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10 Oddball Tax Deductions

11 Most Overlooked Tax Deductions

Updated for 2011

Small Business Deductions: Business Losses vs NOLs

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How Do You Know if You Have a Net Operating Loss?

First, complete your individual income return, Form 1040.

Next, check line 41 of Form 1040 (2008).

Bear in mind, just because you have a negative balance on line 41 doesn't necessarily mean you actually have a net operating loss.

This is why you need to complete Schedule A of Form 1045, Application for Tentative Refund It provides the steps to follow to determine if you have a net operating and, if so, its amount.

You DON'T have a Net Operating loss if:

Carryback and Carryforward of Net Operating Losses (NOLs)

A net operating loss may first be carried back two years then forward 20 years.

Certain eligible losses for individuals may be carried back three years. For example, loss of property due to fire, storm, shipwreck, or other casualty, or theft.

If you carry back a net operating loss you will reduce taxable income of the carryback year which will result in a tax refund.

If you carry forward a net operating loss it will reduce taxable income of the carryforward year resulting in a lower tax liability for that year.

Waiving the carryback period:

To waive the carryback period attach a statement to the original Form 1040 and file it on or before the due date, including extensions, for the NOL year (the year the NOL first occurred). Indicate that you want to waive the carryback period.

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Business Losses and Net Operating Losses: Items that May Cause a Net Operating Loss; Items Not Allowed in Figuring a Net Operating Loss

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