Publication 536

Cat. No. 46569U Contents

Net Operating
Future Developments . . . . . . . . . . . . 1
Department
of the Reminder . . . . . . . . . . . . . . . . . . . . 1

Losses (NOLs)
Treasury
Internal Introduction . . . . . . . . . . . . . . . . . . 1
Revenue

for
Service NOL Steps . . . . . . . . . . . . . . . . . . . 2

How To Figure an NOL . . . . . . . . . . . 2

Individuals, Form 1045, Schedule A Example . . . . 3

When To Use an NOL . . . . . . . . .... 3

Estates, and Exceptions to 2-Year Carryback

Rule . . . . . . . . . . . . . .
Waiving the Carryback Period .
.... 3
.... 4

Trusts How To Carry an NOL Back or

Forward . . . . . . . . . . . . .... 4

How To Claim an NOL Deduction . . . . . 4

Deducting a Carryback . . . . . . . . . 4
Deducting a Carryforward . . . . . . . . 5
For use in preparing Change in Marital Status . . . . . . . . 5

2017 Returns
Change in Filing Status . . . . . . . . . 5

How To Figure an NOL Carryover . . . . . 6

NOL Carryover From 2017 to 2018 . . . . 6

Worksheet Instructions . . . . . . . . . 7

How To Get Tax Help ............ 9

Index . . . . . . . . . . . . . . . . . . . . . 11

Future Developments
For the latest information about developments
related to Pub. 536, such as legislation enacted
after it was published, go to IRS.gov/Pub536.

Reminder
Photographs of missing children. The Inter-
nal Revenue Service is a proud partner with the
National Center for Missing & Exploited
Children® (NCMEC). Photographs of missing
children selected by the Center may appear in
this publication on pages that would otherwise
be blank. You can help bring these children
home by looking at the photographs and calling
1-800-THE-LOST (1-800-843-5678) if you rec-
ognize a child.

Introduction
If your deductions for the year are more than
your income for the year, you may have a net
operating loss (NOL). An NOL year is the year
in which an NOL occurs. You can use an NOL
by deducting it from your income in another
year or years.

What this publication covers. This publica-

Get forms and other information faster and easier at: tion discusses NOLs for individuals, estates,
• IRS.gov (English) • IRS.gov/Korean (한국어) and trusts. It covers:
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) How to figure an NOL,
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (TiếngViệt) When to use an NOL,
How to claim an NOL deduction, and

Mar 07, 2018

 How to figure an NOL carryover. Useful Items The domestic production activities deduc-
To have an NOL, your loss must generally You may want to see: tion.
be caused by deductions from your:
Form (and Instructions) Form 1045, Schedule A. Use Form 1045,
Trade or business,
Schedule A, to figure an NOL. The following
Work as an employee, 1040X Amended U.S. Individual Income discussion explains Schedule A.
Casualty and theft losses, Tax Return
Moving expenses, or First, complete Form 1045, Schedule A,
Rental property. 1045 Application for Tentative Refund line 1, using amounts from your return. If line 1
is a negative amount, you may have an NOL.
A loss from operating a business is the most Next, complete the rest of Form 1045,
common reason for an NOL. See How To Get Tax Help near the end of this
Schedule A, to figure your NOL.
Partnerships and S corporations generally publication for information about getting these
cannot use an NOL. However, partners or forms. Nonbusiness deductions (line 6). Enter
shareholders can use their separate shares of on line 6 deductions that are not connected to
the partnership's or S corporation's business in- your trade or business or your employment. Ex-
come and business deductions to figure their in- NOL Steps amples of deductions not related to your trade
dividual NOLs. or business are:
Follow Steps 1 through 5 to figure and use your Alimony paid,
Keeping records. You should keep records NOL. Deductions for contributions to an IRA or a
for any tax year that generates an NOL for 3 self-employed retirement plan,
years after you have used the carryback/carry- Step 1. Complete your tax return for the year. Health savings account deduction,
forward or 3 years after the carryforward ex- You may have an NOL if a negative amount ap- Archer medical savings account deduc-
pires. pears on the line below. tion,
Individuals — Form 1040, line 41, or Form Most itemized deductions (except for
You should attach all required docu-
1040NR, line 39. casualty and theft losses, state income tax
TIP ments to the Form 1045 or Form Estates and trusts — See the instructions on trade and business income, and any
1040X. For details, see the instructions
for Form 1041, line 22, for information employee business expenses), and
for Form 1045 or Form 1040X.
about taxable income and NOLs. The standard deduction.
Do not include on line 6 the deduction for
What is not covered in this publication? Step 2. Determine whether you have an NOL
personal exemptions for you, your spouse, or
The following topics are not covered in this pub- and its amount. See How To Figure an NOL,
your dependents.
lication. later. If you do not have an NOL, stop here.
Do not enter business deductions on line 6.
Bankruptcies. See Pub. 908, Bankruptcy
These are deductions that are connected to
Tax Guide. Step 3. Decide whether to carry the NOL back
your trade or business. They include the follow-
NOLs of corporations. See Pub. 542, Cor- to a past year or to waive the carryback period
ing.
porations. and instead carry the NOL forward to a future
State income tax on income attributable to
year. See When To Use an NOL, later.
Section references. Section references are to trade or business (including wages, salary,
the Internal Revenue Code unless otherwise and unemployment compensation).
Step 4. Deduct the NOL in the carryback or
noted. Moving expenses.
carryforward year. See How To Claim an NOL
Educator expenses.
Deduction, later. If your NOL deduction is equal
Comments and suggestions. We welcome The deduction for the deductible part of
to or less than your taxable income without the
your comments about this publication and your self-employed health insurance.
deduction, stop here — you have used up your
suggestions for future editions. Domestic production activities deduction.
NOL.
Rental losses.
You can send us comments through
Step 5. Determine the amount of your unused Loss on the sale or exchange of business
IRS.gov/FormComments. Or you can write to:
NOL. See How To Figure an NOL Carryover, real estate or depreciable property.
Internal Revenue Service later. Carry over the unused NOL to the next Your share of a business loss from a part-
Tax Forms and Publications carryback or carryforward year and begin again nership or an S corporation.
1111 Constitution Ave. NW, IR-6526 at Step 4. Ordinary loss on the sale or exchange of
Washington, DC 20224 stock in a small business corporation or a
Note. If your NOL deduction includes more small business investment company.
than one NOL amount, apply Step 5 separately If you itemize your deductions, casualty
Although we can’t respond individually to and theft losses (even if they involve non-
each comment received, we do appreciate your to each NOL amount, starting with the amount
from the earliest year. business property) and employee business
feedback and will consider your comments as expenses (such as union dues, uniforms,
we revise our tax forms, instructions, and publi- tools, education expenses, and travel and
cations.
How To Figure an NOL transportation expenses).
Loss on the sale of accounts receivable (if
Ordering forms and publications. Visit
IRS.gov/FormsPubs to download forms and you use an accrual method of accounting).
If your deductions for the year are more than Interest and litigation expenses on state
publications. Otherwise, you can go to IRS.gov/ your income for the year, you may have an
OrderForms to order current and prior-year and federal income taxes related to your
NOL. business.
forms and instructions. Your order should arrive
within 10 business days. There are rules that limit what you can de- Unrecovered investment in a pension or
duct when figuring an NOL. In general, the fol- annuity claimed on a decedent's final re-
Tax questions. If you have a tax question lowing items are not allowed when figuring an turn.
not answered by this publication, check NOL. Payment by a federal employee to buy
IRS.gov and How To Get Tax Help at the end of Any deduction for personal exemptions. back sick leave used in an earlier year.
this publication. Capital losses in excess of capital gains.
Nonbusiness income (line 7). Enter on
The section 1202 exclusion of the gain
line 7 only income that is not related to your
from the sale or exchange of qualified
trade or business or your employment. For ex-
small business stock.
ample, enter your IRA distributions, pension
Nonbusiness deductions in excess of non-
benefits, social security benefits, annuity in-
business income.
come, dividends, and interest on investments.
The net operating loss deduction.

