What Is the 1045 Form and When Should You Use It?

Taxpayers facing financial setbacks may be able to recover some losses through tax refunds. IRS Form 1045, Application for Tentative Refund, allows individuals, estates, and trusts to quickly claim refunds related to net operating losses (NOLs) or unused credits.

Using this form can result in faster refunds compared to filing an amended return.

Situations Requiring This Filing

Form 1045 is used when taxpayers seek expedited refunds by carrying back losses or credits to prior years. A common example is a business owner reporting a substantial loss from self-employment income. By applying that loss to previous tax years, they may recover taxes paid in those years.

Another case involves unused general business credits exceeding the current year’s tax liability. Credits such as investment tax credits or work opportunity tax credits can be carried back to reduce prior-year taxes. Filing Form 1045 speeds up the refund process compared to submitting Form 1040-X, which takes longer to process.

Taxpayers who suffer casualty or disaster-related losses can also benefit. If a federally declared disaster causes financial damage, they can apply the loss to the prior year’s tax return, potentially generating a refund to aid recovery.

Eligibility Criteria

Form 1045 is available to individuals, estates, and trusts. Corporations must use Form 1139, Corporation Application for Tentative Refund. Applicants must have incurred a qualifying tax event, such as business or casualty losses, and file within the required timeframe.

The IRS requires Form 1045 to be submitted within one year after the end of the tax year in which the loss or credit occurred. For example, a taxpayer with a 2023 loss must file by December 31, 2024. Missing this deadline means filing an amended return using Form 1040-X, which takes longer to process.

Supporting documentation is required, including prior-year tax returns, schedules, and IRS forms detailing the loss or credit calculation. Incomplete or insufficient documentation may result in delays or denial.

Net Operating Loss Application

A net operating loss (NOL) allows individuals or estates to offset prior taxable income. As of 2024, most taxpayers cannot carry back NOLs unless exceptions apply, such as for farming businesses. Instead, NOLs are carried forward indefinitely, subject to an 80% limitation on taxable income in a given year.

When a carryback is permitted, Form 1045 allows a faster refund by applying the loss to previous tax years. Taxpayers must recalculate prior-year tax liabilities as if the NOL had been available at the time. If this adjustment reduces tax paid, the difference is refunded.

NOLs are applied in order, starting with the earliest eligible year. If the loss exceeds taxable income in one year, the remainder carries forward until fully used.

Required Documentation and Attachments

Form 1045 requires supporting documents to substantiate claims. A key component is a detailed computation of tax liability adjustments for each affected year. This includes recalculating taxable income and tax owed as if the loss or credit had been applied earlier.

Taxpayers must include revised tax schedules and forms originally used to calculate prior-year tax liability, such as Schedule D for capital losses or Form 3800 for business credits. A copy of the original tax return for the loss year is required, along with worksheets showing how the loss or credit was determined.

For capital loss carrybacks, investment records, including brokerage statements and cost basis calculations, should be provided. Casualty loss claims require documentation such as insurance reports, repair estimates, and property appraisals.

Filing Timelines and Process

Form 1045 must be filed within one year after the end of the tax year in which the loss or credit originated. This shorter window requires prompt action. The IRS typically processes Form 1045 within 90 days, much faster than the six months or more required for Form 1040-X.

The completed form, along with required attachments, must be mailed to the appropriate IRS service center. Since this is a tentative refund request, it does not undergo the same scrutiny as a formal audit, but the IRS may later review the claim. Discrepancies may lead to requests for additional documentation or adjustments. Taxpayers should keep copies of all submitted materials for reference.

After You Submit the Form

After submission, the IRS reviews the claim and recalculated tax liabilities. Approved refunds are typically issued via direct deposit or check within 90 days. However, approval does not mean the claim is final—the IRS may later adjust the refund or request repayment if errors are found.

If the IRS denies the claim or issues a lower refund than expected, taxpayers can provide additional documentation or file an amended return using Form 1040-X to dispute the adjustment. Responding promptly to IRS requests can help prevent delays.