NOL for individual questions for 2023 taxes - need help by Oct deadline!
Hey everyone! I'm trying to get my 2023 taxes done before the Oct 15th extension deadline, and I've hit a roadblock. I was almost finished with everything in FreeTaxUSA when it suddenly asked me about a Net Operating Loss (NOL). I honestly have no idea what that is or if it applies to me. For context, I had a rough year financially in 2023. Lost my job at the construction company in March, was unemployed for about 4 months, then started my own small handyman business which barely made any money the first few months. All told, I think I lost around $28,000 for the year when you factor in business expenses versus income. Does this count as an NOL? Do I need to fill out special forms for this? I'm completely confused about how to handle this on my taxes and really don't want to mess this up with the deadline so close. Any help would be super appreciated!
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Anastasia Sokolov
Based on what you're describing, you likely do have a Net Operating Loss (NOL) situation for 2023. An NOL happens when your deductions exceed your income, resulting in negative income for tax purposes. This is particularly common for people with business losses like yours. For your 2023 taxes, you need to calculate your NOL on Form 1045, Schedule A. Then you'll report it on your Form 1040. The good news is that you can carry this NOL forward to offset income in future tax years. For example, if you have an NOL of $28,000 in 2023, you can use it to reduce your taxable income in 2024 and beyond until it's used up. FreeTaxUSA should walk you through the NOL calculation, but you'll need to enter your business income and expenses accurately. Make sure you're separating your personal losses from actual business losses, as only business losses typically qualify for NOL treatment.
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Sean O'Connor
•Thanks for the explanation! I'm actually in a similar situation and have a question - do you know if unemployment benefits count as income when calculating an NOL? Also, does having W-2 income for part of the year affect how much of the business loss can be claimed as an NOL?
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Anastasia Sokolov
•Unemployment benefits do count as income when calculating your NOL, so that would reduce the total amount of your NOL. They're considered taxable income for federal purposes. For your W-2 income question, yes, having W-2 income during part of the year absolutely affects your NOL calculation. Your NOL is essentially your total deductions minus your total income (with some adjustments). So if you had both W-2 income and business losses in the same year, the W-2 income would offset some of those losses, potentially reducing your NOL amount.
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Zara Ahmed
I went through the exact same situation last year with my NOL calculation and was totally lost until I found taxr.ai (https://taxr.ai). It's this AI tool that analyzes all your tax documents and helps identify if you actually qualify for an NOL and how to properly calculate it. In my case, I had mixed income sources just like you - some W-2 income and then business losses after starting my own company. The tool confirmed I had an NOL of about $32K and walked me through exactly how to report it. It even explained which parts of my business expenses qualified for the NOL calculation and which didn't. Saved me from making some pretty big mistakes!
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Luca Conti
•How does it actually work though? Do you just upload your tax docs and it figures everything out? I'm worried about sharing my tax info with some random website.
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Nia Johnson
•I'm curious - did it actually help with the specific NOL forms? My accountant wants to charge me an extra $350 just to handle my NOL calculation and I'm wondering if this could save me that money.
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Zara Ahmed
•It's super straightforward - you upload your tax documents (W-2s, 1099s, business expense records) and it scans them to identify potential tax situations like NOLs. Everything is encrypted and secure, and they don't store your documents after analysis. For the NOL forms specifically, yes it was incredibly helpful! It basically gave me step-by-step instructions for completing Form 1045 Schedule A and showed me exactly what to enter on each line. It explained which business expenses qualified and which didn't for NOL purposes. Way cheaper than paying an accountant for something that's actually pretty straightforward once you understand it.
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Nia Johnson
Just wanted to update - I ended up trying taxr.ai after asking about it here, and it was actually really helpful for my NOL situation! The tool confirmed I had a $42,000 NOL from my business losses last year and gave me detailed instructions for how to properly document it on my tax return. The best part was that it explained exactly how my previous W-2 income affected my NOL calculation (something I was totally confused about). It even warned me about a common mistake with home office deductions that would have messed up my NOL calculation. Just filed my taxes yesterday and feel way more confident that I handled the NOL correctly!
