Form 1045 is your fast-track to getting money back from the IRS when life throws you a financial curveball. Think of it as an express lane for tax refunds. When you experience a business loss, get hit with unexpected expenses, or face certain tax situations that create a "net operating loss" (NOL), this form lets you quickly recover taxes you've already paid in previous years.

The form is specifically designed for individuals, estates, and trusts to apply for a "tentative refund" resulting from four main situations: carrying back a net operating loss (the most common scenario), carrying back an unused general business credit, carrying back a net section 1256 contracts loss, or claiming an overpayment due to a "claim of right" adjustment. Unlike the standard amended return process (Form 1040X), Form 1045 gets processed much faster—the IRS is required to review it within 90 days. Source

A net operating loss essentially means your allowable tax deductions exceeded your income for the year. This commonly happens when you run a business that loses money, though it can also result from casualty losses (like fires or storms), theft losses, or significant employee business expenses. The key principle: instead of losing the tax benefit of that loss year, you can "carry it back" to profitable years when you paid taxes, effectively getting a refund of taxes you shouldn't have paid given your overall financial picture.

What Form 1045 Is For

Form 1045 is your fast-track to getting money back from the IRS when life throws you a financial curveball. Think of it as an express lane for tax refunds. When you experience a business loss, get hit with unexpected expenses, or face certain tax situations that create a "net operating loss" (NOL), this form lets you quickly recover taxes you've already paid in previous years.

The form is specifically designed for individuals, estates, and trusts to apply for a "tentative refund" resulting from four main situations: carrying back a net operating loss (the most common scenario), carrying back an unused general business credit, carrying back a net section 1256 contracts loss, or claiming an overpayment due to a "claim of right" adjustment. Unlike the standard amended return process (Form 1040X), Form 1045 gets processed much faster—the IRS is required to review it within 90 days. Source

A net operating loss essentially means your allowable tax deductions exceeded your income for the year. This commonly happens when you run a business that loses money, though it can also result from casualty losses (like fires or storms), theft losses, or significant employee business expenses. The key principle: instead of losing the tax benefit of that loss year, you can "carry it back" to profitable years when you paid taxes, effectively getting a refund of taxes you shouldn't have paid given your overall financial picture.

When You’d Use Form 1045

You must file Form 1045 within a strict timeframe: within 1 year after the end of the year in which the NOL or credit arose. For example, if you had a net operating loss in the 2011 calendar year, you must file Form 1045 no later than December 31, 2012. Here's the critical requirement: you must file your 2011 tax return first—you cannot file Form 1045 before filing the return for the loss year.

This form differs from an amended return in important ways. While Form 1045 offers speed (90-day processing), it's technically an application, not a formal claim for refund. This means if the IRS disallows it, different rules apply than with Form 1040X. You can choose to file Form 1040X instead if you prefer—it takes longer (no guaranteed processing time, though you can file suit after 6 months), but it provides different legal protections. With Form 1040X, if the IRS disallows your claim, you have 2 years to file suit in court.

The "late" aspect is crucial: if you miss the 1-year deadline for Form 1045, you haven't lost all options. You can still file Form 1040X within 3 years after the due date of your original return for the NOL year (or within 2 years after paying the tax, whichever is later). However, you'll lose the fast-track processing benefit. Source

Key Rules or Details for 2011

Several important rules governed Form 1045 in the 2011 tax year:

Carryback Period Rules: Generally, you must carry back your 2011 NOL to the two preceding tax years (2009 and 2010), starting with the earliest year first. However, special losses get extended carryback periods: eligible losses from casualties or federally declared disasters get a 3-year carryback; farming losses get a 5-year carryback; qualified disaster losses (for disasters occurring before January 1, 2010) get a 5-year carryback; and specified liability losses get a 10-year carryback.

Waiving the Carryback: You can elect to skip the carryback entirely and only carry your NOL forward to future years (up to 20 years). To make this election, you must attach a statement to your 2011 return filed by the due date (including extensions) stating you're electing under section 172(b)(3) to relinquish the entire carryback period. If you filed on time without making the election, you can still make it on an amended return filed within 6 months, but you must write "Filed pursuant to section 301.9100-2" on the statement. Once made, this election is irrevocable.

Items Not Allowed in NOL Calculations: When calculating your NOL, you cannot include: personal exemption deductions, capital losses exceeding capital gains, the section 1202 exclusion, nonbusiness deductions exceeding nonbusiness income, NOL deductions from other years, or the domestic production activities deduction. These adjustments often mean your actual NOL is different (and smaller) than the negative number on your tax return.

