Non-Resident return: Do I have to report Wash sale on schedule NEC? Where to include this on my tax form?
I'm filing a non-resident tax return and I'm totally confused about wash sales. I made some trades last year where I sold stocks at a loss and then bought similar ones within 30 days (didn't realize this was a wash sale until later). Now I'm trying to figure out how to report this on my Schedule NEC but there's no column or section that specifically mentions wash sales. Does this mean that as a non-resident alien I don't have to report wash sales at all? That seems weird since I know US residents have to report them. But if I do need to report them, where exactly am I supposed to put this information on the Schedule NEC? The form doesn't seem to have any place for it. My brokerage sent me a 1099-B that clearly shows some of my transactions were wash sales, but I'm at a loss (no pun intended) on how to properly document this on my non-resident return. Any help would be really appreciated!
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Liam Duke
The Schedule NEC (Nonresident Alien Income Tax Return) doesn't have a specific column for wash sales because the reporting mechanism is different, but you still need to account for them. For non-residents, you'd typically report your capital gains and losses on Form 8949 (Sales and Other Dispositions of Capital Assets) first, where you would mark the appropriate box to indicate wash sales. Then the totals flow to Schedule NEC. The wash sale adjustment effectively increases your basis in the replacement stock by the amount of the disallowed loss. When completing Form 8949, use code "W" in column (f) to identify any transactions that are wash sales. The disallowed loss amount should be shown in column (g) as a positive number. This effectively reduces your overall capital loss by the wash sale amount.
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Manny Lark
•Wait I'm confused. So the wash sale still needs to be reported on Form 8949, but then how does that information transfer to Schedule NEC? Does Schedule NEC automatically pull that info from Form 8949 or do I need to manually adjust something?
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Liam Duke
•You'll complete Form 8949 first, marking all wash sales with code "W" and showing the disallowed loss amounts. This form is where the detailed transaction reporting happens. After completing Form 8949, the net amounts get transferred to Schedule NEC. The Schedule NEC doesn't show the wash sale details specifically because those details are already captured on Form 8949. You're simply reporting the already-adjusted net capital gain or loss figure on Schedule NEC.
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Rita Jacobs
I had the exact same issue last year with my non-resident return and wash sales! After hours of frustration trying to figure this out, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much stress. It basically analyzes your specific tax situation and explains exactly how to report everything correctly. For my wash sales, it showed me that I needed to fill out Form 8949 first with the wash sale code and then transfer the adjusted totals to Schedule NEC. The tool walked me through each step with clear instructions specific to non-resident filing requirements. It even confirmed that I was handling the basis adjustments correctly for the replacement shares.
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Khalid Howes
•Does this taxr.ai thing work for all non-resident tax situations? I've got investment income plus some freelance work I did while visiting the US - would it handle that combo?
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Ben Cooper
•I'm a little hesitant to use online tools for tax stuff. How does it handle privacy with all your financial data? And does it actually give you the forms or just tells you what to do?
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Rita Jacobs
•It absolutely works for complex non-resident situations including mixed income sources. The system is designed to handle precisely those complicated scenarios where you have investment income alongside other US source income like freelance work. Regarding privacy, I had the same concern initially. They use bank-level encryption for all data, and you can even upload documents for analysis without creating an account. The tool provides specific instructions for your situation rather than filling forms for you - it shows you exactly what goes where on each form based on your specific scenario.
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Ben Cooper
Just want to follow up about my experience with taxr.ai from my question above. I decided to try it after struggling with my non-resident return for weeks. I uploaded my 1099-B that had several wash sales on it, and the tool immediately identified the issue and explained exactly how to handle it on my forms. It walked me through the Form 8949 process, showed me where to use the wash sale code "W", and explained how to calculate the adjusted basis for my replacement shares. The best part was that it showed me how everything connects between Form 8949 and Schedule NEC for non-resident reporting. Honestly wish I'd found it months ago before all the headaches!
