What the Form Is For

Form 1045 is a specialized IRS form that individuals, estates, and trusts use to request an expedited tax refund by "carrying back" certain losses or credits to previous tax years. Think of it as a time machine for your taxes: when you have a bad year financially, you can reach back to profitable years and reduce the taxes you paid then, resulting in a refund now.

The form applies to four specific situations. First, and most commonly, it handles Net Operating Loss (NOL) carrybacks—when your business deductions exceed your income for the year, creating a loss that can offset income from earlier profitable years. Second, it covers unused general business credit carrybacks, which occur when tax credits you earned (like investment credits or biofuel producer credits) exceed your tax liability and can't be fully used in the current year. Third, it addresses net section 1256 contracts loss carrybacks, which apply to specific types of investment contracts including regulated futures and certain options. Finally, it handles claim of right adjustments under section 1341(b)(1), where you previously reported income that you later had to repay.

The "tentative" in the form's title means the IRS processes your application quickly—within 90 days—but reserves the right to audit and adjust it later if they find errors. This differs from a regular amended return, where the IRS conducts a full review before issuing any refund. IRS.gov

When You’d Use It (Late/Amended Filing Scenarios)

Timing is everything with Form 1045. You generally must file within one year after the end of the tax year in which the loss, unused credit, or adjustment occurred. For 2022 losses or credits, this means your deadline is December 31, 2023. Unlike regular tax returns, you cannot file Form 1045 before you've submitted your regular income tax return for that year—the form must be filed on or after the date you file your annual return.

If you miss the one-year deadline, don't panic: you can still claim the refund using Form 1040-X (Amended U.S. Individual Income Tax Return) within three years of the original return's due date, including extensions. However, Form 1040-X doesn't offer the 90-day expedited processing that makes Form 1045 attractive, and you'll need to file a separate Form 1040-X for each year you're carrying the loss back to, whereas Form 1045 handles up to five carryback years on a single form.

There are specific situations where you must use Form 1040-X instead of Form 1045: if you're carrying back items to a "section 965 year" (a year when you had certain foreign income inclusions), if you're releasing prior year foreign tax credits due to an NOL, or if you're releasing prior year general business credits because of released foreign tax credits. These technical scenarios require the more comprehensive review process of Form 1040-X. IRS Form 1045 Instructions 2022

Key Rules or Details for 2022

The 2022 tax year brought specific rules that significantly impact how Form 1045 works. The most important change: most NOLs arising in 2022 cannot be carried back and can only be carried forward indefinitely to future years. This represents a major shift from temporary COVID-era rules that allowed 5-year carrybacks.

However, critical exceptions exist. Farming losses retain special treatment: they can be carried back 2 years. If you operate a farming business—which includes cattle operations, crop cultivation, or harvesting trees for fruit, nuts, or ornamental purposes—and your NOL arose from that farming activity, you can carry the loss back to 2020 and 2021. Any unused portion then carries forward indefinitely. Similarly, certain casualty insurance companies (other than life insurance) can still carry back NOLs.

For unused general business credits, the standard carryback period is 1 year, meaning 2022 credits typically carry back to 2021. Net section 1256 contracts losses can carry back 3 years—to 2019, 2020, and 2021.

An important limitation affects noncorporate taxpayers: excess business losses remain disallowed for tax years 2021 through 2028 under section 461(l). This means you must use Form 461 to calculate any limitation before computing your NOL. Additionally, carrying back an NOL may create or increase Alternative Minimum Tax (AMT) liability for the carryback year, even if you didn't owe AMT originally—something many taxpayers overlook.

For 2022, NOL deductions for tax years beginning after 2020 are limited to 80% of taxable income (computed without certain deductions), though pre-2018 NOLs carried to 2022 aren't subject to this limitation. If you're carrying a loss back to 2021, be aware of the advance Child Tax Credit complications: the NOL may reduce your adjusted gross income, potentially affecting excess advance payment calculations. IRS Form 1045 Instructions 2022

Step-by-Step (High Level)

Step 1: Calculate Your NOL

Use Schedule A of Form 1045 to compute your net operating loss. This involves taking your taxable income and making specific adjustments—adding back NOL deductions from other years, capital loss deductions, section 1202 exclusions, section 199A qualified business income deductions, and the deductible portion of self-employment tax. The calculation distinguishes between business and nonbusiness income and deductions, which is critical for accuracy.

