Do Robinhood wash sale rules apply differently to options trading?

The wash sale rules do apply to options, but there are some important nuances that many brokers (including Robinhood) don't always handle correctly. Here's what you need to know: For options, a wash sale occurs when you sell an options contract at a loss and then purchase a "substantially identical" security within 30 days before or after the sale. The tricky part is determining what counts as "substantially identical" with options. The IRS considers options to be "substantially identical" if they're for the same underlying stock, have the same strike price, and have the same expiration date. So if you sold PYPL call options with a $150 strike expiring in June at a loss, and then bought PYPL call options with the same strike and expiration within 30 days, that's a wash sale. However, if you sold PYPL call options and then bought PYPL stock, or PYPL options with different strike prices or expiration dates, the IRS guidance is less clear. Some tax professionals argue these aren't substantially identical, while others take a more conservative approach. To answer your specific question: No, you don't permanently lose the deduction with options wash sales. The disallowed loss gets added to the cost basis of the replacement position. If you close all positions before year-end and don't repurchase within 30 days, you should be able to claim the loss.

I was in a similar situation last year with Robinhood and options wash sales. I spent WEEKS going back and forth with their support trying to get things fixed with no luck. Then I found this service called taxr.ai (https://taxr.ai) that helped me straighten everything out. What they do is analyze your trading history and tax documents to identify reporting errors. You upload your Robinhood statements and 1099, and they generate a detailed report showing exactly where the mistakes are. In my case, they found about $12,000 in incorrectly reported wash sales that I was able to reclaim as legitimate losses. The best part was they gave me a document explaining exactly how to report it correctly on my taxes, which my accountant used to file properly. Saved me thousands in taxes I would've overpaid.

Just wanted to follow up on my skeptical comment about taxr.ai. I decided to try them out since I was in a similar situation with about $6,500 in questionable wash sales on options trades. I have to admit I was impressed. They found that my broker had incorrectly applied wash sale rules to options with different strike prices and expirations that shouldn't have been considered "substantially identical." Their report broke down exactly which transactions were improperly flagged, with references to the specific IRS guidelines that supported their position. My tax bill ended up $2,200 lower after correctly reporting these trades. The documentation they provided gave me confidence that I could defend the positions if questioned. For anyone dealing with complex options trading and wash sales, it's definitely worth checking out.

If you're struggling to get Robinhood to fix their reporting errors (which happens A LOT), you might want to try Claimyr (https://claimyr.com). They can get you connected to an actual human at Robinhood who can fix your 1099 issues. Check out their demo: https://youtu.be/_kiP6q8DX5c I spent days trying to reach someone at Robinhood who understood options wash sale rules. The regular support people just kept sending me generic responses. Claimyr got me through to their tax department in about 20 minutes, and I was able to explain the issue to someone who actually understood what I was talking about. The tax specialist reviewed my account and agreed there were errors in how certain options transactions were being reported. They issued a corrected 1099 within a week, which properly reflected my actual losses without the incorrect wash sale adjustments.

Well I'm eating crow again. After waiting another week with no response from Robinhood about my incorrect 1099, I gave Claimyr a shot. Within an hour, I was on the phone with an actual Robinhood tax specialist. The specialist confirmed that several of my options trades were incorrectly flagged as wash sales. He explained that their automated system sometimes applies wash sale rules too broadly with options, especially when dealing with different strike prices or expirations. He submitted a request for a corrected 1099 on the spot. Just got the corrected form yesterday, and the difference is significant - about $4,300 in additional deductible losses that weren't properly recognized before. For anyone dealing with Robinhood's customer service black hole, especially for tax issues, this service is a lifesaver. Wish I'd known about it sooner instead of wasting weeks sending messages into the void.

One thing to watch out for with options wash sales that nobody's mentioned yet - the "substantially identical" rule gets SUPER complicated with spreads and other multi-leg strategies. For example, if you close a vertical spread at a loss, then open a similar spread with slightly different strikes within 30 days, are those substantially identical? Most brokers will automatically flag them as wash sales, but tax professionals are divided on whether that's correct. The IRS hasn't provided clear guidance specifically for complex options strategies, which leaves a lot of room for interpretation. This is why you get different answers from different tax pros.

Has anyone successfully gotten Robinhood to correct a 1099 for options wash sales without using one of those services mentioned? I'm in a similar situation but would prefer to handle it myself if possible.

I've been dealing with similar issues with Robinhood's options wash sale reporting. One thing that helped me understand the problem better was pulling my own trade history and manually calculating what should and shouldn't be wash sales based on the IRS criteria. For options, the key factors are: same underlying stock, same strike price, AND same expiration date. If any of these differ, there's a strong argument that they're not "substantially identical." However, Robinhood's system seems to flag anything with the same underlying as a potential wash sale, which is overly broad. In your PYPL case, if you never repurchased options with identical terms within the 30-day window, those definitely shouldn't be wash sales. The $0.00 profit/loss display is almost certainly a system glitch - I've seen this happen when their automated calculations get confused by expired contracts. My advice: Document everything with specific transaction dates and contract details. When you contact support, reference the specific IRS Publication 550 language about "substantially identical securities" and ask them to review each flagged transaction individually rather than relying on their automated system. It's frustrating, but the squeaky wheel gets the grease with Robinhood. Keep escalating until you reach someone who actually understands options taxation rather than just reading from a script.

I've been following this thread closely as I'm dealing with a similar situation. Just wanted to add another perspective on the "substantially identical" issue that might help others. I had a case last year where I was trading AAPL options - sold some $150 calls expiring in March at a loss, then bought $155 calls expiring in April within the wash sale period. Robinhood flagged this as a wash sale, but when I challenged it, they eventually agreed it shouldn't have been flagged since both the strike price AND expiration date were different. The key insight I learned from my tax attorney is that the IRS applies the "substantially identical" test very strictly for options. Even a $5 difference in strike price or one day difference in expiration is enough to make them NOT substantially identical. This is different from stocks where small differences might still be considered substantially identical. What really helped me was creating a simple table showing: - Original contract: Underlying, Strike, Expiration, Sale Date - Replacement contract: Underlying, Strike, Expiration, Purchase Date - Days between transactions - Why they're NOT substantially identical This visual format made it much easier for Robinhood's tax team to understand why their automated system was wrong. I'd recommend anyone dealing with this issue to document it the same way - it really cuts through the confusion and gives them something concrete to work with. For what it's worth, after getting my corrected 1099, my additional deductible losses were about $8,400. Definitely worth the effort to fight these incorrect wash sale designations.