I had a NOL of $130,000 in 2020. Can that be carried forward?

[Jesse Atkinson]

Business A lost $30,000 and total revenue was $20,000
Business B lost $100,000 and total revenue was $314,000 

This year Business A made $0, Business B made $37,000 (after expenses) and $197,000 (before expenses)

I also did freelancing and made $56,000 (little to no deductions for that). 
Would I be able to use 80% of the $130,000 NOL that was created in 2020 to offset my income in 2021? 

[AmeliesUncle]

First, your NOL is not $130,000.  It would have been reduced by the $56,000 of profit from your other business (and possibly some other adjustments).  Just to confirm, your AGI in 2020 was negative?

On your 2020 tax return, did you file the election to "waive the carryback" of the NOL?  If not, it must be carried BACK 5 years, and you would amend your 2015 tax return to use the NOL.

TurboTax does not calculate NOLs, so you will either need to do that manually or go to a tax professional.  NOLs can be complicated, so you may consider a tax professional.

[Jesse Atkinson]

It says on my tax form from 2020 
"net operating loss carried forward to 2021: $123,202"

The losses were from 2020 and the $56,000 of profit was from 2021. 
Yes AGI was -$123,000 for 2020 

I had my CPA do my taxes last year so I'm assuming the election was filed considering I didn't get a refund from the IRS. My income dating back to 2015 has also been close to nothing so there was no option but to carry it forward. 

[AmeliesUncle]

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@Jesse Atkinson wrote:

I had my CPA do my taxes last year so I'm assuming the election was filed 

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You can't assume that.  Look for the election in your tax return.  It is usually on a separate piece of paper.

[Jesse Atkinson]

What if the election was never made but I still didn't get a refund from the IRS? does that mean the NOL from 2020 is void?

[AmeliesUncle]

A refund has nothing to do with it.

As I said above, if the election was not made, it is first carried back 5 years.  It would first be applied to 2015, 2016, 2017, 2018 and 2019, and if those years did not use up the entire NOL, then the remaining amount would be carried to 2021.

[AmeliesUncle]

One more point ... because you said you did not get a refund, that means your tax preparer did not file Form 1045 which would have been another option.  So it is carried back, unless the election was made.

[Mike9241]

we don't know what the CPA did but there had to be a formal statement in the 2020 return electing to carryforward the NOL. no such election then you need to c/b the NOL to 2015.  it may be that the CPA never prepared the carryback claims. if you don't see it maybe call the CPA to ask. if this was a mess up on their part you may want to see a lawyer about filing a malpractice suit.

I'm not sure TT can do a c/b claim to 2015 since that app is no longer available. as a matter of fact 2016 and 2017 are not available either.  you may need to see a pro to properly file the c/b claims.

[Jesse Atkinson]

Just checked and form 1045 was actually filed. If the losses were carried back I still wouldn't have received a refund because I have owed $0 for the past 5 years. 

Sorry just trying to wrap my mind around whether or not I can use the losses from last year to offset income for this year, I do have a tax prep working on it but she doesn't know yet and I really need to plan for how much I'm going to have to owe. 

[AmeliesUncle]

Your tax person filed a 1045 that resulted in zero refund?  Why on earth would they do that?   Besides the fact that the tax professional probably charged you money to do that, doing so likely reduced your usable NOL to be carried to 2021.

At any rate, any unused NOL can be carried to 2021.  But again, although you can enter the NOL, TurboTax is not set up to calculate NOLs (and I'm not sure if it is set up for the 80% limit for when that applies).