Jewelers of America recently alerted members to carryback legislation that could be a bonus to business. The provision expands the ability for businesses to “carry back” net operating losses (NOLs) suffered during the current recession in order to claim a refund from taxes paid in previous years, reportedly giving retailers and other businesses more than $10 million in cash.
The question is, how can your business take advantage of the provision? In “How to ‘Carry Back’ Your Losses,” Susan Berson offers the following tips:
- Choose the Year Wisely: Under the provision, taxpayers can carryback NOLs for up to five years, for losses incurred either in 2008 or 2009. Berson says important considerations in choosing the year include the amount of loss in 2008 versus 2009 and the tax rate paid in previous income years. Looking at these and other factors could increase carryback benefits. Once you make an election, you can’t change your mind, so Berson notes that you should consider visiting a competent tax professional for expert input.
- Keep Deadlines in Mind: For calendar-year taxpayers, December 31, 2009, is the most pressing deadline.
- File for Faster Refunds: Berson says a tentative refund claim via Form 1139 (or Form 1045) is the fastest option since the IRS pays within 45 days to avoid paying interest.
- Extra Tip: Use overnight mail to get the form to the IRS quickly, and add Form 8302 for direct deposit.
Take The Tip:
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