Form 1045: How to Apply for a Quick Tax Refund

By Mark Henricks

Form 1045 is a tax form that can allow taxpayers in certain situations to apply for a quicker refund of taxes paid in prior years. The form, officially known as the Application for Tentative Refund, can be used by filers who have unused general business credits, net Section 1256 contract losses or carryback of a net operating loss. Essentially, if you’ve experienced a financial setback in the current tax year, Form 1045 may be able to help you recoup some of your previous tax payments more swiftly than the standard refund process.

A financial advisor can help you with your tax planning needs so that you aren’t paying more than you should.

What Is Form 1045?

Form 1045 is also known as the Application for Tentative Refund. This official IRS tax form can be used by individuals, estates and trusts to apply for a quick refund of taxes. This form is particularly useful when taxpayers experience a net operating loss (NOL) and wish to carry back that loss to previous tax years. Filing this form may allow them to receive a refund for taxes paid in those years.

Form 1045 Fundamentals

The primary purpose of Form 1045 is to expedite the refund process for taxpayers who have incurred a net operating loss. Instead of waiting for the IRS to process an amended return, which can take several months, Form 1045 allows for a faster review and refund.

Form 1045 can be especially beneficial for individuals or businesses that need immediate cash flow relief. The form can also be used to carry back unused general business credits or to claim a refund due to a reduction in tax from a foreign tax credit carryback.

Who Can File Form 1045?

Form 1045 can be used by taxpayers seeking to quickly recoup taxes paid in previous years. This form is primarily used by individuals, estates and trusts that have experienced a net operating loss or have unused general business credits.

A net operating loss occurs when a taxpayer’s allowable deductions exceed their taxable income within a given year. For those eligible, Form 1045 allows the carryback of these losses to previous tax years. This can result in a refund of taxes paid during those years.

In addition to net operating losses, Form 1045 can also be used to carry back unused general business credits. These credits may include investment credits, work opportunity credits and others. Under the right circumstances, credits can be applied to previous tax years to reduce the tax liability for those years. By doing so, taxpayers can receive a refund of taxes already paid.

To file Form 1045, taxpayers must meet specific eligibility criteria. Primarily, the form is available to individuals, estates and trusts. Corporations cannot use Form 1045. These entities must file Form 1139.

How To File Form 1045?

To successfully file Form 1045, you’ll first need to gather all relevant documentation. Essential documents include your tax returns for the years to which you are carrying the loss or credit. You will also need any supporting schedules and forms that detail the loss or credit. Accurate and complete documentation avoids delays in processing your application.

The form consists of several parts, each requiring specific information about your financial situation. You’ll need to identify the tax years affected and provide details about the loss or credit. You’ll also need to show the calculations supporting your refund claim.

When preparing Form 1045, it’s important to follow the instructions carefully. Double-check your entries to ensure accuracy. Mistakes or omissions can lead to processing delays or even rejection of your application.

Once complete, Form 1045 must be filed separately from your regular return. Send it to the IRS service center designated for your area. It’s advisable to send your application via certified mail. This ensures it reaches the IRS safely and will give you proof of submission.

The IRS typically processes Form 1045 applications within 90 days. However, the timeline for processing individual forms can vary depending on the complexity of your case and the IRS’s current workload.

Bottom Line

Form 1045 can be a way to get a faster refund on previously paid taxes. The form is specifically designed for taxpayers needing a refund due to a net operating loss, unused credits or other carrybacks. Alternatively, taxpayers can request a refund under these circumstances by filing an amended return, but this may take several months. By submitting Form 1045, you can potentially receive your refund faster. All required documentation must be accurately completed and submitted within the designated timeframe. The deadline is typically one year after the end of the year in which the loss or credit arose.

Tips for Tax Planning

• A financial advisor with tax experience can help you with your long-term tax planning needs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Social Security benefits are an important element of retirement planning for most retirees. Use SmartAsset’s Social Security Calculator to estimate your future monthly payment.

Photo credit: ©iStock.com/Andrii Zastrozhnov, ©iStock.com/gerenme, ©iStock.com/ridvan_celik

The post Form 1045: How to Apply for a Quick Tax Refund appeared first on SmartReads by SmartAsset.

Information contained on this page is provided by an independent third-party content provider. XPRMedia and this Site make no warranties or representations in connection therewith. If you are affiliated with this page and would like it removed please contact [email protected]