This article will assist you with entering Form 1045, Application for Tentative Refund, in the Individual module of Intuit ProConnect. Form 1045 is used to apply for a refund after applying NOL to prior year returns.
What is the purpose of Form 1045?
Form 1045 is used by an individual, estate, or trust to apply for a quick tax refund resulting from:
- The carryback of an NOL
- The carryback of an unused general business credit
- The carryback of a net section 1256 contracts loss
- An overpayment of tax due to a claim of right adjustment under section 1341(b)(1)
Refer to the IRS Instructions for Form 1045 for more information about this form.
How do I enter Form 1045 in ProConnect?
Follow these steps to enter Form 1045 in the program:
- From the left of the screen, select Miscellaneous Forms and choose Tentative Refund (1045).
- If prepared within the year the loss was generated, the Net Operating Loss will be pulled automatically. The NOL can be overridden using the Net operating loss [Override] field.
- Entries must be made if carrying back Unused general business credit and Net Section 1256 contract loss.
- Scroll down to the Step 1 - Compute Schedule B (NOL Carryover) section.
- This section is used to compute the Schedule B (NOL Carryover) by entering the taxable income and other applicable fields.
- Make entries in the field Taxable income (before carryback) (-1=none).
- Start with the left column and enter the earliest carryback year to which the loss is being carried.
- Scroll down to the Step 2 - Computation of Decrease in Tax section.
- This section is used to compute the decrease in tax.
- Complete any applicable fields in the Before Carryback subsection.
- You can obtain these amounts from the original return filed.
- Complete any applicable fields in the After Carryback subsection.
- You must manually calculate these amounts.
To enter carryback for additional prior years:
ProConnect Tax doesn't pull any amounts from prior year programs, and the prior year amounts must be entered. The Application for Tentative Refund from 1045 screen allows you to enter carryback information for up to 3 years. Column 3 is the 1st preceding year, Column 2 is the 2nd preceding year, and Column 1 is the 3rd preceding year.
If more than 3 years are needed:
- Use the + sign at the top of the screen to add an additional Form 1045.
- Enter the information for that year.
- Under the Miscellaneous subsection, select the box "Supplement (skip lines 1 through 9)."
You only need entries in the fields below the Adjustment to Itemized Deductions subsection if the taxpayer itemized and had either a net capital loss deduction, Section 1202 exclusion, or a Domestic Production Activities Deduction.
Why am I getting a NOL critical diagnostic?
For tax year 2021, if there is an NOL for 2018 or newer, you'll receive diagnostic ref #53656:
"NOL #1: The program doesn't automate the limitation of post-2017 net operating losses to 80% of taxable income, before taking into account any NOL deduction. You must override the amount of post-2017 NOL carryforward absorbed this year so it does not exceed the 80% of taxable income limit."
To resolve this error, calculate the allowable amount of the NOL and enter the override on the Net Operating Loss screen in the NOL absorbed in 2021 field. See Net operating losses for the most up to date information from the IRS.