Negative Federal Adjusted Gross Income FAQs

For tax years ending on or after July 30, 2024, can a Missouri individual income tax return begin with a negative federal adjusted gross income?

No. For Missouri tax purposes, an individual’s federal adjusted gross income cannot be negative when computing Missouri adjusted gross income or Missouri nonresident adjusted gross income on the Missouri return. If a taxpayer’s federal adjusted gross income is negative for a given tax year, they must calculate Missouri adjusted gross income or Missouri nonresident adjusted gross income as if their federal adjusted gross income were zero dollars ($0).

What caused this update to the Missouri individual income tax return?

Following publication for public notice and comment, Missouri Code of State Regulations 12 CSR 10-2.710 was updated effective July 2024 to align with the Missouri Supreme Court’s opinion in Eilian v. Director of Revenue.

Although not a cause of this update, this nearly coincides with the IRS’s removal of Schedules A and B from federal Form 1045 beginning with tax year 2024. Prior to this update, individuals who were required to add back an NOL for the loss year on Form MO-A were directed to attach Schedules A and B of federal Form 1045 and to perform a calculation using Schedule A of federal Form 1045. Following this update, individuals are no longer required to add back their loss on Form MO-A except in rare circumstances (described below).

For tax years ending on or after July 30, 2024, am I still required to add back the amount of my NOL on the Form MO-A?

In light of this update preventing federal adjusted gross income from being negative on the Missouri individual income tax return, an individual NOL addition modification is no longer required, except when carrying a net operating loss back more than 2 years or forward more than 20 years. If you filed a Missouri individual income tax return adding back your NOL for a tax year ending on or after July 30, 2024, generally you should file an amended Missouri return to reflect this update.

Does this update apply to the Missouri corporate income tax return?

No. Unlike individual taxpayers, Missouri corporate income taxpayers are subject to a law directly stating that their federal taxable incomes may be a “positive or negative amount” (Section 143.121.5, RSMo). However, corporations may need to compute an NOL addition modification using Form MO-5090. A similar statute has not been passed for individuals.

If you still have questions, please check out other Individual Income Tax FAQs.