Form IL-1040-X Instructions

              IL-1040-X Instructions (R-12/05) Page 1 of 4
Illinois Department of Revenue
Form IL-1040-X Instructions
What if I have a net operating loss deduction?
In general, Illinois allows you to take the same net operating loss
(NOL) carryback or carryforward deduction that was allowed on your
federal income tax return. A carryback deduction is a “federal change”
that reduces your adjusted gross income on Step 2, Line 1. Check the
box marked “NOL” on Step 1, Line 5, and indicate the date on which
the IRS accepted your carryback deduction. This date will usually be
the date on which the IRS issued your refund check. You must file
Form IL-1040-X within 2 years plus 120 days after that date in order to
receive a refund.
Illinois does not allow you to deduct the same NOL twice. To prevent a
double deduction of your NOL, your deduction for a tax year cannot
be greater than the federal NOL available for deduction in that year
minus the federal NOL available to carry to later years. This is the
amount reported as “Modified Taxable Income” on federal Form 1045,
Application for Tentative Refund, Schedule B. For tax years
1999 through 2005 forms, this amount is found on Line 8,
prior to 1999, this amount is found on Line 7.
If you have NOL available to carry to next year, attach a copy of your
federal Form 1045 Schedule B.
If you are a resident in the year you are allowed a federal NOL
deduction, Illinois allows you to deduct the entire amount even if you
were not a resident in the year the loss occurred. If you are a
nonresident or part-year resident in the year you are allowed the
federal NOL deduction, see the instructions for Step 3, Line 21, of
Illinois Schedule NR.
Example: In tax year 2005, Paul Taxpayer, a nonresident individual,
has $20,000 in federal net losses from Partnership A and $180,000 in
net losses from Partnership B. Paul Taxpayer has $100,000 in income
from other sources, so Paul’s adjusted gross income for 2005 is a net
operating loss of $100,000. Federally, Paul Taxpayer carries the entire
$100,000 loss back to 2003.
Ten percent of the $100,000 net operating loss deduction for 2003 is
attributable to Partnership A (Partnership A’s $20,000 loss in 2005 is
divided by the $200,000 in total losses incurred from partnerships in
2005) and 90 percent of the net operating loss deduction is attributable
to Partnership B. Refer to Schedule NR Instructions for Step 3, Line
21, to determine the amount of each partnership’s net operating loss
deduction amount that is allocated or apportioned to Illinois.
What should I attach to Form IL-1040-X when
claiming a NOL?
In order to properly support a refund claimed as a result of a finalized
federal NOL carryback, you must attach the following information:
a complete copy of the U.S. 1040X or U.S. 1045 including any
Schedules A and B, if filed;
a copy of any refund check and a complete copy of any other
notification you received from the IRS that they accepted the
changes shown on your U.S. 1040X or U.S. 1045;
In addition, if you were a nonresident or part-year resident of Illinois in
the carryback year, you must also attach
copies of the U.S. 1040, Pages 1 and 2, and Schedules C, E, and F
that were filed for the loss year. Include supporting information that
identifies the partnerships and Subchapter S corporations (names
and FEINs) whose losses are included in Schedules C, E and F
and the amount of loss incurred by each entity.
copies of Schedule K-1-P or other documentation for the
carryback year for each partnership or S corporation through
which you incurred an NOL in the loss year and that identifies each
entity’s apportionment formula for the carryback year.
If you fail to attach the required information to your Form IL-1040-X,
your refund may be delayed or denied.
General Information
Should I file Form IL-1040-X?
You should file Form IL-1040-X, Amended Individual Income Tax
Return, if you need to change a previously filed Form IL-1040,
Individual Income Tax Return and your change affects items used to
figure your Illinois net income or credits.
Your change can occur from a state change or a federal change, i.e.
an amendment of your federal income tax return,
an adjustment made by the Internal Revenue Service (IRS), or
any other recomputation or redetermination.
You should file Form IL-1040-X only after you have filed a processable
Illinois Income Tax return. A separate Form IL-1040-X must be filed for
each tax year you wish to change.
Do not file Form IL-1040-X if you are changing only your
name, address, or Social Security number. Instead, forward this
information to the address provided under ‘‘What if I need assistance?’’.
How long do I have to correct or amend my return?
You may correct your current year return before the automatic
six-month extension period, which is October 15, if you have
already filed an original return. Any Form IL-1040-X filed prior to the
automatic extension date will be considered a “corrected” rather than
an amended return and any penalties and interest may be refigured.
We will consider your Form IL-1040-X an amended return if you file it
after you filed an original return and after the extended due date has
passed. If you file an amended return after the extended due date,
any penalty for late payment of estimated tax will remain as originally
assessed.
You must file Form IL-1040-X, along with proper supporting
documentation, for both corrected and amended returns.
The amount of time you have to amend your return depends on
whether your Form IL-1040-X is being filed due to a state change or a
federal change.
State change only – If your change decreases the tax due to Illinois
and you want a refund, you must file an amended return (claim for
overpayment) within
three years after the extended due date,
three years after the date your original return was filed, or
one year after the date your Illinois tax was paid,
whichever is latest.
If your change increases the tax you owe to Illinois, you should file a
Form IL-1040-X and pay the tax, penalty, and interest as soon as you
realize that it is owed.
Federal change (including NOLs) – You should not file this form
until you receive a federal finalization notification from the IRS stating
that they have accepted your change either by paying a refund or by
final assessment, agreement, or judgment.
If your federal change decreases your Illinois tax, and you want a
refund, you must file an amended return (claim for overpayment)
within two years plus 120 days of federal finalization.
If your federal change increases your Illinois tax, you must file a
Form IL-1040-X and pay any additional tax within 120 days of the
federal finalization date, or you may be assessed a late-payment
penalty.
If your amended return is filed incorrectly and additional
liability is due, we must issue you a notice of deficiency within two
years from the date you filed Form IL-1040-X. If you fail to file an
amended return when required, we may issue you a notice of
deficiency at any time.