagree with their decision.

Form 1045 is essentially a trade-off: you get speed (90-day processing) but give up your right to challenge a disallowance in court. If the IRS disallows your Form 1045 application, you can still file a regular claim for refund (Form 1040-X) before the limitation period expires—typically within three years of filing your original return.

2021 Instructions for Form 1045 - IRS

Key Rules or Details for 2021

The 2021 tax year brought significant changes that directly impact Form 1045:

• NOL Carryback Eliminated for Most Taxpayers: The special provisions from the CARES Act that allowed five-year carrybacks for 2018, 2019, and 2020 NOLs expired. For losses arising in tax years ending after 2020, you generally can only carry NOLs forward indefinitely to future tax years—you cannot carry them back. The major exception is farming losses, which retain a two-year carryback period.
• Farming Loss Exception: If your NOL includes farming losses, those specific losses can still be carried back two years. A farming loss is defined as the smaller of either the amount that would be the NOL if only farming business income and deductions were considered, or your total NOL for the year. Important note: farming losses from 2021 are limited by section 461(l), so an NOL carryback generally won't exceed $262,000 ($524,000 for joint returns).
• Business Loss Limitations: The Tax Cuts and Jobs Act limited annual losses from trades or businesses for individuals, estates, and trusts. For years beginning after 2020 and before 2026, you can't deduct net losses exceeding a threshold amount ($262,000 for single filers, $524,000 for joint filers in 2021). Any excess business loss is treated as an NOL that can be carried forward.
• Section 965 Restriction: If you carry NOLs back to years in which you had a section 965(a) inclusion (related to the 2017 transition tax on foreign earnings), you cannot use Form 1045. You must use an amended return instead.
• Waiving the Carryback: Even if you qualify for a carryback (such as with farming losses), you can choose to waive it and carry losses forward only. To make this choice, you must attach a statement to your original return filed by the due date, including extensions. Once made, this choice is generally irrevocable.

2021 Instructions for Form 1045 - IRS

Step-by-Step (High Level)

While the form itself contains detailed line-by-line requirements, here's the overall process:

Step 1: Determine Eligibility

Confirm you have a farming loss eligible for carryback, an unused general business credit, a net section 1256 contracts loss, or a claim of right adjustment. For 2021, remember that most regular business NOLs can only be carried forward, not back.

Step 2: File Your 2021 Tax Return

You must file your 2021 Form 1040, 1040-SR, or 1041 on or before you file Form 1045. This is mandatory.

Step 3: Complete Schedule A

Calculate your net operating loss using Schedule A of Form 1045. This involves starting with your taxable income, then adjusting for various non-business deductions, capital losses, and other items to arrive at your true NOL.

Step 4: Complete Schedule B

If your loss isn't fully absorbed in the earliest carryback year, use Schedule B to calculate how much carries over to the next year. This schedule shows the NOL deduction for each carryback year and any remaining carryover.

Step 5: Complete Lines 10–33

These lines compute the decrease in tax for each carryback year. You'll enter amounts "before carryback" and "after carryback" for adjusted gross income, deductions, tax, credits, and other items for each year affected.

Step 6: Gather Required Attachments

You must attach copies of your 2021 tax return, all relevant schedules (Schedule C, Form 3800, Form 461, etc.), any K-1s from partnerships or S corporations, and computations for alternative minimum tax if applicable.

Step 7: Mail to the Correct Service Center

Send Form 1045 to the IRS service center for your location (refer to your 2021 tax return instructions). Do not include Form 1045 in the same envelope as your 2021 tax return—mail them separately.

Step 8: Sign and Date

Individuals must sign; for joint returns, both spouses must sign. All executors/administrators must sign for estates; the fiduciary signs for trusts.

2021 Instructions for Form 1045 - IRS

Common Mistakes and How to Avoid Them

• Filing Before Your Tax Return: You cannot file Form 1045 before filing your 2021 tax return. The IRS instructions clearly state you must file your income tax return no later than the date you file Form 1045. File your 2021 return first or simultaneously.
• Missing Required Attachments: Your application may be disallowed if you don't attach all required forms and schedules. The instructions specify you must include your 2021 return, Schedule A of Form 1045, relevant business schedules, Forms 6251 for AMT calculations, and more. Create a checklist and double-check everything before mailing.
• Material Omissions or Math Errors: If your application contains material omissions or uncorrected math errors, it can be disallowed. Unlike regular refund claims, you cannot challenge a Form 1045 disallowance in court—though you can still file Form 1040-X afterward. Carefully review all calculations and ensure completeness.
• Attempting to Carry Back Non-Farming NOLs: For 2021, you cannot carry back regular business NOLs—only farming losses qualify. Don't waste time filing Form 1045 for a non-farming NOL from 2021; instead, plan to carry it forward to future tax years.
• Not Refiguring AGI-Based Deductions: When your NOL reduces your adjusted gross income in carryback years, you must refigure any deductions based on AGI percentages—such as medical expenses, IRA deductions, and student loan interest. Many taxpayers forget this step, leading to incorrect calculations.
• Sending Form 1045 with Your Tax Return: The IRS explicitly warns: "Don't include Form 1045 in the same envelope as your 2021 income tax return." These go to different processing centers and have different handling procedures. Mail them separately to avoid delays.
• Forgetting the One-Year Deadline: The filing deadline is strict—within one year after the end of the year in which the loss or credit arose. For a 2021 calendar-year loss, that meant filing by December 31, 2022. Miss this deadline, and your only option is Form 1040-X, which has different timeframes and procedures.

