Schedule MI-1045: Net Operating Loss (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Schedule MI-1045 calculates your Michigan net operating loss (NOL) for a loss year and is filed with that year's return. It reports income, additions, subtractions, and required modifications used to determine the loss.
Who files this form
Use Schedule MI-1045 to determine whether you have a Michigan net operating loss (NOL) for the loss year, whether or not you have a federal NOL. File it with your loss-year Michigan income tax return, including an e-filed return.
Nonresidents and part-year residents may also qualify. Only Michigan-sourced income or loss may create a Michigan NOL.
A completed Schedule MI-1045 for the loss year or years and Form 5674 are required before you can claim an NOL carryforward deduction. If you amend a loss-year MI-1040 and change the NOL, include an amended MI-1045 and supporting documentation.
What you'll need
Use your loss-year MI-1040 and Michigan Schedule 1 to complete Part 1. Use the Michigan portion of your loss-year U.S. Form 1040 entries to complete Part 2.
The supporting-document checklist lists:
- U.S. Form 1040 and Schedules 1, A, B, C, D, E and F.
- U.S. Forms 4797, 4835 and 172.
- Schedule K-1s.
- MI-1041 and the final Schedule K-1 from U.S. Form 1041 when the NOL comes from the termination of a trust.
- A statement for all business activity showing the type and location, including city and state, of each source of income or loss. Treasury's website has a “Business, Rental & Royalty Activity Worksheet” for assistance.
- Any other applicable documentation supporting the NOL.
How to file
File Schedule MI-1045 with your loss-year Michigan return, including an e-filed return. The supplied text does not provide a mailing address.
- Enter the loss year, your name and full Social Security number. For a joint return, include your spouse's information. Type or print in blue or black ink.
- Complete Part 1 using the loss-year MI-1040 and Michigan Schedule 1. If line 14 is zero or greater, stop: you do not have a Michigan NOL.
- Complete Part 2 before continuing with the modifications in Part 1. Carry line 30 to line 15.
- Complete the remaining modifications and line 19. If line 19 is zero or greater, you do not have a Michigan NOL.
- Include the required supporting documents.
Use Form 5674 to compute an NOL deduction claimed on Michigan Schedule 1. Use Form 5603 to request a refund from an eligible farming loss carryback.
Common mistakes
- Checking the farming carryback election without understanding it. The checkbox gives up the entire farming NOL carryback period in favor of carrying the loss forward. The election is irrevocable.
- Using the wrong signs or amounts. Enter line 13 as a negative number and line 16 as a positive number. On line 30, enter zero if line 29 is greater than line 23.
- Skipping carryover years. An NOL must be claimed in consecutive years.
- Putting a nonresident deduction on the wrong schedule. For nonresidents and part-year residents, do not report the Michigan NOL deduction on Schedule NR or claim the federal NOL deduction as an addition on Michigan Schedule 1.
- Amending MI-1040 to request a farming carryback refund. The text directs you to Form 5603 instead.
- Leaving out supporting documents. Review the required-document checklist to help reduce processing delays.
Questions people ask
What is a net operating loss?
An NOL occurs when business loss exceeds income in a particular year. Schedule MI-1045 applies the adjustments needed to determine whether you have a Michigan NOL.
Is my Michigan NOL the same as my federal NOL?
Not necessarily. Michigan computes its NOL independently, starting with federal adjusted gross income rather than federal taxable income. Federal itemized and standard deductions are not considered in the Michigan NOL calculation.
Can I carry a 2025 NOL back or forward?
A 2025 loss is a Group 2 TCJA NOL. Most NOL carrybacks are eliminated for losses incurred after 2020, but farming NOLs have a two-year carryback. NOLs may be carried forward indefinitely until fully absorbed. Group 2 TCJA deductions are limited to 80 percent of Michigan taxable income before exemptions and previously claimed NOL deductions.
Does MI-1045 calculate the deduction I can claim this year?
MI-1045 calculates the Michigan NOL for the loss year. Form 5674 calculates the current-year Michigan NOL deduction and is required to claim that deduction on Michigan Schedule 1.