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!

I just wanted to add my perspective as someone who went through almost the exact same confusion last year. The numbers on your 1099 can be really intimidating at first glance - I remember staring at mine thinking "how is there a net gain when my cost basis is higher than my proceeds?!" The wash sale mechanism is actually working in your favor here, even though it's confusing. Those $373k in disallowed losses aren't disappearing - they're being added to the cost basis of your replacement shares. So when you eventually sell those shares (without triggering another wash sale), you'll get to claim those losses then. Think of it this way: the wash sale rule prevents you from claiming a loss and then immediately buying back the same position to capture that loss for tax purposes while maintaining the same investment exposure. Instead, it defers that loss until you actually reduce your position in that security. Your brokerage has done all the heavy lifting here. Just report that $55,786.95 net gain on Schedule D and you're all set. The wash sale calculations are already baked into that number. One practical tip: if you're planning to do any year-end tax planning or loss harvesting in the future, try to avoid buying back the same securities for at least 31 days to avoid these wash sale complications altogether.

I've been following this discussion and wanted to share something that might help others in similar situations. Last year I had a very comparable wash sale scenario - about $280k in disallowed losses and was completely overwhelmed trying to understand what it meant for my taxes. What really helped me was realizing that the 1099-B is essentially a "net result" document. All those complex wash sale calculations, basis adjustments, and carry-forwards have already been processed by your brokerage's systems. The net gain of $55,786.95 is literally the bottom line - that's your taxable amount. I made the mistake of trying to reverse-engineer all the wash sale math myself, thinking I needed to understand every transaction. But the reality is, unless there's an obvious error in your 1099, you can trust that the brokerage has handled the wash sale rules correctly. One thing I learned that might be useful: if you have multiple brokerages, make sure you're not creating additional wash sales across accounts that your individual brokers wouldn't catch. But for your situation with clear numbers from one 1099, you're in good shape. Just report that $55,786.95 on Schedule D and you're done. The complexity is already resolved for you!

As someone who's dealt with wash sale confusion multiple times, I can confirm what everyone else is saying - you only pay taxes on that $55,786.95 net gain amount. That's it! The wash sale disallowed amount isn't an extra tax or penalty - it's just showing you that some losses throughout the year were deferred because you bought back the same or similar securities within the 30-day window. Your brokerage has already factored all of this into your final net gain calculation. Think of those disallowed losses as being "stored" in the cost basis of your replacement shares. When you eventually sell those replacement shares (without triggering another wash sale), you'll finally get to use those deferred losses to offset gains or claim them as losses. The math on your 1099 makes perfect sense: - You had gross losses that were disallowed due to wash sales - Those losses increased the cost basis of replacement shares - The net result after all adjustments is a $55,786.95 gain - That's what goes on your Schedule D Don't overthink it - your brokerage has done all the heavy lifting with the wash sale calculations. Just report that net gain and you're all set!