Greetings. We all need to find creative ways to grow and protect our wealth during the economic crisis. Here’s one you may not be aware of, and it’s a fantastic way to potentially put more money back in your pocket by taking advantage of the IRS tax code.
To help businesses suffering after World War I, a “Net Operating Loss” provision was added to the United States tax code in 1918.
The provision has been redacted and reenacted many times over the years, and the rules are frequently modified.
But in short, the Net Operating Losses provision allows businesses who experience a net loss to “carryback” that loss to past tax years — and get up to a 100% tax refund for those years.
In recent history the carryback window for Net Operating Losses was up to 3 years back and usually capped at 80% of net losses.
But in 2017, the Tax Cuts and Jobs Act of 2017 signed by President Trump eliminated the Net Operating Loss provision completely.
Business owners warned that this elimination could hurt them in the next recession. And they were right.
That’s why the CARES Act has not only reinstated Net Operating Losses, but increased the carryback window to 5 years and 100% of net losses.
This could mean up to a 100% tax refund for the last 5 years.
And since it’s your money that you’re getting back, there are no restrictions. No conditions on the money. No interest to pay. You get to keep the money as the business owner and use it however you want.
I hope you find this information compelling and actionable. If you would like to move forward with employing this strategy, simple contact our office and we will get the process rolling with one of our licensed tax strategists.