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Process for a Net Operating Loss (NOL) Carryback in a 1040 Return using Form 1040X

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Process for a Net Operating Loss (NOL) Carryback in a 1040 Return using Form 1040X

I have a NOL that needs to be carried back. What is the process for doing an NOL Carryback using Form 1040X?

Solution Description

Before making any changes for an NOL carryback you should consult the Tax Help and Government Instructions for Form 1040-X for specific information regarding NOL carrybacks

If amending multiple years, start with the tax year that is the furthest back.

  1. Select and open the return that you want to amend.
  2. Create a copy of the return with a new name (for example, CLIENT-amended.17i). This keeps the original file intact.
  3. Open Form 1040X:
    1. Press the F6 key to open the Find Forms window.
    2. Press the X key to highlight Form 1040X.
    3. Press Enter.
  4. Enter the applicable Calendar Year. (This activates the form, and the figures flow from the 1040 to the appropriate fields in the 1040X. The figures "freeze" in Column A and Column C reflects what is currently on the return.)

    IMPORTANT: If you are also amending a state return, activate the amended state return form BEFORE making changes to the federal return:

    1. Go to the state return and select the amended form.
    2. Enter the applicable Calendar Year or enter an X in the appropriate check box (review the Tax Help instructions for your state). (Note- The Original Amount column shows the amounts that were originally reported on the state's main form already filed.)
    3. Go back to the federal return.
  1. Make the appropriate changes as specified in IRS Publication 536 Page 8. (Note: On the Other Income Statement, "Other taxable income" line 21 allows for manual entry of positive or negative entries)
  2. Save and Print the Return.

Continue with amending the next tax year's return:

  1. Select and open the return that you want to amend.
  2. Create a copy of the return with a new name (for example, CLIENTX-amended.18i). This keeps the original file intact.
  3. Open Form 1040X:
    1. Press the F6 key to open the Find Forms window.
    2. Type X to highlight Form 1040X.
    3. Press Enter.
  4. Enter the applicable Calendar Year. (This activates the form, and the figures flow from the 1040 to the appropriate fields in the 1040X. The figures "freeze" in Column A and Column C reflects what is currently on the return.)

    IMPORTANT: If you are also amending a state return, activate the amended state return form BEFORE making changes to the federal return:

    1. Go to the state return and select the amended form.
    2. Enter the appropriate Calendar Year or enter an X in the appropriate check box (review the Tax Help instructions for your state). (Note- The Original Amount column shows the amounts that were originally reported on the state's main form already filed.)
    3. Go back to the federal return.
  1. Open Federal Carryover Worksheet:
    1. Press the F6 key to open the Find Forms window.
    2. Type CO to highlight the Carryover Worksheet.
    3. Press Enter.

      The first column will display the previous year carryovers, make sure it matches the Federal Carryover Worksheet that you printed from the previous return.

  2. Make the appropriate changes as specified in IRS Publication 536 Page 8. (Note: On the Other Income Statement, "Other taxable income" line 21 allows for manual entry of positive or negative entries)
  3. Save and Print the Return.

Continue process until you reach the current year return.

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