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CyberNinja
If you're still struggling with your NOL and need to talk to an actual IRS agent about your specific situation (which I highly recommend for something complex like this), check out https://claimyr.com. I tried calling the IRS directly about my NOL questions last year and kept getting disconnected after waiting on hold for hours. With Claimyr, I actually got through to an IRS rep in about 15 minutes who answered all my NOL questions. They have this callback system that handles the hold time for you - you can see how it works at https://youtu.be/_kiP6q8DX5c. The agent walked me through exactly how to report my NOL on my 2022 return and how to carry it forward to future years. Totally worth it for the peace of mind knowing I was doing it correctly.
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Mateo Lopez
•How is this even possible? IRS wait times are like 2+ hours. Is this some kind of scam where they pretend to be the IRS?
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Aisha Abdullah
•This sounds too good to be true. And I'm skeptical - did you actually get accurate information? Last time I called the IRS the person gave me completely wrong advice that my accountant had to fix later.
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CyberNinja
•It's definitely not a scam - they don't pretend to be the IRS. What they do is use an advanced dialing system that navigates the IRS phone tree automatically and waits on hold for you. When they finally get an agent, they call you and connect you directly to that actual IRS agent. You're talking to real IRS employees. The information I got was definitely accurate. I verified it with the IRS website later. The agent walked me through the exact forms I needed for my NOL and explained how carrying forward losses works. What's nice is you can actually ask follow-up questions and get clarification in real-time, which you can't do with the IRS website. The agent even emailed me some specific publications about NOLs that were super helpful.
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Aisha Abdullah
I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it since I was desperate to speak with the IRS about my NOL carryforward question before the filing deadline. The service actually worked exactly as described - they called me back in about 20 minutes with an IRS agent already on the line. The agent was super knowledgeable about NOLs and confirmed that I was calculating my carryforward correctly. She even explained a special rule for self-employed people with NOLs that my tax software didn't catch. Would have spent half my day on hold otherwise. Now my 2023 return is filed correctly with my NOL properly documented. Sometimes being proved wrong is a good thing!
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Ethan Davis
One thing to watch for with NOLs is that there have been some changes in how they work over the past few years. Currently, you can only carry NOLs forward (not backward like you could in the past), and they're limited to 80% of your taxable income in future years. So if you have a $28,000 NOL from 2023, and in 2024 you have $50,000 in taxable income, you can only use $40,000 of your NOL (80% of your income) to offset your 2024 taxes. The remaining $12,000 would carry forward to 2025. Make sure you keep really good records of your NOL so you can properly apply it in future years!
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Diego Ramirez
•Thank you for pointing this out! I had no idea about the 80% limitation. Does this mean I need to file any special forms for my 2024 taxes next year when I use the NOL? And should I be keeping copies of anything specific from my 2023 return as proof?
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Ethan Davis
•Yes, when you apply your NOL to your 2024 taxes next year, you'll need to file Form 1045 Schedule B to show how you're applying the carryforward. It's a good idea to keep a complete copy of your entire 2023 tax return, especially Schedule A of Form 1045 where you calculated the original NOL. Also keep any supporting documentation for the business losses that created the NOL - receipts, invoices, mileage logs, etc. The IRS tends to look more closely at returns with NOLs, so being able to substantiate everything is important. I recommend creating a dedicated "NOL documentation" folder with copies of everything, since you might be carrying this forward for several years.
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Yuki Tanaka
One more thing to consider - if you're filing in a state with income tax, the NOL rules may be different than federal. Some states don't recognize NOLs at all, some have different carryforward periods, and others follow federal rules. For example, in California, NOL rules are different from federal with their own forms and calculations. Worth checking your state's department of revenue website for specifics before filing your state return.
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Carmen Ortiz
•Good point about state taxes! I've also seen some states limit the amount of NOL you can claim in a single year, regardless of the federal 80% rule. My state (Illinois) has its own NOL worksheet that's completely different from the federal one.
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