Page 2 Publication 536 (2017)

Also, include your share of nonbusiness income DEDUCTIONS Qualified small business. A qualified
from partnerships and S corporations. small business is a sole proprietorship or a part-
Do not include on line 7 the income you re- Net loss from business (gross income of nership that has average annual gross receipts
$67,000 minus expenses of $72,000) . . . . $5,000
ceive from your trade or business or your em- (reduced by returns and allowances) of $5 mil-
Net short-term capital loss
ployment. This includes salaries and wages, on sale of stock . . . . . . . . . . . . . . . . . . . . 1,000
lion or less during the 3-year period ending with
self-employment income, unemployment com- Standard deduction . . . . . . . . . . . . . . . . . 6,350 the tax year of the NOL. If the business did not
pensation included in your gross income, and Personal exemption . . . . . . . . . . . . . . . . 4,050 exist for this entire 3-year period, use the period
your share of business income from partner- the business was in existence.
ships and S corporations. Also, do not include Glenn's total deductions $16,400 An eligible loss does not include a farming
rental income or ordinary gain from the sale or loss or a qualified disaster loss.
other disposition of business real estate or de- Glenn's deductions exceed his income by
preciable business property. $12,750 ($16,400 − $3,650). However, to figure Farming loss. The carryback period for a
whether he has an NOL, certain deductions are farming loss is 5 years. Only the farming loss
Adjustment for section 1202 exclusion not allowed. He uses Form 1045, Schedule A, portion of the NOL can be carried back 5 years.
(line 17). Enter on line 17 any gain you exclu- to figure his NOL. A farming loss is the smaller of:
ded under section 1202 on the sale or ex- The following items are not allowed on Form
1045, Schedule A. 1. The amount that would be the NOL for the
change of qualified small business stock.
tax year if only income and deductions at-
tributable to farming businesses were
Adjustments for capital losses (lines 19– Nonbusiness net short-term capital loss . . . . $1,000
taken into account, or
22). The amount deductible for capital losses is Nonbusiness deductions
limited based on whether the losses are busi- (standard deduction, $6,350) minus 2. The NOL for the tax year.
ness capital losses or nonbusiness capital los- nonbusiness income (interest, $425) . . . . . . . 5,925
ses. Deduction for personal exemption . . . . . . . . 4,050 Farming business. A farming business is
a trade or business involving cultivation of land
Total adjustments to net loss $10,975
Nonbusiness capital losses. You can de- or the raising or harvesting of any agricultural or
duct your nonbusiness capital losses (line 2) horticultural commodity. A farming business
only up to the amount of your nonbusiness capi- can include operating a nursery or sod farm or
Therefore, Glenn's NOL for 2017 is figured
tal gains without regard to any section 1202 ex- raising or harvesting most ornamental trees or
as follows.
clusion (line 3). If your nonbusiness capital los- trees bearing fruit, nuts, or other crops. The
ses are more than your nonbusiness capital raising, shearing, feeding, caring for, training,
gains without regard to any section 1202 exclu- Glenn's total 2017 income . . . . . . . . . . . . $3,650 and management of animals is also considered
Less:
sion, you cannot deduct the excess. a farming business.
Glenn's original 2017 total
deductions . . . . . . . . . . . . . $16,400
A farming business does not include con-
Business capital losses. You can deduct
Reduced by the disallowed tract harvesting of an agricultural or horticultural
your business capital losses (line 11) only up to
items . . . . . . . . . . . . . . . . − 10,975 − 5,425 commodity grown or raised by someone else. It
the total of:
also does not include a business in which you
Your nonbusiness capital gains that are Glenn's NOL for 2017 . . . . . . . . . . . . . . . $1,775
merely buy or sell plants or animals grown or
more than the total of your nonbusiness
raised entirely by someone else.
capital losses and excess nonbusiness de-
ductions (line 10), and
Your total business capital gains without When To Use an NOL Waiving the 5-year carryback. You can
choose to figure the carryback period for a
regard to any section 1202 exclusion farming loss without regard to the special 5-year
(line 12). Generally, if you have an NOL for a tax year carryback rule. To make this choice for 2017,
ending in 2017, you must carry back the entire attach to your 2017 income tax return filed by
Domestic production activities deduction amount of the NOL to the 2 tax years before the the due date (including extensions) a statement
(line 23). You cannot take the domestic pro- NOL year (the carryback period), and then carry that you are choosing to treat any 2017 farming
duction activities deduction when figuring your forward any remaining NOL for up to 20 years losses without regard to the special 5-year car-
NOL. Enter on line 23 any domestic production after the NOL year (the carryforward period). ryback rule. If you filed your original return on
activities deduction claimed on your return. You can, however, choose not to carry back an time but did not file the statement with it, you
NOL and only carry it forward. See Waiving the can make this choice on an amended return
NOLs from other years (line 24). You cannot Carryback Period, later. You cannot deduct any filed within 6 months after the due date of the
deduct any NOL carryovers or carrybacks from part of the NOL remaining after the 20-year car- return (excluding extensions). Attach an elec-
other years. Enter the total amount of your NOL ryforward period. tion statement to your amended return, and
deduction for losses from other years. write “Filed pursuant to section 301.9100-2” at
NOL year. This is the year in which the NOL the top of the statement. Once made, this
occurred.
Form 1045, Schedule A choice is irrevocable.
Example Exceptions to 2-Year Qualified disaster loss. The carryback period
for a qualified disaster loss is 5 years. Only the
The following example describes how to figure Carryback Rule qualified disaster loss portion of the NOL can
an NOL. be carried back 5 years. A qualified disaster
Eligible losses, farming losses, qualified disas-
loss is the smaller of:
Example. Glenn Johnson is in the retail re- ter losses, and specified liability losses, all de-
cord business. He is single and has the follow- fined next, qualify for longer carryback periods. 1. The sum of:
ing income and deductions on his Form 1040
a. Any losses attributable to a federally
for 2017. Eligible loss. The carryback period for eligible
declared disaster and occurring be-
losses is 3 years. Only the eligible loss portion
fore January 1, 2010, in the disaster
INCOME
of the NOL can be carried back 3 years. An eli-
area, plus
gible loss is any part of an NOL that:
Wages from part-time job . . . . . . . . . . . . . $1,225 Is from a casualty or theft, or b. Any qualified disaster expenses that
Interest on savings . . . . . . . . . . . . . . . . . . 425
Is attributable to a federally declared disas- were allowable under section 198A
Net long-term capital gain on sale of real
estate used in business . . . . . . . . . . . . . . . 2,000 ter for a qualified small business or certain (even if you did not choose to treat
qualified farming businesses. those expenses as deductions in the
Glenn's total income $3,650
current year), or
2. The NOL for the tax year.