Step 2: Figure the Carryback Years

Determine which prior years you're applying the loss to. For 2022 farming losses, this would be 2020 (second preceding year) and 2021 (first preceding year). Complete Schedule B if the loss isn't fully absorbed in the first carryback year; this calculates how much carries to subsequent years.

Step 3: Refigure Each Carryback Year's Tax

This is the heart of Form 1045. For each year receiving the carryback, you'll complete paired columns showing "before carryback" and "after carryback" amounts. Start with adjusted gross income, then recalculate deductions (many are percentage-based and change when AGI changes), taxable income, tax liability, credits, and other items. This recalculation cascades through the entire return—changing your AGI might affect medical expense deductions, IRA deductions, education credits, and more.

Step 4: Assemble Required Attachments

Form 1045 demands extensive documentation. Attach your complete 2022 Form 1040 (or Form 1040-SR pages 1-3), all relevant schedules (A, C, D, E, F, etc.), any Forms 8886 for reportable transactions, Form 461 for business loss limitations, Form 6251 for AMT calculations, all partnership/S-corp K-1s that contributed to the loss, and supporting forms that created the carryback (like Form 3800 for business credits or Form 6781 for section 1256 contracts). Missing attachments are the number one reason applications get delayed or disallowed.

Step 5: Submit to the Correct Service Center

Mail Form 1045 to the IRS Service Center that serves your location (check the Form 1040 instructions for your address). Use a separate envelope—never include Form 1045 with your regular tax return. Consider using certified mail with return receipt to prove filing date.

Common Mistakes and How to Avoid Them

Mistake #1: Incomplete Attachments

The most frequent error is incomplete attachments. The IRS instructions explicitly warn: "You must attach copies of all required forms...and complete all lines on Form 1045 that apply to you. Otherwise, your application may be delayed or disallowed." Many taxpayers submit the main form but forget supporting schedules, causing automatic rejection. Before mailing, create a checklist from the instructions and verify every required document is included.

Mistake #2: Math Errors and Inconsistent Figures

Math errors and inconsistent figures plague many applications. When you refigure amounts for the "after carryback" column, remember that changing AGI creates a domino effect—you must recalculate every item that depends on AGI, including itemized deduction limitations, phase-outs for credits, and the qualified business income deduction. Use worksheets from the original year's forms and instructions to ensure accuracy. The IRS can disallow applications with material errors that aren't corrected within 90 days.

Mistake #3: Ignoring Cascading Effects

Many filers mistakenly ignore the cascading effect on credits and deductions in carryback years. For example, if you're carrying a loss back to 2021, you must refigure not just your taxable income but also premium tax credits (using Form 8962), advance Child Tax Credit payments, self-employment tax, Alternative Minimum Tax, and Net Investment Income Tax. Each of these calculations uses AGI or modified AGI as an input. Failing to recalculate these items means your "after carryback" numbers will be wrong, delaying your refund.

Mistake #4: Timing Mistakes

Timing mistakes are costly. Filing Form 1045 before submitting your 2022 return results in rejection. Missing the one-year deadline means you forfeit expedited processing. If you qualify for disaster-related extensions (check IRS.gov/DisasterTaxRelief), make sure you actually claim them rather than assuming they apply automatically.

Mistake #5: Using the Wrong Form

Some taxpayers attempt to use Form 1045 for situations requiring Form 1040-X. Remember: section 965 years, released foreign tax credits, and released general business credits require amended returns, not tentative refund applications. Using the wrong form guarantees denial.

Mistake #6: Poor Record Organization

Finally, poor record organization causes problems during IRS follow-up. The agency may contact you for clarification during the 90-day processing window. If you haven't kept copies of everything submitted or can't quickly produce additional documentation, processing stops until you respond, negating the speed advantage of Form 1045.

What Happens After You File

Once you mail Form 1045, the IRS has 90 days to process your application, measured from the later of: (1) when they receive your complete application, or (2) the last day of the month containing your 2022 return's due date (including extensions). For most 2022 returns, this means 90 days from either when your complete Form 1045 arrives or October 31, 2023 (if you filed a valid extension to October 15).

