Help understanding 1099 tax form with wash sale loss disallowed - what does this mean for my return?

The good news is you only pay taxes on your net gain of $55,786.95! That's the actual profit the IRS considers taxable. The wash sale rule comes into play when you sell a security at a loss and then buy the same or a "substantially identical" security within 30 days before or after the sale. When this happens, you can't immediately claim that loss for tax purposes - that's the "disallowed" part. What your 1099 is showing is that throughout the year, you had $373,152.71 in losses that were initially disallowed due to wash sales. However, your brokerage has already adjusted your cost basis to account for this. That's why despite having: - Proceeds less than your cost basis (which would normally mean an overall loss) - You still end up with a net gain The wash sale amount isn't an additional tax - it's just showing you that some losses were deferred by being added to the cost basis of replacement shares. Your brokerage has done the math for you, and the $55,786.95 is what you'll report on your Schedule D.

After struggling with a similar wash sale situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me hours of headache. I was confused by my 1099-B showing a bunch of wash sales and wasn't sure if my brokerage calculated everything correctly. I just uploaded my tax forms to taxr.ai and it analyzed all the transactions, confirmed the wash sale calculations were correct, and explained everything in plain English. It even flagged some potential issues with cost basis reporting that I wouldn't have caught. The interface walks you through the whole process and explains what each number means specifically for your situation. Much better than trying to decipher IRS publications yourself!

I was really skeptical about taxr.ai when I first heard about it, but I decided to try it anyway because my wash sale situation was even more complicated than the original poster's. My 1099 showed over $500k in wash sale disallowed losses across multiple securities and I was totally lost. Uploading my forms to taxr.ai was surprisingly simple and the analysis it provided was incredibly detailed. It confirmed that my broker had calculated everything correctly, but more importantly, it explained WHY certain trades triggered wash sales while others didn't. The tool even created a detailed report I could save for my records in case of an audit. Definitely worth checking out if you're dealing with complex trading patterns and wash sales.

After spending literally HOURS on hold with the IRS trying to get clarification about wash sales on my tax forms, I finally found Claimyr (https://claimyr.com). You can see how it works here: https://youtu.be/_kiP6q8DX5c They actually got me through to a real IRS agent in about 15 minutes when I'd been trying for days on my own. The agent walked me through my exact wash sale situation and confirmed I was only responsible for the net gain amount on my 1099. If you're still confused after getting advice here, talking to an actual IRS representative can give you the official answer. Claimyr just handles the painful waiting part so you're not wasting your whole day on hold.

Ok I need to publicly eat my words here. After posting that skeptical reply yesterday, I was still desperate for help with my wash sale issue so I tried Claimyr. IT ACTUALLY WORKED. I got a call back in about 20 minutes and was connected to an IRS agent who was surprisingly helpful. She confirmed exactly what others here said - I only need to report the net gain amount on my Schedule D, and the wash sale disallowed amount was already factored into that calculation. Instead of spending another day banging my head against the wall trying to interpret tax forms, I got a clear answer from an official source. Consider me converted!

One thing nobody's mentioned yet is that wash sales can carry over to the next tax year if you buy replacement shares in December and sell them in January. For example, if you sell Stock X at a loss on December 15th, then buy it again on January 10th, that December loss is disallowed and gets added to the cost basis of your January purchase. So the loss isn't recognized until you eventually sell those January shares. Make sure your situation doesn't involve any year-end wash sales that might affect next year's taxes!

From someone who got audited specifically about wash sales - keep ALL your trading records for at least 3 years after filing! The IRS questioned some of my wash sale adjustments and I had to provide detailed transaction histories to show why certain losses were or weren't disallowed. If you're doing a lot of trading in the same securities, especially across multiple accounts, you might want to use tax software specifically designed for investors rather than the basic versions.

Just wanted to add another perspective here - I work as a tax preparer and see wash sale confusion constantly during tax season. The key thing to remember is that wash sales don't increase your taxes, they just defer losses to future years. In your case with the $55,786.95 net gain, that's exactly what you'll report on Schedule D. The $373,152.71 in disallowed wash sale losses aren't "lost forever" - they've been added to the cost basis of your replacement shares. When you eventually sell those shares (without triggering another wash sale), you'll get to use those deferred losses. One tip: if you're an active trader, consider using specific identification for your lots rather than FIFO. This gives you more control over which shares you're selling and can help minimize unintended wash sales. You can usually change this setting in your brokerage account preferences. Your 1099-B is correct as presented - just use that net gain figure and you're good to go!

I went through a very similar situation last year with even larger wash sale amounts and completely panicked thinking I owed way more in taxes than expected. After reading through all the helpful responses here, I can confirm what everyone is saying is correct. The key insight that finally clicked for me was understanding that wash sales don't create additional taxable income - they just defer losses to future tax years. Your brokerage has already done all the complex math to arrive at that net gain figure of $55,786.95, which includes all the wash sale adjustments. One additional tip I learned the hard way: if you're planning to do any tax-loss harvesting near year-end, be very careful about the 30-day wash sale window extending into the new year. I accidentally triggered some wash sales in early January that affected my prior year's return, and I didn't realize it until I was already filing. Also, definitely keep detailed records of all your trades. The IRS explanations are confusing, but having a paper trail makes everything much clearer if you ever need to review the calculations or face an audit. Your $55,786.95 net gain is what you'll report on Schedule D - that's it!