Publication 536 (2017) Page 3

 Excluded losses. A qualified disaster loss To make this choice, attach a statement to 2014. The remaining $1,000 is carried to 2015
does not include any losses from property used your original return filed by the due date (includ- with the $38,000 NOL that you must begin us-
in connection with any private or commercial ing extensions) for the NOL year. This state- ing in 2015.
golf course, country club, massage parlor, hot ment must show that you are choosing to waive
tub facility, suntan facility, or any store for which the carryback period under section 172(b)(3). Carryback/ Unused
the principal business is the sale of alcoholic Year Carryover Loss
beverages for consumption off premises. If you filed your original return on time but
did not file the statement with it, you can make 2014 . . . . . . . . . . . . . . . $4,000 $1,000
A qualified disaster loss also does not in-
clude any losses from any gambling or animal this choice on an amended return filed within 6 2015 . . . . . . . . . . . . . . . 39,000 37,000
racing property. Gambling or animal racing months of the due date of the return (excluding 2016 . . . . . . . . . . . . . . . 37,000 34,000
property is any equipment, furniture, software, extensions). Attach a statement to your amen-
ded return, and write “Filed pursuant to section 2017 (NOL year)
or other property used directly in connection
with gambling, the racing of animals, or the 301.9100-2” at the top of the statement. 2018 . . . . . . . . . . . . . . . 34,000 28,500
on-site viewing of such racing, and the portion 2019 28,500 19,500
Once you choose to waive the carryback pe- . . . . . . . . . . . . . . .
of any real property (determined by square foot-
riod, it generally is irrevocable. If you choose to 2020 . . . . . . . . . . . . . . . 19,500 9,700
age) that is dedicated to gambling, the racing of
waive the carryback period for more than one
animals, or the on-site viewing of such racing, 2021 . . . . . . . . . . . . . . . 9,700 1,000
NOL, you must make a separate choice and at-
unless this portion is less than 100 square feet.
tach a separate statement for each NOL year. 2022 . . . . . . . . . . . . . . . 1,000 -0-

Specified liability loss. The carryback period If you do not file this statement on time,
for a specified liability loss is 10 years. Only the you cannot waive the carryback period.
specified liability loss portion of the NOL can be
!
CAUTION How To Claim
carried back 10 years. Generally, a specified li-
ability loss is a loss arising from: an NOL Deduction
Product liability and expenses incurred in How To Carry an NOL Back
the investigation or settlement of, or oppo- or Forward If you have not already carried the NOL to an
sition to, product liability claims, or earlier year, your NOL deduction is the total
An act (or failure to act) that occurred at If you choose to carry back the NOL, you must NOL. If you carried the NOL to an earlier year,
least 3 years before the beginning of the first carry the entire NOL to the earliest carry- your NOL deduction is the carried over NOL mi-
loss year and resulted in a liability under a back year. If your NOL is not used up, you can nus the NOL amount you used in the earlier
federal or state law requiring: carry the rest to the next earliest carryback year or years.
year, and so on. If you carry more than one NOL to the same
1. Reclamation of land,
If you waive the carryback period or do not year, your NOL deduction is the total of these
2. Dismantling of a drilling platform, carrybacks and carryovers.
use up the NOL in the carryback period, carry
3. Remediation of environmental contamina- forward what remains of the NOL to the 20 tax
tion, or NOL resulting in no taxable income. If your
years following the NOL year. Start by carrying
NOL is more than the taxable income of the
4. Payment under any workers’ compensa- it to the first tax year after the NOL year. If you
year you carry it to (figured before deducting the
tion act. do not use it up, carry the unused part to the
NOL), you generally will have an NOL carryover
next year. Continue to carry any unused part of
Any loss from a liability arising from (1) to the next year. See How To Figure an NOL
the NOL forward until the NOL is used up or you
through (4) above can be taken into account as Carryover, later, to determine how much NOL
complete the 20-year carryforward period.
a specified liability loss only if you used an ac- you have used and how much you carry to the
crual method of accounting throughout the pe- Example 1. You started your business as a next year.
riod in which the act (or failure to act) occurred. sole proprietor in 2017 and had a $42,000 NOL
For details, see section 172(f). for the year. No part of the NOL qualifies for the Deducting a Carryback
3-year, 5-year, or 10-year carryback. You begin
Waiving the 10-year carryback. You can
using your NOL in 2015, the second year before If you carry back your NOL, you can use either
choose to figure the carryback period for a
the NOL year, as shown in the following chart. Form 1045 or Form 1040X. You can get your re-
specified liability loss without regard to the spe-
fund faster by using Form 1045, but you have a
cial 10-year carryback rule. To make this choice
Carryback/ Unused shorter time to file it. You can use Form 1045 to
for 2017, attach to your 2017 income tax return
Year Carryover Loss apply an NOL to all carryback years. If you use
filed by the due date (including extensions) a
Form 1040X, you must use a separate Form
statement that you are choosing to treat any 2015 . . . . . . . . . . . . . . . $42,000 $40,000
1040X for each carryback year to which you ap-
2017 specified liability losses without regard to 2016 40,000 37,000
. . . . . . . . . . . . . . . ply the NOL.
the special 10-year carryback rule. If you filed
2017 (NOL year)
your original return on time but did not file the Estates and trusts that do not file Form 1045
statement with it, you can make this choice on 2018 . . . . . . . . . . . . . . . 37,000 31,500 must file an amended Form 1041 (instead of
an amended return filed within 6 months after 2019 . . . . . . . . . . . . . . . 31,500 22,500 Form 1040X) for each carryback year to which
the due date of the return (excluding exten- NOLs are applied. Use a copy of the appropri-
sions). Attach a statement to your amended re- 2020 . . . . . . . . . . . . . . . 22,500 12,700
ate year's Form 1041, check the “Amended re-
turn and write “Filed pursuant to section 2021 . . . . . . . . . . . . . . . 12,700 4,000 turn” box, and follow the Form 1041 instructions
301.9100-2” at the top of the statement. Once 2022 . . . . . . . . . . . . . . . 4,000 -0- for amended returns. Include the NOL deduc-
made, this choice is irrevocable. tion with other deductions not subject to the 2%
If your loss were larger, you could carry it limit (line 15a). Also, see the special procedures
Waiving the Carryback forward until the year 2037. If you still had an for filing an amended return due to an NOL car-
unused 2017 carryforward after the year 2037, ryback, explained under Form 1040X, later.
Period you would not be allowed to deduct it.
Form 1045. You can apply for a quick refund
You can choose not to carry back your NOL. If by filing Form 1045. This form results in a tenta-
Example 2. Assume the same facts as in
you make this choice, then you can use your tive adjustment of tax in the carryback year.
Example 1, except that $4,000 of the NOL is at-
NOL only in the 20-year carryforward period.
tributable to a casualty loss and this loss quali- If the IRS refunds or credits an amount to
(This choice means you also choose not to
fies for a 3-year carryback period. You begin you from Form 1045 and later determines that
carry back any alternative tax NOL.)
using the $4,000 in 2014. As shown in the fol- the refund or credit is too much, the IRS may
lowing chart, $3,000 of this NOL is used in assess and collect the excess immediately.

