Arizona Association of Mortgage Brokers -- One of our member brokers told us how he benefited from a new IRS law. It allows small business owners to refile their 2008 income tax returns to recapture some of the taxes paid, if they showed a loss on their 2008 tax return.
This particular member was able to recapture $2,300 of taxes paid in previous years with an amended return.
Here is the scoop from the IRS:
To accommodate the change in tax law, the IRS today updated the instructions for two key forms — Forms 1045 and 1139 — that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.
The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 (Update: please see superceding Revenue Procedure 2009-26) outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.
“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”
With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.
Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns."
If you happened to show a loss on your 2008 tax return, you may benefit from this new tax law. Note: this information is not intended as professional tax advice. Consult your accountant or other tax professional to evaluate your specific situation.
If you've already taken advantage of this tax law change, be sure to share your experience in the "Post a Comment" section below.
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