The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) is designed to provide financial and tax relief to individuals and businesses harmed as a result of COVID-19. A number of these changes suspend or alter rules put in place by the Tax Cuts and Jobs Act (TCJA). As a result, there are several opportunities to file for federal tax refunds, which produce immediate cash for taxpayers.

Net Operating Losses

The TCJA eliminated the carryback for net operating losses (NOLs) arising after 2017 (other than for farming businesses). It also limited the offset of taxable income in carryover years to 80%. The CARES Act makes two key changes: It allows NOLs arising in tax years beginning in 2018, 2019, and 2020 to be carried back five years, with unused amounts carried forward. It also allows carrybacks to offset 100% of taxable income.

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