Page 4 Publication 536 (2017)

 Generally, you must file Form 1045 on or af- The itemized deduction for qualified mort- deduct the NOL in the carryback year, the joint
ter the date you file your tax return for the NOL gage insurance premiums. rates apply to the resulting taxable income.
year, but not later than one year after the end of The itemized deduction for casualty los-
the NOL year. If the last day of the NOL year ses. Refund limit. If you are not married in the NOL
falls on a Saturday, Sunday, or holiday, the form Miscellaneous itemized deductions subject year (or are married to a different spouse), and
will be considered timely if postmarked on the to the 2% limit. in the carryback year you were married and
next business day. For example, if you are a The overall limit on itemized deductions filed a joint return, your refund for the overpaid
calendar year taxpayer with a carryback from (does not apply to carryback years begin- joint tax may be limited. You can claim a refund
2017 to 2015, you must file Form 1045 on or af- ning after December 31, 2009, and before for the difference between your share of the re-
ter the date you file your tax return for 2017, but January 1, 2013). figured tax and your contribution toward the tax
no later than December 31, 2018. The phaseout of the deduction for exemp- paid on the joint return. The refund cannot be
tions (does not apply to carryback years more than the joint overpayment. Attach a
Form 1040X. If you do not file Form 1045, you beginning after December 31, 2009, and statement showing how you figured your re-
can file Form 1040X to get a refund of tax be- before January 1, 2013). fund.
cause of an NOL carryback. Generally, file
Do not refigure the itemized deduction Figuring your share of a joint tax liabil-
Form 1040X for the carryback year within 3
! for charitable contributions. ity. There are five steps for figuring your share
years after the due date, including extensions,
for filing the return for the NOL year. For exam-
CAUTION of the refigured joint tax liability.
ple, if you are a calendar year taxpayer, you Finally, use your refigured taxable income 1. Figure your total tax as though you had
must generally file a claim for refund because of (Form 1045, line 15, using the “After carryback” filed as married filing separately.
an NOL carryback from 2015 by April 15, 2019 column) to refigure your total tax liability. Refig-
(3 years after the due date for the NOL return). ure your income tax, your alternative minimum 2. Figure your spouse's total tax as though
tax, and any credits that are based on or limited your spouse also had filed as married filing
Filing Form 1040X does not extend by your adjusted gross income (AGI), modified separately.
! the carryback period. See When To adjusted gross income (MAGI), or tax liability.
Use an NOL, earlier. 3. Add the amounts in (1) and (2).
CAUTION
(On Form 1045, use lines 16 through 30, and
Attach a computation of your NOL using the “After carryback” column.) The earned in- 4. Divide the amount in (1) by the amount in
Form 1045, Schedule A, and, if it applies, your come credit, for example, may be affected by (3).
NOL carryover using Form 1045, Schedule B, changes to adjusted gross income or the 5. Multiply the refigured tax on your joint re-
discussed later. amount of tax (or both) and, therefore, must be turn by the amount figured in (4). This is
recomputed. If you become eligible for a credit your share of the joint tax liability.
Refiguring your tax. To refigure your total tax because of the carryback, complete the form for
liability for a carryback year, first refigure your that specific credit (such as the EIC Worksheet) Figuring your contribution toward tax
adjusted gross income for that year. (On Form for that year. paid. Unless you have an agreement or clear
1045, use lines 10 and 11 and the “After carry- While it is necessary to refigure your income evidence of each spouse's contributions toward
back” column for the applicable carryback tax, alternative minimum tax, and credits, do not the payment of the joint tax liability, figure your
year.) Use your adjusted gross income after ap- refigure your self-employment tax and addi- contribution by adding the tax withheld on your
plying the NOL deduction to refigure income or tional medicare tax. For information about refi- wages and your share of joint estimated tax
deduction items that are based on, or limited to, guring your net investment income tax, shared payments or tax paid with the return. If the origi-
a percentage of your adjusted gross income. responsibility payment, and credits, see the In- nal return for the carryback year resulted in an
Refigure the following items. structions for Form 1045. overpayment, reduce your contribution by your
share of the tax refund. Figure your share of a
1. The special allowance for passive activity joint payment or refund by the same method
losses from rental real estate activities. Deducting a Carryforward used in figuring your share of the joint tax liabil-
2. Taxable social security and tier 1 railroad ity. Use your taxable income as originally repor-
If you carry forward your NOL to a tax year after ted on the joint return in steps (1) and (2)
retirement benefits.
the NOL year, list your NOL deduction as a above, and substitute the joint payment or re-
3. IRA deductions. negative figure on the “Other income” line of fund for the refigured joint tax in step (5).
Form 1040 or Form 1040NR (line 21 for 2017).
4. Excludable savings bond interest. Estates and trusts include an NOL deduction on
5. Excludable employer-provided adoption Form 1041 with other deductions not subject to Change in Filing Status
benefits. the 2% limit (line 15a for 2017).
If you and your spouse were married and filed a
6. The student loan interest deduction. You must attach a statement that shows all joint return for each year involved in figuring
7. The tuition and fees deduction. the important facts about the NOL. Your state- NOL carrybacks and carryovers, figure the NOL
ment should include a computation showing deduction on a joint return as you would for an
If more than one of these items apply, refig- how you figured the NOL deduction. If you de- individual. However, treat the NOL deduction as
ure them in the order listed above, using your duct more than one NOL in the same year, your a joint NOL.
adjusted gross income after applying the NOL statement must cover each of them.
deduction and any previous item. (Enter your If you and your spouse were married and
NOL deduction on Form 1045, line 10. On filed separate returns for each year involved in
line 11, using the “After carryback” column, en-
Change in Marital Status figuring NOL carrybacks and carryovers, the
ter your adjusted gross income refigured after spouse who sustained the loss may take the
If you and your spouse were not married to NOL deduction on a separate return.
applying the NOL deduction and after refiguring
each other in all years involved in figuring NOL
any above items.) Special rules apply for figuring the NOL car-
carrybacks and carryovers, only the spouse
Next, refigure your taxable income. (On rybacks and carryovers of married people
who had the loss can take the NOL deduction. If
Form 1045, use lines 12 through 15 and the “Af- whose filing status changes for any tax year in-
you file a joint return, the NOL deduction is limi-
ter carryback” column.) Use your refigured ad- volved in figuring an NOL carryback or carry-
ted to the income of that spouse.
justed gross income (Form 1045, line 11, using over.
the “After carryback” column) to refigure certain For example, if your marital status changes
deductions and other items that are based on or because of death or divorce, and in a later year Separate to joint return. If you and your
limited to a percentage of your adjusted gross you have an NOL, you can carry back that loss spouse file a joint return for a carryback or car-
income. Refigure the following items. only to the part of the income reported on the ryforward year, and were married but filed sep-
The itemized deduction for medical expen- joint return (filed with your former spouse) that arate returns for any of the tax years involved in
ses. was related to your taxable income. After you figuring the NOL carryback or carryover, treat

