Refund delayed. Didn't use carryover

[Mike92ct]

For 4+ years i ran a small business. I had some carryover expenses that I see on my IRS transcripts that mainly started in 22' and a little in 23'. In 2024 I did not operate my business. 

This tax season for 2024 i filed my w2 wages and took advantage of a savers credit and post season IRA deductions. Did not touch the carryover that the IRS has on file. 

My refund is held up.. 60 day review and today a 971 notice. No idea why yet. Is there a rule that I must apply/use my carryover before I get credits? Or something along those lines? The carryover is $36K.

Edit: I've since read it can't be skipped. 

I'm certain that's the issue. I will see what the notice says but will begin to offset/deduct using the 36K. I have $5K of capital gains on stocks but the rest is w2 income - limited to $3K? 

I can deduct all of the capital gains and only 3K of my w2 income, totaling $8K off of my carryover and then more next year??

[MarilynG1]

What type of carryover expenses did you have?  For some (like QBI) they can only be used in the current year against the current business. The only business expense that carries over year after year is depreciation, or possibly Home Office. 

If you did have a Business Loss Carryover, yes, you must use it against other income each year until it's used up, whether you still have the business or not. 

Check the Federal Carryover Worksheet for carryover items. Here's more info on Business Expense Carryovers.

Once you receive your letter from the IRS, you'll know more about what the 971 code on your transcript relates to. 

@Mike92ct 

[Mike92ct]

Thanks. So my refund actually got released. It updated the following day and today I see it pending in my bank. No mail or any letters online.

My carryover...the reason I forgot it or didn't know was because I didn't think I had any. 

I looked back at each year and somehow **cough cough** Turbotax, somehow filled out a form for carryover. I used 29xxx that year and deducted it fully. Same for the following year. There was not any extra. 

I'm looking into how to fix that as I don't want an inaccurate carryover following me. And certainly can't use it ..