No one likes to see their business lose money.
But a net operating loss can actually produce one of the best tax deductions the IRS has to offer.
You see, a net operating loss can generate tax refunds from prior years and a tax shelter for future years.
But be careful! The IRS has set four traps that you must avoid if you want your net operating loss to work to your advantage.
You’ll get all the details when you read my new article titled Tax Tips: Avoid These Traps and Cash In on Taxes When Your Business Loses Money!
Here’s what you need to watch out for:
Trap #1: You failed to file a return or filed it late. Uncle Sam says you have to file a tax return when your income exceeds a certain amount. If you’re a new business owner and are losing money, you may not know that you have to file a return. The result? You’ll lose a money-making opportunity. We’ll tell you more when you read the full article.
Trap #2: You failed to create a valid election that waives the “two-year carryback.” The IRS requires that you attach a statement to your timely-filed return. And that the statement contains four important pieces of information. We’ll explain the two-year carryback provision and list the information you’re required to provide when you read the full article.
Trap #3: You disregarded the statute of limitations on your net-operating-loss refund. The law requires that you file a claim for a refund related to a net-operating-loss carryback. And you must file your claim within three years of the due date of the return for the “loss year.” This will all be explained when you read the full article.
Trap #4: You forgot about the AMT. Remember, there’s a separate net-operating-loss for Alternative Minimum Tax (AMT) purposes that you must compute (taking AMT adjustments and preferences into account). Does this sound complicated? It is. That’s why you need to read the full article.