Did you experience a loss from your business last year? If so, you may have a Net Operating Loss (NOL).
In certain situations, the IRS allows taxpayers to use the losses in one year to offset the profits of other years. This provision is achieved through the carryback (as far back as 5 years per the American Recovery and Reinvestment Act of 2009 ) and carryforward of NOLs. In other words, you can deduct an NOL from one year from your income in another year or years.
For example, if you had an NOL from 2009, your Adjusted Gross Income (AGI) was negative and you did not pay any income tax for 2009. But if you had higher income in 2004, 2005, 2006 or 2007, you can 'carryback' and net the 2009 NOL with the income from the previous year and receive a refund of taxes you paid in the previous year.
Or you can elect to carryforward the NOL, in which case you net the NOL with your 2010 income. If the NOL is not completely taken up by your 2010 income, it carries forward to 2011 and so forth, up to 20 years, until the entire NOL is used.
Please contact me for a full, free consultation to see if you have an NOL.
