Review these important details about Form 1045 and NOL (Net Operating Loss).
- The IRS provides Form 1045 so that taxpayers may file for a quick refund of previous years' tax resulting from an NOL that was generated on a later year return. This option is provided as an alternative to filing amended returns for those previous years. For more information on determining whether a 1045 or amended returns should be filed, see the Instructions for Form 1045.
- Starting in Drake16: enter all pertinent information on the 1045 screen in order to populate the 1045 form.
- The left side of the screen will generate pages 1 and 2 -- the tax year to which the NOL should be carried back to and the AGI from that year are required to be entered. Enter any additional information necessary.
- The right side of this screen will populate the Schedule B, pages 4 and 5, of the 1045. Enter any pertinent information in this section.
- To enter information for an additional carryback year, press Page Down to generate an additional 1045 screen.
- Important: starting in Drake18, you can only select from the preceding two years due to changes implemented by the TCJA.
- If you want to produce pages 1-5, do not mark the option on the NOL screen that indicates that the 20YY NOL is being carried back later or outside of the software.
- Never enter current year losses on the LOSS screen. The software automatically carries a current year NOL forward for you, so no additional entry is necessary. This carryforward is displayed on the Wks CARRY worksheet (WK_CARRY in Drake15 and prior) in view mode. (Note: The Carryover worksheet must be enabled on the Setup > Options > Form & Schedule Options tab.)
- The actual result is displayed on line 41, even if it is negative.
- In Drake Tax, Form 1045 is only able to be generated for carryback of a NOL. If you need to carry back a general business credit or Section 1256 loss on Form 1045, you will have to manually complete the form outside the software. A fillable PDF is available from the IRS.
- E-Filing: You can e-file the return in which you generate Form 1045, but Form 1045 does not e-file with the return, nor may it be e-filed separately. Preparers should paper file Form 1045 the same way as they would paper file Form 1040 for the same taxpayer. The IRS list of filing addresses is here: Tax Professionals - Where to File Individual Returns for Your Clients
Form 1045 will generally not produce if there is no current year net operating loss to carry back. The software produces Form 1045 Schedule A - NOL if either:
- there is an NOL, or
- there is not an NOL, but
- You have selected the PRNT screen option Print Form 1045 page 3 (Schedule A - NOL) (page 2 in Drake14), and
- The amount on Form 1040 for AGI minus standard or itemized deductions is negative (Form 1040, line 7 less line 8 starting in Drake18, Form 1040, line 41 in Drake17 and prior).
To eliminate form 1045 Schedule A from view, uncheck the PRNT screen option.
Note: Drake13 and earlier software produces Form 1045 Schedule A - NOL if either:
- You have selected Calculate 1045 page 2 ONLY on screen NOL.
- Or you have selected Prepare as needed in the Form 1045 page 2 (NOL) field at Setup > Options > Form & Schedule Options and Line 41 of the 1040 is negative.
In any event, Form 1045 is not transmitted with the return.