What IRS Form 1045 (2013) Is For
IRS Form 1045 (2013) allows individuals, estates, and trusts to apply for a tentative refund upon incurring Net Operating Losses (NOLs). The form enables taxpayers to carry back NOLs to previous taxable years, providing a quicker refund compared to the standard amended return process.
It is designed to assist individuals and entities that have experienced a reduction in gross or taxable income due to specific deductions or credits, such as qualified business income and farming business losses. Form 1045 is particularly valuable for those facing financial hardship, as it expedites the process of securing a refund from prior tax years, improving cash flow, and providing immediate relief.
When You’d Use Form 1045 (2013)
Form 1045 is used primarily when taxpayers experience NOLs and need to apply the loss to prior tax years to obtain a tax refund. It is especially valuable when there is no carryover period, allowing losses to offset taxable income in carryback years. The form is particularly useful for taxpayers who have experienced casualty losses or certain modifications affecting their gross income or nonbusiness income.
Taxpayers may waive the carryback period and apply the loss only to future years, but this decision is irreversible. The NOL carryforwards allow the taxpayer to apply the loss to up to 20 years. If the NOL year includes an exception that applies, the taxpayer should consider all options before filing.
Key Rules or Details for 2013
The NOL carryback period for 2013 losses is generally two years, enabling taxpayers to apply their losses to tax years ending within that period. Most taxpayers will use the carryback years to apply their NOL deductions and adjust their taxable income. If taxpayers choose not to carry back the loss, they may apply it to future years through the NOL carryforwards.
For losses incurred in 2013, taxpayers can extend the carryback to five years for certain types of losses, including casualty losses. The ability to use only NOLs for tax adjustments is a key aspect of the process, which impacts how modified taxable income is calculated. Taxpayers must file the correct tax return to utilize the carryback provision properly.
Step-by-Step (High Level)
Step 1: Calculate Your NOL Deduction
Begin by calculating your NOL deduction using Schedule A. You must ensure that all eligible losses, including farming losses and qualified small business stock, are included in the calculation.
Step 2: Complete the Carryback Computation
Once you have determined the NOL, apply it to the appropriate carryback years. Adjust your total tax liability for each year to reflect the loss carried back, including farming losses that might qualify for a longer carryback period.
Step 3: Attach Required Documents
Be sure to attach the necessary forms, including Form 1040 and related schedules, to your tax return. Ensure that all required documentation is included to avoid delays in processing.
Step 4: Submit Your Form
Be sure to send your completed Form 1045 to the correct IRS service center. Ensure that the form is mailed separately from your regular tax return to ensure proper processing.
Common Mistakes and How to Avoid Them
It is crucial to avoid common mistakes when filing Form 1045 to ensure accurate processing and minimize delays. Below is a table outlining frequent mistakes and how to prevent them.
1. Missing Filing Deadline
- How to Avoid It: Taxpayers must file Form 1045 within one year after the NOL year ends to avoid missing the deadline.
2. Incorrect NOL Calculation
- How to Avoid It: Review all NOL deductions carefully to ensure tax attributes and adjustments are calculated accurately.
3. Failing to Include Farming Losses
- How to Avoid It: Include all eligible farming losses in your carryback years to ensure full eligibility for relief.
4. Not Filing the Correct Forms
- How to Avoid It: Attach Schedule A and any other required forms to your tax return to prevent processing delays.
5. Omitting Supporting Documents
- How to Avoid It: Confirm that all income tax forms and schedules are included when submitting your Form 1045.
Avoiding these common mistakes helps ensure compliance and speeds up the IRS processing of your refund.
What Happens After You File
Once Form 1045 is filed, the IRS will begin processing the application. The IRS reviews the taxable years to verify the carryback period based on the NOL deductions claimed. This includes determining whether the loss is properly applied to the taxable year beginning and whether all required adjustments have been made.
If the IRS approves your application, it will issue a tax refund for the lost year based on the carryback. However, if the application is disallowed, you may need to file an amended return using Form 1040X to claim the refund. In some cases, the IRS may contact you for additional documentation if it needs clarification.
The processing of your claim ensures that you understand your taxable income and any impact on future carry-forward years. Keep track of the IRS’s decision and follow up if necessary. Visit our IRS Form Help Center for additional filing guidance.
FAQs
Can I e-file my Form 1045 for tax year 2013?
No, e-filing is not available for Form 1045 for tax years beginning in 2013. The application for an estimated refund must be mailed in paper form to the correct IRS service center. Starting with future taxable years, e-filing may become available as part of the IRS’s ongoing updates.
How does the NOL carryback period affect my refund?
The NOL carryback period allows taxpayers to apply NOLs arising in a particular taxable year to prior tax years. This provides a quick, tentative adjustment to reduce tax liability and obtain a refund. If you miss the carryback year, the loss can instead be carried forward to offset future taxable income.
What is the impact of the CARES Act on NOLs?
The CARES Act provides special provisions for NOLs arising in tax years 2018, 2019, and 2020. Under the Jobs Act, the year carryback period for certain NOLs was extended to five years, allowing taxpayers to carry back losses to earlier years for quicker tax refunds. The entire carryback period is particularly useful for small businesses facing losses due to coronavirus aid disruptions.
Can I waive the carryback period for my NOL deductions?
Yes, you can waive the carryback period for NOLs arising in a specific year. This election, made under section 172(b) of the Internal Revenue Code, allows you to apply the NOL only to taxable years beginning after the loss arises. This decision is irrevocable, so it’s crucial to consult tax professionals before making this election.
What happens if my NOL is carried forward indefinitely?
Under the Tax Cuts and Jobs Act, some NOLs arising after 2017 can be carried forward indefinitely to offset modified adjusted gross income in future years. This provision eliminates the 20-year limit for NOL carryforwards and allows businesses and individuals to apply their losses as long as needed, reducing future taxable income.
Access more federal filing resources through our Federal Fillable Tax Forms page.
