Did your business incur and report a loss for tax year 2013? By now, you’ve probably made the decision of whether to carry the loss forward to future tax years or back to a prior tax year. Here’s a quick overview of carrybacks and carryforwards.
- Carryback: As a general rule, you can utilize your 2013 NOL – net operating loss to offset income earned in the preceding two years. The loss is carried back first to the earliest year, then forward. If the entire loss is not used during those two years, you can carry the remainder forward for 20 years.You can either amend your prior year tax returns or file a special form for a quick refund. In either case, you’ll receive interest if the IRS takes more than 45 days to process your request.
- Carryforward: You have up to 20 years to use the net operating loss – NOL to offset future income.Please note that the IRS assumes you will carry a net operating loss back in order to claim a refund. The assumption means that if you chose to carry your current year loss forward to future years, you had to attach an election statement to your 2013 tax return — and that election is irrevocable.
What if you forgot to attach the carryforward election to your return? As long as you filed the return on time, you may be able to complete an amended your 2013 tax return and attach the election to it. To qualify for this relief, the amended return must be filed within six months of the due date of your return.
For general tax help or for net operating loss – NOL engagements, please give us a call at 877-788-2937.
The tax firm of Mike Habib, EA in Whittier California provides specialized tax services help, such as tax representation, tax preparation, tax planning and tax advisory to individual and business clients throughout Southern California including Norwalk, Santa Fe Springs, Downey, Pico Rivera, Montebello, Hacienda Heights, La Habra Heights, West Covina, La Habra, Brea, Fullerton, Yorba Linda, Cerritos, La Mirada, Lakewood, Anaheim, Santa Ana, Long Beach, Compton, Torrance, Los Angeles, Pasadena, Beverly Hills, Santa Monica and throughout Los Angeles County, Orange County, Corona, San Bernardino County, Riverside County, the Inland Empire, the San Fernando Valley and the San Gabriel Valley.