During this period, the IRS conducts a limited review focusing on mathematical accuracy and whether required documentation is attached. They may contact you or your designated representative (use Form 2848 to authorize someone) if they need clarification. Unlike regular refund claims, Form 1045 isn't a formal "claim for credit or refund" under tax law—it's an application for tentative relief. This means if the IRS disallows it, you cannot sue in court to challenge the denial. Your only recourse is filing Form 1040-X before the statute of limitations expires.

If approved, the IRS will issue your refund within the 90-day window. However—and this is crucial—receiving your refund doesn't mean the IRS has accepted your calculations as correct. The agency can later audit the application and, if they find overstatements, will bill you for excessive refunds as if they were math errors on an original return, plus interest compounding daily. Penalties may apply if the IRS determines you were negligent, substantially understated income, or overvalued property deductions.

In practice, processing times have often exceeded 90 days in recent years. The Treasury Inspector General for Tax Administration reported significant delays in 2021-2022, with many applications taking six months or longer despite the statutory deadline. Interest accrues in your favor starting from the 46th day after the IRS receives the form, providing some compensation for delays.

If your application is disallowed or you don't receive a response, you can file Form 1040-X for the same tax years as a backup. With Form 1040-X, if the IRS doesn't process your claim within six months, you can file suit in federal court. If they disallow your claim, you have two years from the denial date to sue. This litigation right doesn't exist with Form 1045, making Form 1040-X the stronger legal option—though slower.

FAQs

Q: Can I e-file Form 1045?

A: Starting with the 2024 tax year, Form 1045 can be filed electronically. However, for 2022 Form 1045 applications, you must mail a paper copy to the IRS Service Center. Keep copies of everything you send, and consider using certified mail for proof of filing date.

Q: Should I use Form 1045 or Form 1040-X?

A: Form 1045 offers faster processing (90 days vs. 6+ months) and handles multiple carryback years on one form, while Form 1040-X requires separate forms for each year. Choose Form 1045 if you're within the one-year deadline and want your refund quickly. Use Form 1040-X if you've exceeded the one-year deadline, need to carry back to a section 965 year, or want the right to sue if your claim is denied. You can also file Form 1045 for speed, then follow up with Form 1040-X as a protective claim if concerned about the tentative nature of Form 1045.

Q: What if I have both a farming loss and a non-farming loss in 2022?

A: You must separate them. The farming loss portion can be carried back 2 years (to 2020 and 2021), but the non-farming loss arising in 2022 cannot be carried back—it can only be carried forward to future years. Calculate the farming loss as the smaller of: (a) what your NOL would be if only farming business income and deductions were counted, or (b) your total NOL.

Q: How does carrying an NOL back to 2021 affect my advance Child Tax Credit?

A: The NOL will reduce your 2021 adjusted gross income and modified AGI, which may change your excess advance Child Tax Credit repayment obligation. You must recalculate Schedule 8812 using your new, lower AGI. The good news: a lower MAGI might reduce repayment amounts under the protection provisions of section 24(j) based on income thresholds. Include any excess advance payment amounts on Form 1045, line 17, in both the "before carryback" and "after carryback" columns.

Q: What happens if the IRS finds my tentative refund was too large?

A: The IRS will bill you for the excessive amount as if it resulted from a math or clerical error, meaning they can assess it without going through the normal deficiency procedures. You'll owe the excess refund plus interest compounded daily from the date you received it. If they determine the overstatement was due to negligence, substantial understatement of income, or overvaluation of property, penalties may also apply.

Q: Can I authorize my accountant to speak with the IRS about my Form 1045?

A: Yes, and it's highly recommended. Attach Form 2848 (Power of Attorney and Declaration of Representative) to your Form 1045. The IRS may need to contact someone during the 90-day processing window to clarify calculations or request additional information. Having an authorized representative who can respond immediately prevents delays that could push processing beyond 90 days.

Q: I missed the one-year deadline for Form 1045. Can I still get my refund?

A: Yes, but you must use Form 1040-X instead. You have three years from the due date (including extensions) of your 2022 return to file amended returns for the carryback years. Form 1040-X doesn't offer 90-day processing, but it does preserve your legal rights if the claim is denied. File a separate Form 1040-X for each carryback year, attach Schedule A from Form 1045 showing your NOL calculation, and write "Carryback Claim" at the top of page 1.

Additional Resources

For More Information:

• Form 1045 and instructions: IRS.gov/Form1045
• Net Operating Loss guidance: IRS Publication 536
• Disaster relief extensions: IRS.gov/DisasterTaxRelief