What Form 1045 Is For

Form 1045 is the IRS's express lane for getting a tax refund when you've experienced certain financial losses or overpaid taxes. Think of it as a "quick refund application" that bypasses the usual slow refund process. When you file this form, the IRS commits to reviewing your request and issuing a decision within 90 days—much faster than the typical amended return process that can take 6 months or longer.

For the 2019 tax year, individuals, estates, and trusts use Form 1045 to apply for a tentative (temporary) refund in four specific situations: carrying back a Net Operating Loss (NOL), which occurs when your business deductions exceed your income; carrying back unused general business credits that you couldn't use in the current year; carrying back net losses from section 1256 contracts (certain financial investments); or claiming an overpayment due to a "claim of right" adjustment when you had to return income you previously reported and paid taxes on. IRS.gov

The most common use—especially relevant for 2019—involves Net Operating Losses. If your business had a terrible year and your deductions significantly exceeded your income, you can "carry back" that loss to offset income from previous profitable years, essentially getting a refund on taxes you already paid.

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

Timing is critical with Form 1045. You must file it within one year after the end of the tax year in which your NOL, unused credit, net section 1256 contracts loss, or claim of right adjustment occurred. For a 2019 calendar-year taxpayer with an NOL, this means you had until December 31, 2020, to file Form 1045. However, if you were affected by a federally declared disaster, you may have received additional time. IRS Instructions for Form 1045

One important rule: you must file your 2019 income tax return no later than the date you file Form 1045. Don't submit Form 1045 before completing your regular tax return, and never include Form 1045 in the same envelope as your tax return—they go through different processing systems.

If you miss the one-year window for Form 1045, you're not out of luck entirely. You can still file Form 1040-X (Amended U.S. Individual Income Tax Return) to claim your refund, but you'll sacrifice the 90-day processing guarantee. The IRS isn't required to act on Form 1040-X within any specific timeframe, and you typically have up to three years from the original return's due date to file an amended return.

Key Rules or Details for 2019

The 5-Year Carryback

The 2019 tax year saw dramatic changes to NOL rules thanks to the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) passed in 2020. These changes were retroactively applied to 2019, creating significant refund opportunities that didn't exist when you originally filed your 2019 return.

The 5-Year Carryback: The biggest change for 2019 was the restoration of the 5-year carryback period for NOLs. Under the Tax Cuts and Jobs Act of 2017, most NOL carrybacks had been eliminated, but the CARES Act reversed this for losses arising in 2018, 2019, and 2020. This means if you had an NOL in 2019, you could carry it back to 2014 and work forward through 2018 until the loss is fully absorbed. IRS Instructions for Form 1045

Section 965 Election

Section 965 Election: The CARES Act also introduced a special election allowing you to exclude years with section 965 inclusions (related to the 2017 tax reform's one-time transition tax on foreign earnings) from your 5-year carryback period. This prevents your NOL from reducing the tax on deemed repatriation income, which could be disadvantageous in complex situations.

No 80% Limitation

No 80% Limitation: Unlike current rules, losses carried back to 2019 and earlier years aren't subject to the 80% taxable income limitation. Your NOL can completely wipe out taxable income in the carryback year.

Business Loss Limitation Repealed

Business Loss Limitation Repealed: The CARES Act repealed the excess business loss limitation for noncorporate taxpayers for years 2018-2020. If you filed your 2019 return with this limitation applied, you could file an amended return or Form 1045 to correct this and potentially increase your NOL.

Waiving the Carryback

Waiving the Carryback: You can elect to forgo the carryback period and instead carry your NOL forward indefinitely. To make this election, you must attach a statement to your original 2019 return (or an amended return filed within 6 months of the due date). Once you waive the carryback, the decision is generally irrevocable.

Step-by-Step (High Level)

Step 1: Determine Your Eligibility

First, figure your 2019 NOL using Schedule A of Form 1045. This involves calculating your taxable income, then making specific adjustments for nonbusiness deductions, capital losses, and other items. If the result is negative, you have an NOL to carry back.

Step 2: Identify Your Carryback Years

Determine which years you'll carry the loss back to. For most 2019 NOLs, you'll start with your 2014 tax year and work forward through 2015, 2016, 2017, and 2018 until the loss is fully absorbed. If you elected to exclude section 965 years, you'll skip those years.

