FreeTaxUSA missing wash sale rule functionality? Only showing cost basis and proceeds

Hey there! Tax preparer here. This is actually a common issue with many of the free tax software options. The wash sale rule is really important to get right, especially with that amount of wash sales ($20K). FreeTaxUSA doesn't have a dedicated field for wash sales because they expect that information to already be factored into the adjusted basis reported on your 1099-B from your brokerage. Check your 1099-B - if Box 1g is checked, the wash sale amount should already be included in your adjusted basis in Box 1e. If your brokerage has properly adjusted the basis on your 1099-B, you can just enter the information as shown on the form into FreeTaxUSA. However, if you've calculated wash sales yourself or your brokerage hasn't accounted for them properly, this could get tricky.

After spending hours trying to figure out wash sales in various tax programs, I found taxr.ai to be super helpful. I took pictures of my complex 1099-B with all the wash sales and uploaded them to https://taxr.ai and it analyzed exactly which numbers to put where in FreeTaxUSA. Saved me so much time trying to decode all the boxes and columns! It basically confirmed what the tax preparer said above - that the wash sales were already factored into the adjusted basis on my form. But seeing the detailed explanation for each transaction made me feel way more confident I wasn't screwing something up.

Just wanted to update that I tried taxr.ai after my skeptical question above. It actually worked really well! I uploaded my brokerage statements and it confirmed that my wash sales were already factored into the adjusted basis. It even pointed out that two transactions I was worried about weren't actually wash sales. This saved me from buying TurboTax for $89 when FreeTaxUSA works fine as long as you enter the right numbers. The explanation was super clear about where each number should go. Definitely less stressful than trying to interpret tax forms on my own!

If you've tried everything and still can't get through to the IRS for clarification on wash sale reporting, try https://claimyr.com - I was stuck for 3 weeks trying to get someone on the phone about a similar capital gains reporting issue. Used their service and had someone from the IRS on the phone within 45 minutes instead of waiting on hold for hours. They have a demo video here: https://youtu.be/_kiP6q8DX5c that shows how it works. The IRS agent confirmed exactly what others have said - if Box 1g is checked on your 1099-B, the wash sale adjustments are already factored in. Saved me so much anxiety knowing I heard it directly from the IRS!

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I needed to ask about reporting some foreign stock transactions. To my absolute shock, I got a call back in about 35 minutes and was connected to an actual IRS representative. The rep confirmed my cost basis reporting method was correct and answered all my questions. I've literally never gotten through to the IRS before despite multiple attempts waiting on hold for 2+ hours before giving up. This was absolutely worth it during tax season.

If you have $20k in wash sales, maybe consider spending the $89 on TurboTax? I've used both, and while FreeTaxUSA is great for simpler returns, TurboTax does make investment reporting much easier especially with the direct import. I switched to FreeTaxUSA two years ago to save money, but found the investment section kinda clunky when you have lots of transactions. Sometimes the money saved isn't worth the extra hours of frustration...

Does anyone know if H&R Block's free edition handles wash sales better than FreeTaxUSA? I'm in the same boat with about $8k in wash sales.

I was in a similar situation last year with about $15k in wash sales and ended up sticking with FreeTaxUSA after doing some research. The key thing is understanding that wash sales aren't something you need to calculate separately in most cases - your brokerage has already done the work for you. Here's what I learned: Check Box 1g on your 1099-B forms. If it's checked, that means your broker has already adjusted your cost basis to account for wash sales and reported it to the IRS. You literally just enter the numbers from your 1099-B exactly as they appear - no additional calculations needed. The "missing functionality" you're seeing isn't actually missing - it's just that FreeTaxUSA expects the wash sale adjustments to already be included in the basis amount you're entering. This is actually how it should work according to IRS guidelines. I saved the $79 and had zero issues with the IRS. My advice: double-check your 1099-B forms first before switching to TurboTax. You might find you don't need the extra features after all.

Just wanted to add my experience for anyone still on the fence about FreeTaxUSA vs TurboTax for wash sales. I had about $12k in wash sales last year and was initially panicking about using FreeTaxUSA. After reading through all the advice here, I checked my Schwab 1099-B forms and sure enough, Box 1g was checked on all of them. The adjusted basis in Box 1e already included the wash sale adjustments. I entered the numbers exactly as shown into FreeTaxUSA and filed without any issues. The IRS accepted my return with no questions, and I saved $79 compared to TurboTax. The "missing functionality" really isn't missing at all - it's just that FreeTaxUSA expects your broker to have done the wash sale calculations correctly (which they almost always do for major brokerages). My advice: Check Box 1g on your 1099-B first. If it's checked, FreeTaxUSA will work just fine. If for some reason your broker hasn't adjusted for wash sales (which would be unusual), then you might need to consider other options or do manual calculations.

This thread has been incredibly helpful! I've been stressing about the exact same issue with FreeTaxUSA and wash sales. I have around $7k in wash sales from some unfortunate day trading attempts last year and was convinced I needed to upgrade to TurboTax or find special software. After reading everyone's experiences, I checked my E*TRADE 1099-B forms and confirmed that Box 1g is checked on all of them. Looking more closely at the numbers, I can see that my adjusted basis amounts are indeed higher than my original purchase prices - exactly what you'd expect with wash sale adjustments already included. It's such a relief to know that FreeTaxUSA will handle this correctly as long as I enter the 1099-B numbers exactly as they appear. I was overthinking this whole process and nearly wasted money on more expensive software when the "functionality" I thought was missing is actually working exactly as it should. Thanks to everyone who shared their real-world experiences - this community discussion saved me both money and a lot of unnecessary anxiety!