Publication 536 (2017) Page 5

the separate carryback or carryover as a joint 3. Subtract the amount figured in (2) from the
carryback or carryover. joint modified taxable income. This is
spouse B's share of the joint modified tax- How To Figure an NOL
Joint to separate returns. If you and your
spouse file separate returns for a carryback or
able income. Carryover
4. Reduce the amount figured in (3), but not
carryforward year, but filed a joint return for any
below zero, by spouse B's NOL deduction. If your NOL is more than your taxable income
or all of the tax years involved in figuring the
for the year to which you carry it (figured before
NOL carryover, figure each of your carryovers 5. Add the amounts figured in (2) and (4).
deducting the NOL), you may have an NOL car-
separately.
6. Subtract the amount figured in (5) from ryover. You must make certain modifications to
Joint return in NOL year. Figure each spouse A's NOL deduction. This is spouse your taxable income to determine how much
spouse's share of the joint NOL through the fol- A's share of the joint carryover. The rest of NOL you will use up in that year and how much
lowing steps. the joint carryover is spouse B's share. you can carry over to the next tax year. Your
carryover is the excess of your NOL deduction
1. Figure each spouse's NOL as if he or she Example. Sam and Wanda filed a joint re- over your modified taxable income for the carry-
filed a separate return. See How To Figure turn for 2015 and separate returns for 2016 and back or carryforward year. If your NOL deduc-
an NOL, earlier. If only one spouse has an 2017. In 2017, Sam had an NOL of $18,000 tion includes more than one NOL, apply the
NOL, stop here. All of the joint NOL is that and Wanda had an NOL of $2,000. They NOLs against your modified taxable income in
spouse's NOL. choose to carry back both NOLs 2 years to their the same order in which you incurred them,
2. If both spouses have an NOL, multiply the 2015 joint return and claim a $20,000 NOL de- starting with the earliest.
joint NOL by a fraction, the numerator of duction.
which is spouse A's NOL figured in (1) and Their joint modified taxable income (MTI) for Modified taxable income. Your modified tax-
the denominator of which is the total of the 2015 is $15,000, and their joint NOL carryover able income is your taxable income figured with
spouses' NOLs figured in (1). The result is to 2016 is $5,000 ($20,000 – $15,000). Sam the following changes.
spouse A's share of the joint NOL. The and Wanda each figure their separate MTI for
1. You cannot claim an NOL deduction for
rest of the joint NOL is spouse B's share. 2015 as if they had filed separate returns. Then
the NOL carryover you are figuring or for
they figure their shares of the $5,000 carryover
any later NOL.
Example 1. Mark and Nancy are married as follows.
and file a joint return for 2017. They have an 2. You cannot claim a deduction for capital
NOL of $5,000. They carry the NOL back to losses in excess of your capital gains.
2015, a year in which Mark and Nancy filed Step 1. Also, you must increase your taxable in-
separate returns. Figured separately, Nancy's Sam's separate MTI . . . . . . . . . . . . . . . $9,000 come by the amount of any section 1202
2017 deductions were more than her income, Wanda's separate MTI . . . . . . . . . . . . . + 3,000 exclusion.
and Mark's income was more than his deduc- Total MTI . . . . . . . . . . . . . . . . . . . . . . $12,000
3. You cannot claim the domestic production
tions. Mark does not have any NOL to carry Step 2. activities deduction.
back. Nancy can carry back the entire $5,000 Joint MTI . . . . . . . . . . . . . . . . . . . . . . $15,000
NOL to her 2015 separate return. Sam's MTI ÷ total MTI 4. You cannot claim a deduction for your ex-
($9,000 ÷ $12,000) . . . . . . . . . . . . . . . × .75 emptions for yourself, your spouse, or de-
Example 2. Assume the same facts as in Sam's share of joint MTI . . . . . . . . . . . . $11,250 pendents.
Example 1, except that both Mark and Nancy Step 3. 5. You must figure any item affected by the
had deductions in 2017 that were more than Joint MTI . . . . . . . . . . . . . . . . . . . . . . $15,000
amount of your adjusted gross income af-
their income. Figured separately, his NOL is Sam's share of joint MTI . . . . . . . . . . . . − 11,250
ter making the changes in (1), (2), and (3),
$1,800 and her NOL is $3,000. The sum of their Wanda's share of joint MTI . . . . . . . . . . $3,750
above, and certain other changes to your
separate NOLs ($4,800) is less than their Step 4. adjusted gross income that result from (1),
$5,000 joint NOL because his deductions inclu- Wanda's share of joint MTI . . . . . . . . . . $3,750 (2), and (3). This includes income and de-
ded a $200 net capital loss that is not allowed in Wanda's NOL deduction . . . . . . . . . . . − 2,000 duction items used to figure adjusted
figuring his separate NOL. The loss is allowed Wanda's remaining share . . . . . . . . . . . $1,750 gross income (for example, IRA deduc-
in figuring their joint NOL because it was offset tions), as well as certain itemized deduc-
Step 5.
by Nancy's capital gains. Mark's share of their tions. To figure a charitable contribution
Sam's share of joint MTI . . . . . . . . . . . . $11,250
$5,000 joint NOL is $1,875 ($5,000 × Wanda's remaining share . . . . . . . . . . . + 1,750 deduction, do not include deductions for
$1,800/$4,800) and Nancy's is $3,125 ($5,000 NOL carrybacks in the change in (1) but
Joint MTI to be offset . . . . . . . . . . . . . . $13,000
− $1,875). do include deductions for NOL carryfor-
Step 6.
Joint return in previous carryback or Sam's NOL deduction . . . . . . . . . . . . . $18,000 wards from tax years before the NOL year.
carryforward year. If only one spouse had an Joint MTI to be offset . . . . . . . . . . . . . . − 13,000
Your taxable income as modified cannot be
NOL deduction on the previous year's joint re- Sam's carryover to 2016 . . . . . . . . . . . . $5,000 less than zero.
turn, all of the joint carryover is that spouse's
Joint carryover to 2016 . . . . . . . . . . . . . $5,000
carryover. If both spouses had an NOL deduc- Form 1045, Schedule B. You can use Form
Sam's carryover . . . . . . . . . . . . . . . . . − 5,000
tion (including separate carryovers of a joint 1045, Schedule B, to figure your modified taxa-
Wanda's carryover to 2016 . . . . . . . . . . $-0-
NOL, figured as explained in the previous dis- ble income for carryback years and your carry-
cussion), figure each spouse's share of the joint over from each of those years. Do not use Form
carryover through the following steps. Wanda's $2,000 NOL deduction offsets
$2,000 of her $3,750 share of the joint modified 1045, Schedule B, for a carryforward year. If
1. Figure each spouse's modified taxable in- taxable income and is completely used up. She your 2017 return includes an NOL deduction
come as if he or she filed a separate re- has no carryover to 2016. Sam's $18,000 NOL from an NOL year before 2017 that reduced
turn. See Modified taxable income under deduction offsets all of his $11,250 share of your taxable income to zero (to less than zero, if
How To Figure an NOL Carryover, later. joint modified taxable income and the remaining an estate or trust), see NOL Carryover From
$1,750 of Wanda's share. His carryover to 2016 2017 to 2018, later.
2. Multiply the joint modified taxable income
you used to figure the joint carryover by a is $5,000.
fraction, the numerator of which is spouse
A's modified taxable income figured in (1),
NOL Carryover From
and the denominator of which is the total 2017 to 2018
of the spouses' modified taxable incomes
figured in (1). This is spouse A's share of If you had an NOL deduction carried forward
the joint modified taxable income. from a year prior to 2017 that resulted in your