2021 Instructions for Form 1045 - IRS

What Happens After You File

The IRS must process your Form 1045 application within 90 days from the later of either the date you filed the complete application or the last day of the month that includes your 2021 return's due date (including extensions).

During this period, the IRS may contact you or your authorized representative (such as your accountant) for additional information. If you want to designate someone for the IRS to contact, attach Form 2848 (Power of Attorney and Declaration of Representative) to your Form 1045.

Here's what's important to understand: receiving your tentative refund doesn't mean the IRS has fully accepted your application as correct. The processing and payment are provisional. If the IRS later determines that your claimed deductions or credits were overstated—whether due to overvaluation of property, negligence, or substantial understatement—you may have to pay penalties and interest, compounded daily.

If your application is disallowed in whole or in part, you cannot file suit challenging the disallowance. However, you're not out of options: you can still file a regular claim for credit or refund using Form 1040-X before the limitation period expires (typically three years from filing your original return).

If the IRS finds that any amount applied, credited, or refunded was excessive, they will bill you as if it were a math or clerical error on your return. This is another reason why accuracy is crucial when completing Form 1045.

2021 Instructions for Form 1045 - IRS

FAQs

Q1: Can I e-file Form 1045 for 2021?

No. For the 2021 tax year, Form 1045 must be filed by mail. The IRS began accepting electronic filing for Form 1045 starting with the 2024 form filed in 2025, but 2021 applications were paper-only. Mail your completed form to the IRS service center for your location as shown in your 2021 tax return instructions.

Q2: What's the difference between Form 1045 and Form 1040-X?

Form 1045 is an application for a tentative (quick) refund with guaranteed 90-day processing, but you cannot challenge a disallowance in court. Form 1040-X is a formal amended return that doesn't have the 90-day guarantee but gives you the right to file suit if the IRS doesn't process it within six months or if you disagree with their determination. Form 1045 has a one-year filing deadline; Form 1040-X generally has a three-year deadline.

Q3: I have a 2021 business loss but no farming income. Can I still use Form 1045?

Not for an NOL carryback. Regular (non-farming) business NOLs from 2021 can only be carried forward to future years, not back to prior years. However, you might still use Form 1045 if you have an unused general business credit or a net section 1256 contracts loss. Otherwise, you'll need to apply your NOL to reduce taxable income in 2022 and beyond.

Q4: What if I filed a joint return in 2021 but filed separately in the carryback years?

Special rules apply when your filing status changes between the loss year and carryback years. You'll need to allocate the loss appropriately and may need detailed allocation schedules. The IRS instructions for Form 1045 and Publication 536 provide guidance on these situations. Consider consulting a tax professional for complex filing status scenarios.

Q5: Can I carry back my 2021 NOL to a year when I had the transition tax (section 965 inclusion)?

No. If you're carrying NOLs back to "section 965 years" (typically 2017 or 2018 when the transition tax on foreign earnings applied), you cannot use Form 1045. You must use an amended return to carry back to those years.

Q6: Will carrying back an NOL trigger Alternative Minimum Tax (AMT)?

Possibly. Carrying back an NOL to an earlier year may create or increase AMT liability for that earlier year, even if you had no AMT on your originally filed return. You must refigure AMT for each carryback year using Form 6251 and include any additional AMT in your calculations on Form 1045.

Q7: What if I miss the one-year deadline for filing Form 1045?

You lose the ability to use the fast-track Form 1045 process, but you can still file Form 1040-X (Amended U.S. Individual Income Tax Return) or an amended Form 1041 for estates/trusts. The deadline for amended returns is generally three years from the date you filed your original return or two years from when you paid the tax, whichever is later. While you lose the 90-day processing guarantee, you gain the right to challenge any disallowance in court.

Note: Tax situations can be complex, and this guide provides general information based on 2021 rules. For specific advice about your situation, consult the official IRS instructions for Form 1045 or seek assistance from a qualified tax professional.