Your old tax returns still have value according to The Wall Street Journal.
Small-business owners looking for tax relief would be wise to review the past years’ filings, for a number of reasons. For one, there may be opportunities to amend your returns to receive tax refunds, which could provide some much-needed cash. And for another, old filings can remind you of carryovers and other deductions that you can plan to take this tax year.
While some tax write-offs are limited for the current year, tax rules allow the unused amounts to be claimed in future years. Keep an eye out for these items on your old returns:
– Home-office deductions. The deduction for home-office expenses cannot exceed gross income from the home-office activity. But the unused portion of the deduction can be carried forward and used up to the amount of income from a home-office activity in a future year. This is true even if you relocate and have a new home office. There is no time limit on the carryforward.
– Net operating losses (NOLs). Losses from business operations that are not used in the current year can be carried back for a set period (usually two years) and forward for up to 20 years. Check to see whether you have any unused carryovers. If your business had NOLs in more than one year, be sure to track the losses; there is an ordering rule for claiming these loss carryovers.
– Tax credits. Tax credits that are part of the general business credit (which is not a separate credit but rather an overall limitation of a variety of business credits) that cannot be fully used in the current year may be carried back for one year (five years for credits of small businesses in 2010) and forward for up to 20 years. Again, check for potential carryovers.
It’s a good idea (and worth the additional cost) to have a tax professional other than the person preparing your return review old returns to check for overlooked opportunities.
Photo by taxforminstructions.com.