Required Attachments: Form 1045 requires extensive documentation. You must attach copies of pages 1 and 2 of your 2011 Form 1040, relevant schedules (A, D, J if applicable), all Forms 8886 for reportable transactions, any extension applications, and all forms creating the carryback (like Schedule C for business losses, Form 6781 for section 1256 contracts, or Form 3800 for business credits). Incomplete applications may be disallowed. Source

Step-by-Step (High Level)

Step 1: Confirm You Have an NOL

Complete your 2011 tax return first. If Form 1040 line 41 shows a negative number, you might have an NOL—but you need to calculate it properly using Form 1045, Schedule A, because many deductions that reduce taxable income don't count toward an NOL.

Step 2: Calculate Your Actual NOL

Complete Schedule A of Form 1045. Start with your taxable income from line 41 of Form 1040. Then adjust by adding back items that don't count, like your standard deduction amount exceeding nonbusiness income, nonbusiness capital losses exceeding gains, personal exemptions, and various other non-qualifying deductions. The result on Schedule A, line 25, is your actual NOL—which may be much smaller than the negative number on your return.

Step 3: Determine Carryback Years

Identify which years you'll carry the loss back to (generally 2009 and 2010 for a 2011 loss). Check if you filed joint or separate returns in those years, as this affects calculations. Gather your original returns for those years—you'll need the exact figures.

Step 4: Complete the Carryback Computation

Fill out lines 10-27 on Form 1045, creating "before" and "after" columns for each carryback year. The "before" column shows your original figures from that year's return. The "after" column shows recalculated figures after applying the NOL deduction. You'll need to refigure items like adjusted gross income, itemized deductions, and taxable income. This determines your tax decrease for each year.

Step 5: Assemble and Mail Your Application

Gather all required attachments (2011 return pages, schedules, supporting forms). Mail Form 1045 in a separate envelope from your 2011 tax return to the IRS Service Center where you'd file your 2011 return. Do not combine them. The IRS has 90 days from the later of your filing date or your 2011 return due date (including extensions) to process it.

Step 6: Wait for Your Refund or Response

If approved, you'll receive a refund check. However, approval doesn't mean the IRS has accepted your calculation as final—they can still audit and adjust it later, potentially assessing penalties and interest if they find errors. Source

Common Mistakes and How to Avoid Them

Mistake #1: Filing Form 1045 Before Your 2011 Tax Return
Many taxpayers file Form 1045 prematurely. You must file your 2011 return first—the instructions explicitly state "file application on or after the date you file your annual income tax return." File your 2011 return, then immediately file Form 1045 if you're within the deadline.

Mistake #2: Mailing Both Forms Together
The instructions warn: "Do not include Form 1045 in the same envelope as your 2011 income tax return." These go to different processing units. Mailing them together can cause delays or lost paperwork.

Mistake #3: Not Adjusting for Percentage-Based Deductions
When you recalculate your "after carryback" figures, you must refigure any deductions that depend on your adjusted gross income—medical expenses, miscellaneous itemized deductions subject to the 2% floor, casualty losses, and others. Simply subtracting the NOL from your original taxable income creates errors that can get your application disallowed.

Mistake #4: Miscalculating the NOL Amount
The most common error is assuming your NOL equals the negative number on your tax return. You must complete Schedule A's adjustments. Personal exemptions, standard deductions exceeding nonbusiness income, and capital losses must be added back. Your actual NOL is typically much smaller than you think.

Mistake #5: Missing the 1-Year Deadline
Unlike regular amended returns (3-year deadline), Form 1045 has a hard 1-year deadline. For a 2011 NOL, the deadline is December 31, 2012. Missing this means you forfeit the 90-day fast processing and must use Form 1040X instead.

Mistake #6: Incomplete Documentation
Applications are disallowed if they have "material omissions or math errors" that aren't corrected within 90 days. Attach every required form: full copies of your 2011 return, all schedules generating the loss (Schedule C, F, etc.), Form 6251 if AMT applies, and any carryback-year forms being recomputed. Review the instructions' attachment checklist carefully.

Mistake #7: Ignoring Alternative Minimum Tax (AMT)
The instructions contain a prominent caution: "When carrying back an NOL to an earlier tax year, an alternative minimum tax (AMT) liability may be created for that earlier year." You must refigure AMT for each carryback year using Form 6251. An NOL carryback can trigger AMT even if you had none originally, potentially reducing or eliminating your expected refund. Source

What Happens After You File

The IRS will process your Form 1045 within 90 days from the later of: (1) the date you file the complete application, or (2) the last day of the month containing your 2011 return's due date (including extensions). For calendar year taxpayers filing on time with extensions, this means 90 days from October 31, 2012.

