What is Form 1045: Request for Provisional Refund?
This form, distributed by the Internal Revenue Service (IRS), is used by individuals, estates and trusts to request a quick tax refund.
According to the IRS instructions for Form 1045, the basis for the refund request must be for one of four reasons:
- carry forward of a net operating loss (NOL)
- carry-over of unused general business credit
- carry-back of a net loss of contracts under article 1256
- an overpayment of tax due to a request for adjustment of the law under article 1341 (b) (1)
The instructions on Form 1045 explain what constitutes a loss.
Key points to remember
- Due to the Tax Reduction and Jobs Act, most taxpayers can now only wear NOLs from tax years after 2020 to a later year.
- Carrying back the ANL will generally not exceed $ 250,000 or $ 500,000 for joint returns.
- Taxpayers should be careful when carrying over NOLs to a previous taxation year, as this can create a Minimum Tax Obligation (LMO).
Who can file Form 1045: Request for Provisional Refund?
Individuals, estates and trusts can file Form 1045: Request for Interim Repayment instead of using Form 1040-X for Individuals or Form 1041 for Estates or Trusts.
Form 1045 is used to file a quick tax refund, while Forms 1040X and 1041 are not processed as quickly. Form 1045 must be processed by the IRS within 90 days, and cannot be filed by the taxpayer or the taxpayer entity within one year of the occurrence of the NOL. However, Form 1040X for individuals or Form 1041 for estates and trusts can be filed up to three years from the date of the ANS. However, the IRS will not process Form 1040X or Form 1041 within 90 days and has six months to process either of these refunds.
Form 1045 can be challenged by the IRS or the taxpayer after processing the refund, which is why it is labeled as a provisional refund. However, the information and complaints made on the 1040X and 1041 forms are assumed to be correct and final by all the parties. A party wishing to receive a prompt refund but who does not wish the refund to be corrected subsequently will file Form 1045, while a party wishing to be exact and who can await the correct refund will file Form 1040X (individuals) or Form 1041 (inheritance or trust).
Form 1045: Request for provisional reimbursement is not attached to a tax return, but filed separately or mailed in a separate envelope.
How to File Form 1045: Request for Provisional Refund
Taxpayers must file Form 1045 within one year of the end of the year in which the triggering event occurred – an NOL, unused credit, net loss on section 1256 contracts, or an adjustment request.
The first part of the form includes personal information, including the name, address and social security number of the declarant. The next section includes questions about the nature of the deferral. The declarant must then determine the amount of the tax reduction carried forward for each year before the NOL or the unused credit. The taxpayer will sign and date the bottom of the form, along with the tax preparer, if applicable.
Other relevant forms
Although Form 1045 is filed separately from the taxpayer’s main income tax return, it should include the first two pages of Form 1040, any Form 4952: Investment expense deduction, and all Schedules K-1.
The form is available for download.