Page 6 Publication 536 (2017)

having taxable income on your 2017 return of 2. Taxable social security and tier 1 railroad The amounts from lines 3 through 5 of the
zero (of less than zero, if an estate or trust), retirement benefits. worksheet.
complete Table 1, Worksheet for NOL Carry- The exemption amount from Form 1041,
3. IRA deductions.
over From 2017 to 2018, on the following pa- line 20.
ges. It will help you figure your NOL to carry to 4. Excludable savings bond interest. The NOL deduction for the NOL year en-
2018. Keep the worksheet for your records. tered at the top of the worksheet and for
5. Excludable employer-provided adoption
later years.
benefits.
Worksheet Instructions 6. The student loan interest deduction.
To refigure the casualty and theft loss de-
duction of an estate or trust, modified adjusted
At the top of the worksheet, enter the NOL year 7. The tuition and fees deduction. gross income is the total of the following
for which you are figuring the carryover. amounts.
If none of these items apply to you, enter The adjusted gross income amount you
zero on line 6. Otherwise, increase your adjus- used to figure the deduction claimed on
More than one NOL. If your 2017 NOL deduc- ted gross income by the total of lines 3 through the return.
tion includes amounts for more than one loss 5 and your NOL deduction for the NOL year en- The amounts from lines 3 through 5 of the
year, complete this worksheet only for one loss tered at the top of the worksheet and later worksheet.
year. To determine which year, start with your years. Using this increased adjusted gross in- The NOL deduction for the NOL year en-
earliest NOL and subtract each NOL separately come, refigure the items that apply, in the order tered at the top of the worksheet and for
from your taxable income figured without the listed above. Your adjustment for each item is later years.
NOL deduction. Complete this worksheet for the difference between the refigured amount
the earliest NOL that results in your having tax- and the amount included on your return. Com- Line 11. Treat your NOL deduction for the NOL
able income below zero. Your NOL carryover to bine the adjustments for previous items with year entered at the top of the worksheet and for
2018 is the total of the amount on line 10 of the your adjusted gross income before refiguring later years as a positive amount. Add it to your
worksheet and all later NOL amounts. the next item. Keep a record of your computa- adjusted gross income. Enter the result on
tions. line 11.
Example. Your taxable income for 2017 is
Enter your total adjustments for the above
$5,000 without your $9,000 NOL deduction.
items on line 6. Line 20. Is your modified adjusted gross in-
Your NOL deduction includes a $2,000 carry-
over from 2015 and a $7,000 carryover from come from line 13 of this worksheet more than
Line 7. Enter zero if you claimed the standard $100,000 ($50,000 if married filing separately)?
2016. Subtract your 2015 NOL of $2,000 from
deduction and the amounts on lines 3 through 5 Yes. Your deduction is limited. Refigure
$5,000. This gives you taxable income of
are zero. Otherwise, use lines 11 through 33 of your deduction using the Mortgage Insurance
$3,000. Your 2015 NOL is now completely used
the worksheet to figure the amount to enter on Premiums Deduction Worksheet in the 2017 In-
up. Subtract your $7,000 2016 NOL from
this line. Complete only those sections that ap- structions for Form 1045. On line 2 of the Mort-
$3,000. This gives you taxable income of
ply to you. gage Insurance Premiums Deduction Work-
($4,000). You now complete the worksheet for
your 2016 NOL. Your NOL carryover to 2018 is Estates and trusts. Enter zero on line 7 if sheet, enter the amount from line 13 of this
the unused part of your 2016 NOL from line 10 you did not claim any miscellaneous deductions worksheet.
of the worksheet. on Form 1041, line 15c, or a casualty or theft No. Your deduction is not limited. Enter
loss. Otherwise, refigure these deductions by the amount from line 19 on line 20 and enter -0-
Line 2. Treat your NOL deduction for the NOL substituting modified adjusted gross income on line 21.
year entered at the top of the worksheet and (see below) for adjusted gross income. Subtract
later years as a positive amount. Add it to your the recomputed deductions from those claimed Line 23. If you had a contributions carryover
negative taxable income (figured without the on the return. Enter the result on line 7. from 2016 to 2017 and your NOL deduction in-
NOL deduction). Enter the result on line 2. cludes an amount from an NOL year before
Modified adjusted gross income. To re- 2016, you may have to reduce your contribu-
Line 6. You must refigure the following income figure miscellaneous itemized deductions of an tions carryover. Reduce the contributions carry-
and deductions based on adjusted gross in- estate or trust (Form 1041, line 15c), modified over by the amount of any adjustment you
come. adjusted gross income is the total of the follow- made to your 2016 charitable contributions de-
ing amounts. duction when figuring your NOL carryover to
1. The special allowance for passive activity The adjusted gross income on the return.
losses from rental real estate activities. 2017. Use the reduced contributions carryover
to figure the amount to enter on line 23.

Publication 536 (2017) Page 7

Table 1. Worksheet for NOL Carryover From 2017 to 2018 (For an NOL Year Before 2017)*
For Use by Individuals, Estates, and Trusts (Keep for your records.)
See the instructions under NOL Carryover From 2017 to 2018.
NOL Year __________

USE YOUR 2017 FORM 1040, FORM 1040NR (OR FORM 1041) TO COMPLETE THIS
WORKSHEET:

1. Enter as a positive number your NOL deduction for the NOL year entered above from line 21 (Form
1040 or Form 1040NR) or line 15a (Form 1041) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
2. Enter your taxable income without the NOL deduction for 2017 (see instructions) . . . . . . . . . . . . . . . . __________
3. Enter as a positive number any net capital loss deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
4. Enter as a positive number any gain excluded on the sale or exchange of a qualified small
business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
5. Enter the amount of any domestic production activities deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
6. Enter any adjustments to your adjusted gross income (see instructions) . . . . . . . . . . . . . . . . . . . . . . . __________
7. Enter any adjustments to your itemized deductions from line 33 below (see instructions) . . . . . . . . . . . __________
8. Enter your deduction for exemptions from line 42 (Form 1040), line 40 (Form 1040NR), or line 20 (Form
1041) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
9. Modified taxable income. Combine lines 2 through 8. Enter the result (but not less than zero) . . . . . __________
10. NOL carryover to 2018. Subtract line 9 form line 1. Enter the result (but not less than zero) here and
on the “other income” line of Form 1040 or Form 1040NR (or the line on Form 1041 for deductions NOT
subject to the 2% floor) in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENTS TO ITEMIZED DEDUCTIONS (INDIVIDUALS ONLY):

11. Enter you adjusted gross income without the NOL deduction for the NOL year entered above or later
years (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
12. Combine lines 3, 4, 5, and 6 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
13. Modified adjusted gross income. Combine lines 11 and 12 above . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENT TO MEDICAL EXPENSES:

14. Enter your medical expenses from Schedule A (Form 1040), line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . __________
15. Enter your medical expenses from Schedule A (Form 1040), line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . __________
16. Multiply line 13 above by 7.5% (0.075) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
17. Subtract line 16 from line 15. Enter the result (but not less than zero) . . . . . . . . . . . . . . . . . . . . . . . . . __________
18. Subtract line 17 from line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENT TO MORTGAGE INSURANCE PREMIUMS:

19. Enter your mortgage insurance premiums deduction from Schedule A (Form 1040), line 13 . . . . . . . . __________
20. Refigure your mortgage insurance premiums deduction using line 13 above as your adjusted gross
income (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
21. Subtract line 20 from line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENT TO CHARITABLE CONTRIBUTIONS:

22. Enter your charitable contributions deductions from Schedule A (Form 1040), line 19, or Schedule A
(Form 1040NR), line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
23. Refigure your charitable contributions deduction using line 13 above as your adjusted gross income
(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
24. Subtract line 23 from line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENT TO CASUALTY AND THEFT LOSSES:

25. Enter your casualty and theft losses from Form 4684, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
26. Multiply line 13 above by 10% (0.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
27. Subtract line 26 from line 25. Enter the result (but not less than zero) . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENT TO MISCELLANEOUS DEDUCTIONS:

28. Enter your miscellaneous deductions from Schedule A (Form 1040), line 27 or Schedule A (Form
1040NR), line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... __________
29. Enter your miscellaneous deductions from Schedule A (Form 1040), line 24 or Schedule A (Form
1040NR), line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
30. Multiply line 13 above by 2% (0.02) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
31. Subtract line 30 from line 29. Enter the result (but not less than zero) . . . . . . . . . . . . . . . . . . . . . . . . . __________
32. Subtract line 31 from line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

*Note: If you choose to waive the carryback period, and instead you choose to only carry your 2017 NOL forward, use Schedule A, Form 1045, to
compute your 2017 NOL that will be carried over to 2018. Report your 2017 NOL from line 25, Schedule A, Form 1045, on the “other income” line of
your 2018 Form 1040 or Form 1040NR, or the line on Form 1041 for deductions NOT subject to the 2% floor in 2018.

Page 8 Publication 536 (2017)

Table 1. (Continued)
TENTATIVE TOTAL ADJUSTMENT:

33. Combine lines 18, 21, 24, 27, and 32, and enter the result here. If line 13 above is $313,800 or less if
married filing jointly or qualifying widow(er), $287,650 or less if head of household, $261,500 or less if
single, or $156,900 or less if married filing separately, also enter the result on line 7 above and stop
here. Otherwise, go to line 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

ADJUSTMENT TO OVERALL ITEMIZED LIMIT:

34. Enter the amount from Schedule A (Form 1040), line 29, or Schedule A (Form 1040NR), line 15 . . . . . __________
35. Add lines 17, 20, 23, 26, and 31, and the amounts on Schedule A (Form 1040), lines 9,10,11,12,14,
and 28, or the amounts from Schedule A (Form 1040NR), lines 1 and 14 . . . . . . . . . . . . . . . . . . . . . . __________
36. Add lines 17 and 27, the amount on Schedule A (Form 1040), line 14, and any gambling and casualty
or theft losses included on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR),
line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
37. Subtract line 36 from line 35. If the result is zero, enter the amount from line 33 on line 7 above and
stop here. Otherwise, go to line 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
38. Multiply line 37 by 80% (0.80) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
39. Subtract $313,800 if married filing jointly or qualifying widow(er), $287,650 if head of household,
$261,500 if single, or $156,900 if married filing separately from the amount on line 13 . . . . . . . . . . . . . __________
40. Multiply line 39 by 3% (0.03) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
41. Enter the smaller of line 38 or line 40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
42. Subtract line 41 from line 35. Enter the result (but not less than your standard deduction
amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
43. Subtract line 42 form line 34. Enter the result here and on line 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________

Using direct deposit. The fastest way to re-

Go to IRS.gov/Help or IRS.gov/LetUsHelp
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and the final response for your records. credits. Due to changes in the law, the IRS
Preparing and filing your tax return. Find Go to IRS.gov/Pub17 to get Pub. 17, Your can’t issue refunds before mid-February 2018,
free options to prepare and file your return on Federal Income Tax for Individuals, which for returns that properly claimed the earned in-
IRS.gov or in your local community if you qual- features details on tax-saving opportuni- come credit (EIC) or the additional child tax
ify. ties, 2017 tax changes, and thousands of credit (ACTC). This applies to the entire refund,
The Volunteer Income Tax Assistance interactive links to help you find answers to not just the portion associated with these cred-
(VITA) program offers free tax help to people your questions. View it online in HTML, as its.
who generally make $54,000 or less, persons a PDF, or download it to your mobile de-
with disabilities, and limited-English-speaking vice as an eBook. Getting a transcript or copy of a return. The
taxpayers who need help preparing their own You may also be able to access tax law in- quickest way to get a copy of your tax transcript
tax returns. The Tax Counseling for the Elderly formation in your electronic filing software. is to go to IRS.gov/Transcripts. Click on either
(TCE) program offers free tax help for all tax- "Get Transcript Online" or "Get Transcript by
payers, particularly those who are 60 years of Mail" to order a copy of your transcript. If you
Getting tax forms and publications. Go to
age and older. TCE volunteers specialize in an- prefer, you can:
IRS.gov/Forms to view, download, or print all of
swering questions about pensions and retire- Order your transcript by calling
the forms and publications you may need. You
ment-related issues unique to seniors. 1-800-908-9946.
can also download and view popular tax publi-
You can go to IRS.gov to see your options Mail Form 4506-T or Form 4506T-EZ (both
cations and instructions (including the 1040 in-
for preparing and filing your return which in- available on IRS.gov).
structions) on mobile devices as an eBook at no
clude the following. charge. Or, you can go to IRS.gov/OrderForms
Free File. Go to IRS.gov/FreeFile. See if Using online tools to help prepare your re-
to place an order and have forms mailed to you
you qualify to use brand-name software to turn. Go to IRS.gov/Tools for the following.
within 10 business days.
prepare and e-file your federal tax return The Earned Income Tax Credit Assistant
for free. (IRS.gov/EIC) determines if you’re eligible
Access your online account (Individual tax-
VITA. Go to IRS.gov/VITA, download the for the EIC.
payers only). Go to IRS.gov/Account to se-
free IRS2Go app, or call 1-800-906-9887 The Online EIN Application (IRS.gov/EIN)
curely access information about your federal tax
to find the nearest VITA location for free helps you get an employer identification
account.
tax preparation. number.
View the amount you owe, pay online or
TCE. Go to IRS.gov/TCE, download the The IRS Withholding Calculator (IRS.gov/
set up an online payment agreement.
free IRS2Go app, or call 1-888-227-7669 W4App) estimates the amount you should
Access your tax records online.
to find the nearest TCE location for free tax have withheld from your paycheck for fed-
Review the past 18 months of your pay-
preparation. eral income tax purposes.
ment history.
Getting answers to your tax ques- Go to IRS.gov/SecureAccess to review the
tions. On IRS.gov get answers to your required identity authentication process.
tax questions anytime, anywhere.