If Approved: You'll receive a refund check for the tax decrease calculated on Form 1045, lines 26 and 27, totaled across all carryback years. The refund typically arrives faster than standard amended return refunds. However—and this is critical—processing your Form 1045 and paying your refund does not mean the IRS has accepted your application as correct. The instructions explicitly warn: "The processing of Form 1045 and the payment of the requested refund does not mean the IRS has accepted your application as correct." The IRS can later examine your calculation, and if they determine you overstated deductions or the NOL amount due to negligence, disregard of rules, or property valuation errors, you'll owe the money back plus penalties and interest (compounded daily).

If Disallowed: Your application may be disallowed if it contains "material omissions or math errors that are not corrected within the 90-day period." Disallowance means the IRS rejected it administratively—this is different from denying a refund claim. Since Form 1045 is technically not a formal claim for refund (unlike Form 1040X), disallowance has different legal implications. You would then need to file Form 1040X to make a formal refund claim, which restarts the clock on legal remedies.

Dealing with Delays: If the IRS hasn't responded after the 90-day period, contact them with a copy of your application and proof of mailing. Unlike Form 1040X (where you can file suit after 6 months of inaction), Form 1045 doesn't explicitly grant the same litigation rights for IRS inaction.

Future Year Impact: If your NOL isn't fully absorbed by the carryback years, you'll have an NOL carryover to subsequent years (2012, 2013, etc., up to 20 years forward). Complete Schedule B of Form 1045 to calculate this carryover amount, then claim it on your future returns' Form 1040, line 21 ("Other income"), as a negative number. Source

FAQs

1. Can I e-file Form 1045 for 2011?

No. Form 1045 for 2011 must be filed on paper and mailed to your IRS Service Center. The form was not available for electronic filing in 2011. (Note: Electronic filing became available for Form 1045 starting with the 2024 tax year.)

2. Should I file Form 1045 or Form 1040X?

It depends on your priorities. Choose Form 1045 if you need money quickly—it's processed within 90 days. Choose Form 1040X if you prefer stronger legal protections: it's a formal refund claim, giving you explicit rights to file suit after 6 months if the IRS doesn't respond, and you have 2 years to sue if your claim is denied. You have 1 year to file Form 1045 but 3 years for Form 1040X. Many tax professionals recommend Form 1040X for complex situations.

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

Special rules apply when your filing status changes between the NOL year and carryback years. Generally, if you file jointly in the NOL year, carry the NOL back to joint returns in prior years. If you filed separately in carryback years, you must allocate the NOL between spouses based on each person's contribution to the loss. The instructions note: "Special rules apply if you filed a joint return (or a separate return) for some but not all of the tax years involved in figuring an NOL carryback." Attach a detailed computation showing your allocation methodology. Source

4. Can I designate someone to speak with the IRS about my Form 1045?

Yes. Attach Form 2848 (Power of Attorney and Declaration of Representative) if you want to authorize your accountant, tax preparer, or other representative to discuss your application with the IRS on your behalf. This is highly recommended if your application is complex.

5. What if my business loss was from a federally declared disaster?

You may qualify for extended carryback periods. For 2011, if your loss includes eligible losses from casualties or federally declared disasters, that portion can be carried back 3 years instead of 2. Qualified disaster losses from disasters occurring before January 1, 2010, could be carried back 5 years. You must properly identify and separate these loss types on Schedule A to claim the extended carryback.

6. Do I need to file separate Forms 1045 for each carryback year?

Generally, no—one Form 1045 handles multiple carryback years using different column pairs (lines 10-27). However, if your carryback period extends beyond the standard form's columns (for example, a 10-year specified liability loss carryback), you may need additional Forms 1045 for earlier years. Complete lines 1-9 and Schedule A on only one Form 1045 (the one you sign). Use additional Forms 1045 only for the calculations on lines 10-27 for the extended carryback years.

7. Can I change my mind after filing Form 1045?

If you elected to waive the carryback period (carry the NOL forward only), that election is irrevocable—you cannot change it. If you filed Form 1045 to carry back an NOL but want to reverse that decision, you would need to file an amended return for the NOL year making the waiver election, but only if you're still within the 6-month window after the original due date (excluding extensions). Once the IRS processes your Form 1045 and issues a refund, reversing course becomes very complicated and may not be possible. Consider your strategy carefully before filing. Source