What happens though if one does nothing?
Like if one does not elect to waive carry back?
A statement waiving the NOL carryback period MUST be included in a timely filed return for the year of the NOL. if you did not include the statement (TURBOTAX does provide it if you select it) then you must do the carryback.
a statement something like the following was needed.
“Taxpayer is electing to apply Sec. 172(b)(3) under Rev. Proc. 2020-24 and tax year for which statement applies”
IRS 1045 Instructions:
Where To File: File Form 1045 with the Internal Revenue Service Center for the place where you live as shown in the instructions for your 2020 income tax return. Don't include Form 1045 in the same envelope as your 2020 income tax return.
What actually happens next year if I enter my NOL forward in TY 2021?
no one can say for sure that the IRS will catch the failure to timely file the carryforward election. if they do besides the taxes you will owe penalties (maybe even substantial underpayment penalties) and interest. it might take the IRS a year or two to catch your "error". under certain circumstances, it may have 6 years or longer. Then certain carryback years will be closed. the loss will still have to be carried back to 2015 and then carried forward but you will lose out on refunds for the closed years.
