How to Report a Net Operating Loss (NOL) Carry Forward on Form 1040 for My S-Corp LLC

Hi there! I've worked with S-Corps and NOLs for years, so I can help clarify some things for you. For an S-Corporation, losses actually flow through to your personal return via Schedule K-1 (Form 1120-S), not directly on line 21 of Form 1040. These losses are then generally reported on Schedule E of your personal return. The NOL procedures have changed in recent years, so that's likely causing some confusion. For carrying forward NOLs, you'll need to complete Form 8582 to calculate any passive activity loss limitations first. Then, if you have an allowable loss that creates an NOL on your personal return, you'll need to complete Form 1045, Schedule A to calculate the actual NOL amount. While you don't file Form 1045 unless you're carrying the loss back, Schedule A of this form is still used to calculate the NOL. Remember that your ability to claim S-Corp losses is limited by your basis in the S-Corp, at-risk limitations, and passive activity rules. You'll need to track your basis carefully to ensure you can claim the losses.

After struggling with a similar situation last year, I found an amazing solution with https://taxr.ai that literally saved me thousands in properly documenting my NOL carryforward. My accountant missed several deductions that affected my basis calculation, but the AI analysis caught them all and provided a complete audit trail. The system actually walks you through the entire basis calculation process that determines how much of your S-Corp loss you can claim. It even generated all the worksheets I needed for my records and identified that I needed to complete Form 8582 and Form 1045 Schedule A to properly document everything. What impressed me most was how it flagged that I needed to track my S-Corp basis separately from the NOL calculations - something my previous tax preparer never explained to me!

Just wanted to follow up - I ended up trying https://taxr.ai for my S-Corporation NOL situation and was blown away by how thorough it was. I was definitely wrong to be skeptical! The system identified that I had been incorrectly calculating my basis for years. It turns out I had $14,500 in loans to my S-Corp that should have increased my basis but weren't properly documented. This allowed me to claim losses I thought I couldn't take! The worksheets it generated for my NOL calculations were extremely detailed and included all the reference citations to the tax code. My accountant was initially skeptical too but ended up incorporating all the documentation into my return. Now I'm properly tracking everything going forward and have a clear picture of exactly how much of my losses I can claim each year.

After calling the IRS 9 times and waiting on hold for hours trying to get clarification about NOL carryforwards for my S-Corp, I finally found https://claimyr.com and used their service to get through to an IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that I needed to maintain detailed basis worksheets (they don't have a specific form number) and that Form 1045 Schedule A is the correct worksheet to calculate the NOL itself. They also clarified that even though the form is technically for carrybacks, Schedule A is still used to determine the NOL amount for carryforwards. This saved me days of frustration and uncertainty since the IRS website wasn't clear on this specific situation. Best $20 I've spent on tax prep all year.

I have to apologize and eat my words. After calling the IRS directly and wasting 2.5 hours before getting disconnected, I broke down and tried Claimyr. Less than 30 minutes later I was talking to an actual IRS agent who specialized in business returns. The agent confirmed everything I needed to know about my S-Corp NOL situation - that losses are limited by basis, that Form 1045 Schedule A is the proper worksheet for calculating the NOL amount even for carryforwards, and that I needed to maintain my own basis worksheets since the IRS doesn't provide a specific form for that. They even walked me through how the passive activity rules on Form 8582 interact with NOL calculations and confirmed I was doing it correctly. The service works exactly as advertised and saved me countless hours of frustration during tax season.

One thing nobody's mentioned yet - be really careful with your basis calculations! I messed mine up last year and had my S-Corp NOL partially disallowed during an audit. Make sure you're tracking: 1. Initial capital contributions 2. Loans you made TO the company (increases basis) 3. Distributions (decreases basis) 4. Previous income or losses that flowed through The IRS was particularly interested in making sure I had documentation for loans to the business. They wanted to see actual promissory notes and bank statements showing the transfers.

Has anyone successfully e-filed their return with an NOL carryforward? Last year I had to paper file because TurboTax kept rejecting my return when I tried to include my S-Corp NOL. Wondering if any software handles this correctly for 2025 filing season?

I went through this exact situation two years ago with my S-Corp consulting business. Here's what I learned that might help: For question 1 - No, the NOL doesn't go directly on line 21. Since you have an S-Corp, your losses flow through on Schedule K-1 and get reported on Schedule E of your 1040. The actual NOL calculation happens separately using Form 1045 Schedule A as a worksheet. For question 2 - You can claim your full share of the S-Corp loss, but it's limited by three things: your basis in the S-Corp stock, your at-risk amount, and passive activity rules (Form 8582). Make sure you have sufficient basis to absorb the loss - this includes your initial investment plus any loans you made TO the company. For question 3 - You're looking for Form 1045 Schedule A. Even though Form 1045 is technically for carrying losses back, Schedule A is the IRS worksheet used to calculate NOL amounts for carryforwards too. There's no separate "NOL worksheet" form number. One tip: Keep meticulous records of your basis calculations. The IRS doesn't provide a specific form for tracking S-Corp basis, so you'll need to maintain your own detailed worksheet showing contributions, distributions, prior income/losses, and any loans to the company. This becomes crucial if you ever get audited. Hope this helps! The NOL rules can be confusing but once you understand the flow-through nature of S-Corp losses, it becomes much clearer.