Do I owe taxes on my options investments after wash sales and some gains?

Thanks for the explanation but I'm still a bit confused. So if my overall loss after everything is $8,700, and I had $4,000 in gains during the year, does that mean I don't owe any taxes on those gains since they're offset by the losses? Also, FreeTaxUSA just has fields for total proceeds and cost basis - do I need to enter each transaction individually somewhere? There were hundreds of trades!

You don't owe taxes on those $4,000 gains because they're completely offset by your losses. When calculating your tax liability, it's the net result that matters - so with a net loss of $8,700, you won't owe capital gains tax. FreeTaxUSA should have a section for entering capital gains and losses. You'll need to summarize your transactions rather than entering each one individually. Your 1099-B from Robinhood will have summary sections that show total proceeds, cost basis, and any wash sale adjustments. You'll use those totals on Schedule D, and you may need to complete Form 8949 to list transactions by category (short-term vs. long-term, with or without basis reported to IRS, etc.). If you have hundreds of trades, you can attach a summary instead of listing each transaction.

Does it work with other brokers too? I've got a mix of Fidelity and Webull accounts with a ton of options trades and I'm dreading figuring out all the wash sales between accounts.

I'm skeptical about these tax tools. How does it actually handle the reporting part? Do you still have to manually enter stuff into FreeTaxUSA or does it generate forms you can just submit?

It definitely works with all major brokers! I've seen people use it with Fidelity, Webull, TD Ameritrade and more. The system is designed to consolidate trades across multiple brokers, which is actually super helpful for catching those wash sales that happen between different accounts. For the reporting part, it generates a complete breakdown that you can either enter as summary figures into your tax software or you can download the actual IRS forms (Schedule D and Form 8949) already filled out. I chose to use the summary figures in FreeTaxUSA since it was pretty straightforward once I had the correct totals, but having the actual completed forms as a reference was super helpful.

Wait, how exactly does this work? The IRS just calls you back because some website asked them to? That sounds really sketchy to me.

I don't buy it. I've been trying to reach the IRS for months about my audit and they never call back. How could this possibly work when the IRS phone system is completely broken?

It's not sketchy at all - they use the IRS Priority Services that are normally used by tax professionals, but they've made it available to everyone. They basically wait on hold for you in the queue and then when an agent is about to pick up, they connect the call to your phone. The IRS allows this type of service for practitioners. I was definitely skeptical too until I tried it. The IRS phone system is absolutely broken for regular people, that's why this service exists. They have access to special practitioner lines that have much shorter wait times. When I used it, I got a call back from an actual IRS agent who was super helpful with my options trading questions. It's basically just a way to skip the ridiculous hold times that regular callers face.

This! I had Robinhood show completely wrong basis amounts for some options I exercised last year. How do you correct this on your tax forms if the 1099 is wrong?

You need to file Form 8949 and check box C for short-term transactions with incorrect basis. Then you'll list the transaction as reported on your 1099-B, but you'll make an adjustment in column g to correct the basis amount. In the code column, you'll enter "B" which means that the basis was reported incorrectly by the broker. Keep detailed records of your actual trade confirmations showing the correct basis in case you're ever audited. It's definitely more work, but it ensures you're not overpaying taxes because of broker reporting errors. Most tax software has a way to enter these adjustments, though it's not always obvious where to find that section.

Robinhood's tax docs are still a mess. I switched to TDA and it's night and day difference. Their reporting actually makes sense and properly tracks wash sales.