Publication 536 (2017) Page 9

 The First Time Homebuyer Credit Account in monthly installments if you can’t pay What Can the Taxpayer Advocate
Look-up (IRS.gov/HomeBuyer) tool pro- your taxes in full today. Once you complete Service Do For You?
vides information on your repayments and the online process, you will receive imme-
account balance. diate notification of whether your agree- We can help you resolve problems that you
The Sales Tax Deduction Calculator ment has been approved. can’t resolve with the IRS. And our service is
(IRS.gov/SalesTax) figures the amount you Use the Offer in Compromise Pre-Qualifier free. If you qualify for our assistance, you will be
can claim if you itemize deductions on (IRS.gov/OIC) to see if you can settle your assigned to one advocate who will work with
Schedule A (Form 1040), choose not to tax debt for less than the full amount you you throughout the process and will do every-
claim state and local income taxes, and owe. thing possible to resolve your issue. TAS can
you didn’t save your receipts showing the help you if:
sales tax you paid. Checking the status of an amended return. Your problem is causing financial difficulty
Go to IRS.gov/WMAR to track the status of for you, your family, or your business,
Resolving tax-related identity theft issues. Form 1040X amended returns. Please note that You face (or your business is facing) an
The IRS doesn’t initiate contact with tax- it can take up to 3 weeks from the date you immediate threat of adverse action, or
payers by email or telephone to request mailed your amended return for it to show up in You’ve tried repeatedly to contact the IRS
personal or financial information. This in- our system and processing it can take up to 16 but no one has responded, or the IRS
cludes any type of electronic communica- weeks. hasn’t responded by the date promised.
tion, such as text messages and social me-
dia channels. Understanding an IRS notice or letter. Go to
IRS.gov/Notices to find additional information
How Can You Reach Us?
Go to IRS.gov/IDProtection for information
and videos. about responding to an IRS notice or letter.
We have offices in every state, the District of
If your SSN has been lost or stolen or you Columbia, and Puerto Rico. Your local advo-
suspect you’re a victim of tax-related iden- Contacting your local IRS office. Keep in
cate’s number is in your local directory and at
tity theft, visit IRS.gov/ID to learn what mind, many questions can be answered on
TaxpayerAdvocate.IRS.gov/Contact-Us. You
steps you should take. IRS.gov without visiting an IRS Tax Assistance
can also call us at 1-877-777-4778.
Center (TAC). Go to IRS.gov/LetUsHelp for the
Checking on the status of your refund. topics people ask about most. If you still need
Go to IRS.gov/Refunds. help, IRS TACs provide tax help when a tax is- How Can You Learn About Your
Due to changes in the law, the IRS can’t is- sue can’t be handled online or by phone. All Taxpayer Rights?
sue refunds before mid-February 2018, for TACs now provide service by appointment so
returns that properly claimed the EIC or the you’ll know in advance that you can get the The Taxpayer Bill of Rights describes 10 basic
ACTC. This applies to the entire refund, service you need without long wait times. Be- rights that all taxpayers have when dealing with
not just the portion associated with these fore you visit, go to IRS.gov/TACLocator to find the IRS. Our Tax Toolkit at
credits. the nearest TAC, check hours, available serv- TaxpayerAdvocate.IRS.gov can help you un-
Download the official IRS2Go app to your ices, and appointment options. Or, on the derstand what these rights mean to you and
mobile device to check your refund status. IRS2Go app, under the Stay Connected tab, how they apply. These are your rights. Know
Call the automated refund hotline at choose the Contact Us option and click on “Lo- them. Use them.
1-800-829-1954. cal Offices.”
How Else Does the Taxpayer
Making a tax payment. The IRS uses the lat- Watching IRS videos. The IRS Video portal Advocate Service Help Taxpayers?
est encryption technology to ensure your elec- (IRSvideos.gov) contains video and audio pre-
tronic payments are safe and secure. You can sentations for individuals, small businesses, TAS works to resolve large-scale problems that
make electronic payments online, by phone, and tax professionals. affect many taxpayers. If you know of one of
and from a mobile device using the IRS2Go these broad issues, please report it to us at
app. Paying electronically is quick, easy, and Getting tax information in other languages. IRS.gov/SAMS.
faster than mailing in a check or money order. For taxpayers whose native language isn’t Eng-
Go to IRS.gov/Payments to make a payment lish, we have the following resources available.
using any of the following options. Taxpayers can find information on IRS.gov in Low Income Taxpayer
IRS Direct Pay: Pay your individual tax bill the following languages. Clinics
or estimated tax payment directly from Spanish (IRS.gov/Spanish).
your checking or savings account at no Chinese (IRS.gov/Chinese). Low Income Taxpayer Clinics (LITCs) are inde-
cost to you. Vietnamese (IRS.gov/Vietnamese). pendent from the IRS. LITCs represent individu-
Debit or credit card: Choose an ap- Korean (IRS.gov/Korean). als whose income is below a certain level and
proved payment processor to pay online, Russian (IRS.gov/Russian). need to resolve tax problems with the IRS, such
by phone, and by mobile device. as audits, appeals, and tax collection disputes.
The IRS TACs provide over-the-phone inter-
Electronic Funds Withdrawal: Offered In addition, clinics can provide information
preter service in over 170 languages, and the
only when filing your federal taxes using about taxpayer rights and responsibilities in dif-
service is available free to taxpayers.
tax preparation software or through a tax ferent languages for individuals who speak
professional. English as a second language. Services are of-
Electronic Federal Tax Payment Sys- The Taxpayer Advocate fered for free or a small fee. To find a clinic near
tem: Best option for businesses. Enroll- Service Is Here To Help You you, visit TaxpayerAdvocate.IRS.gov/LITCmap
ment is required. or see IRS Publication 4134, Low Income
Check or money order: Mail your pay- What is the Taxpayer Advocate Taxpayer Clinic List.
ment to the address listed on the notice or Service?
instructions.
The Taxpayer Advocate Service (TAS) is an in-
Cash: You may be able to pay your taxes
dependent organization within the IRS that
with cash at a participating retail store.
helps taxpayers and protects taxpayer rights.
What if I can’t pay now? Go to IRS.gov/ Our job is to ensure that every taxpayer is trea-
Payments for more information about your op- ted fairly and that you know and understand
tions. your rights under the Taxpayer Bill of Rights.
Apply for an online payment agreement
(IRS.gov/OPA) to meet your tax obligation

Page 10 Publication 536 (2017)

 To help us develop a more useful index, please let us know if you have ideas for index entries.
Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Farming loss 3
A Figuring an NOL: M S
Assistance (See Tax help) Capital losses 3 Marital status, change in 5 Specified liability loss 4
Carryover 6 Missing children, photographs Steps in figuring NOL 2
Form 1045, Schedule A 2 of 1
C NOL deduction 3 Modified taxable income 6
Carryback, waiving 4 Nonbusiness deductions 2 T
Carryback period 3 Nonbusiness income 2 Tax help 9
Carryforward period 3 Filing status, change in 5 N
Carryover from 2017 to 2018: Form 1045, Schedule A 2 NOL resulting in no taxable
Form 1045, Schedule B 6
Estates and trusts 7 income 4 W
Worksheet instructions 7 Forms and schedules: NOL year 1, 3 Waiving the 10-year carryback 4
Claiming an NOL deduction 4 Form 1040X 5 Waiving the 5-year carryback 3
Form 1045 4 Waiving the carryback period 4
Form 1045, Schedule A 2
P When to use an NOL 3
Form 1045, Schedule B 6
D Publications (See Tax help) Worksheet:
Future developments 1
Deducting a carryback 4 (Continued) 9
Deducting a carryforward 5 Carryover from 2017 to 2018 8
Domestic production activities Q
deduction 3, 6 H Qualified disaster loss 3
How to carry an NOL back or Qualified small business 3
forward 4
How to figure an NOL 2
E
Eligible loss 3 R
Refiguring tax 5
I
Identity theft 10
F
Farming business 3

Publication 536 (2017) Page 11