Step 3: Gather Required Documentation

Collect copies of your original 2019 tax return (Form 1040 or 1040-SR with all relevant schedules), any Schedule K-1s from partnerships or S corporations, Form 461 if you have business losses, Form 6251 for Alternative Minimum Tax, and any other forms related to your loss or credits. You'll need to attach these to Form 1045.

Step 4: Complete the Main Form

Fill out Form 1045's front page with your identifying information and indicate which type of carryback you're claiming (NOL, unused credit, etc.). Then complete the computation section showing "before carryback" and "after carryback" figures for each affected year.

Step 5: Calculate the Tax Decrease

For each carryback year, figure how the loss affects your adjusted gross income, deductions, exemptions, taxable income, and ultimately your tax liability. You may need to refigure certain deductions that are based on AGI percentages, such as medical expenses or miscellaneous itemized deductions (for pre-2018 years).

Step 6: Complete Schedule B (if needed)

If your NOL exceeds the income in the first carryback year, use Schedule B to calculate the remaining loss that carries forward to the next year. This schedule helps track how much of your loss is absorbed in each year.

Step 7: Mail Your Application

Send Form 1045 to the IRS service center for your location (as shown in your 2019 tax return instructions). Mail it separately from any other returns, and consider sending it via certified mail for proof of delivery.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to Attach Required Documentation

The IRS can delay or disallow your application if you don't include all required forms and schedules. Always attach complete copies of your 2019 return with all schedules, not just excerpts. Double-check the "What to Attach" section of the Form 1045 instructions before mailing.

Mistake #2: Mathematical Errors in Calculating the NOL

Schedule A's NOL calculation involves multiple adjustments and can be confusing. Common errors include treating business income as nonbusiness income (or vice versa), forgetting to enter capital losses as positive numbers, and miscalculating the adjustments for items limited by AGI. Use IRS Publication 536 for detailed examples and consider professional tax software or a tax professional for complex situations.

Mistake #3: Not Refiguring AGI-Based Deductions

When you carry back an NOL, your adjusted gross income for the carryback year changes. Many deductions are based on AGI thresholds—medical expenses, mortgage insurance premiums, casualty losses, and miscellaneous deductions. You must recalculate these deductions using your new, lower AGI. Forgetting this step understates your refund.

Mistake #4: Ignoring Alternative Minimum Tax Implications

Carrying back an NOL can create or increase Alternative Minimum Tax liability in the carryback year, even if you didn't owe AMT originally. Complete Form 6251 for each carryback year to determine if AMT applies. This can reduce your expected refund.

Mistake #5: Missing the Filing Deadline

The one-year deadline after the end of your NOL year is firm. For a 2019 calendar-year NOL, that deadline was December 31, 2020. If you discovered your NOL later (perhaps after the CARES Act changes), you may have already missed the Form 1045 deadline, but you can still file Form 1040-X within three years of your original return's due date—for 2019, that would be April 15, 2023 (or July 17, 2023, with COVID-19 extensions).

Mistake #6: Filing Form 1045 for Situations Requiring Form 1040-X

You cannot use Form 1045 to carry back items other than NOLs to a section 965 year, to request a foreign tax credit release due to an NOL carryback, or to claim certain other adjustments. These require Form 1040-X. Read the instructions carefully to determine which form applies to your situation.

What Happens After You File

Once the IRS receives your complete Form 1045 application, the clock starts ticking on their 90-day processing commitment. The 90 days begin from whichever is later: the date they receive your complete application or the last day of the month that includes your 2019 return's due date (including extensions).

During this period, the IRS may contact you or your authorized representative for additional information. If you want to designate someone (like an accountant) to handle IRS inquiries, attach Form 2848 (Power of Attorney) to your Form 1045.

If Approved

The IRS will issue your tentative refund within the 90-day window. However—and this is crucial—receiving the refund doesn't mean the IRS has accepted your application as correct. The "tentative" label means they're provisionally granting your refund while reserving the right to examine it more thoroughly later. If the IRS later determines you overstated deductions or understated income, you'll owe back taxes, interest (compounded daily), and potentially penalties. Think of it as a provisional refund, not a final determination.

If Disallowed

The IRS may disallow your application if it contains material omissions or mathematical errors that aren't corrected within the 90-day period. If they disallow it in whole or in part, you cannot sue in court to challenge the disallowance of Form 1045 itself. However, you can still file Form 1040-X as a formal claim for refund. Unlike Form 1045, if the IRS denies your Form 1040-X claim, you can file suit in court (but you must do so within 2 years of the disallowance). IRS Instructions for Form 1045

Interest Payments

If your refund is approved, the IRS will pay you interest on the refund amount from the date of overpayment until the date the refund is issued. This can add up to a meaningful sum if you're carrying back losses several years.

FAQs

Q1: Can I still file Form 1045 for my 2019 NOL in 2025?

Unfortunately, no. The deadline to file Form 1045 for a 2019 calendar-year NOL was December 31, 2020—one year after the end of the tax year. However, if you filed your 2019 return by April 15, 2020 (or the extended deadline), you may still have time to file Form 1040-X. The deadline for 1040-X is generally three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. For most 2019 returns, this deadline was April 15, 2023 (extended to July 17, 2023, due to COVID-19 pandemic relief).

Q2: What's the difference between Form 1045 and Form 1040-X for claiming an NOL refund?

Form 1045 offers speed—the IRS must process it within 90 days—but it cannot be challenged in court if disallowed. Form 1040-X takes longer to process (no guaranteed timeline), but if the IRS denies your claim, you can file suit in federal court. Form 1045 is best when you have a clear-cut NOL and want fast money. Form 1040-X is better for complex situations where you might need to litigate, or when you've missed the 1-year Form 1045 deadline.

Q3: How does the CARES Act's 5-year carryback affect my 2019 NOL?

The CARES Act was a game-changer for 2019 NOLs. Previously, the Tax Cuts and Jobs Act had eliminated most NOL carrybacks, allowing only carryforwards. The CARES Act restored a 5-year carryback specifically for losses arising in 2018, 2019, and 2020. This means your 2019 NOL can offset income from as far back as 2014, potentially generating substantial refunds from high-income years before 2019. Many taxpayers who filed their 2019 returns before the CARES Act passed in March 2020 didn't realize they could get these refunds.

Q4: Will carrying back my 2019 NOL affect my eligibility for other tax benefits in prior years?

Potentially, yes. Carrying back an NOL reduces your adjusted gross income in the carryback years, which can affect AGI-based calculations. On the positive side, it might increase AGI-limited deductions like medical expenses (which are limited to amounts exceeding 7.5% or 10% of AGI). On the negative side, it could reduce or eliminate certain credits like the earned income credit, child tax credit, or education credits that phase out at higher AGI levels but also require minimum income. It might also affect eligibility for premium tax credits for health insurance purchased through the marketplace.

Q5: Can I carry back an NOL to a year where I filed a joint return if I'm now filing separately (or vice versa)?

Yes, but special rules apply. When your filing status changes between the NOL year and the carryback year, you need to allocate the NOL and other items between spouses. IRS Publication 536 provides detailed guidance on this, but in general, you'll need to attach detailed allocation schedules to Form 1045 showing how you divided the NOL and related items. This is a complex area where professional tax assistance is highly recommended.

Q6: What is a "section 965 year" and should I elect to exclude them from my carryback?

Section 965 refers to the one-time transition tax on foreign earnings that was part of the 2017 Tax Cuts and Jobs Act. If you had untaxed foreign earnings in 2017 or 2018, you may have had to recognize that income and pay tax on it. A "section 965 year" is a tax year in which you had this inclusion. The CARES Act allows you to elect to skip these years when carrying back your 2019 NOL, because reducing section 965 income with an NOL might actually be disadvantageous due to complex interactions with foreign tax credits and payment installment plans. This election is highly technical—if you think you have section 965 income, consult a tax professional before deciding whether to make this election.

Q7: Do I need to hire a tax professional to file Form 1045?

While it's not legally required, Form 1045 involves complex calculations, particularly Schedule A (determining the NOL) and Schedule B (tracking carryovers). The stakes are high—errors can result in disallowance, and you may not discover mistakes until the IRS audits you years later. If your NOL is substantial or involves multiple years, business entities, or complex transactions, professional help from a CPA or enrolled agent familiar with NOL carrybacks is a wise investment. For simpler situations with modest losses, quality tax software that supports Form 1045 may suffice.

Sources

• IRS Form 1045 - About Page
• IRS Form 1045 Instructions for 2019
• IRS Form 1045 (2019 version)
• IRS Publication 536 (2019) - Net Operating Losses

Note: Tax situations vary widely. This summary provides general guidance based on 2019 tax law. For specific advice about your situation, consult a qualified tax professional.