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Naila Gordon
For anyone still stuck on this wash sale issue, I had the same problem and spent HOURS on hold with the IRS trying to get clarification. It was brutal - kept getting disconnected or waiting forever. Finally found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 20 minutes instead of hours. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly what others are saying here - non-residents DO need to report wash sales, but it's done on Form 8949 first with code "W", and then the adjusted totals flow to Schedule NEC. The agent was super helpful and even explained how to handle the basis adjustment for replacement shares purchased in a different tax year, which was my specific situation.
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Cynthia Love
•Wait how does this Claimyr thing actually work? The IRS phone lines are notoriously impossible to get through - are you saying this somehow jumps the queue or something?
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Darren Brooks
•Yeah right. There's no way to "skip the line" with the IRS. Sounds like a scam to me. Has anyone else actually tried this and gotten through? I'm extremely skeptical that this actually works.
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Naila Gordon
•It doesn't "skip the line" in the way you might think. What it does is automate the calling process using their system that keeps dialing until it gets through, then it calls you back when an agent is ready. It's basically doing the hold time for you so you don't have to sit there listening to the hold music for hours. Totally understand the skepticism - I felt the same way! But it's not a scam. The service just handles the tedious part (the constant calling back after disconnects and waiting on hold) while you go about your day. When it gets through to an actual IRS agent, it connects you directly to them. They don't interface with the IRS on your behalf or anything like that.
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Darren Brooks
I have to eat my words from my skeptical comment above. After struggling for literally 3 days trying to get through to the IRS about my non-resident wash sale question, I caved and tried the Claimyr service. Not gonna lie, I was SHOCKED when I got a call back in about 15 minutes saying they had an IRS agent on the line. The agent confirmed everything about wash sales on non-resident returns and walked me through exactly how to fill out both the 8949 and Schedule NEC. He even emailed me a publication that specifically addresses this issue. For anyone dealing with the wash sale reporting issue as a non-resident, definitely try to speak with an IRS agent directly. Whether you use the service or try calling yourself, getting that official guidance made a huge difference in my confidence about filing correctly.
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Rosie Harper
I think there's also some confusion because there are TWO different things called "Schedule NEC" in tax world. There's Schedule NEC for Form 1040-NR (for non-resident aliens) and then there's the 1099-NEC form (for non-employee compensation). Make sure you're looking at the right guidance for the non-resident Schedule NEC!
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Elliott luviBorBatman
•Omg this explains why I was getting such conflicting information when I was googling this! I kept seeing stuff about independent contractors when I was trying to figure out my investment reporting. So for the non-resident Schedule NEC, the wash sale still needs to be reported on 8949 first right?
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Rosie Harper
•Yes, you've identified exactly what causes so much confusion! The naming overlap between different tax forms creates a lot of issues when researching. For the non-resident Schedule NEC (which is part of Form 1040-NR), you definitely need to report wash sales on Form 8949 first. You'll mark the transactions with code "W" and show the disallowed loss, then the adjusted totals will flow to your Schedule NEC. The wash sale rules apply to all investors regardless of residency status, but the reporting mechanism is through Form 8949.
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Demi Hall
Your brokerage might actually provide you with a gain/loss statement that specifically identifies wash sales. Mine does this and it made figuring out which transactions needed the "W" code much easier. Check your online brokerage account to see if they have a tax document section with supplemental information.
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Mateusius Townsend
•This is so true! My brokerage (Schwab) had a detailed gain/loss statement that highlighted every wash sale and even calculated the adjusted basis for me. Much easier than trying to figure it all out manually from the raw transaction data.
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Kara Yoshida
Make sure you're keeping track of the adjusted basis for any replacement shares! The wash sale rule disallows the loss, but that loss doesn't disappear forever - it gets added to the basis of your replacement shares. This matters for when you eventually sell those replacement shares.
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Philip Cowan
•This is such an important point that's often missed! I once had a situation where I had wash sales across tax years, and I had to make sure I tracked the adjusted basis into the next year. Does being a non-resident change anything about how this carry-over basis works?
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Kara Yoshida
•You're right to ask about the cross-year implications for non-residents! The basis adjustment works the same way regardless of residency status, but there's an extra wrinkle for non-residents. If you have wash sales that create adjusted basis in replacement shares, you need to carefully track that adjusted basis even if your residency status changes in the future. The IRS systems don't always effectively track basis information across different taxpayer statuses, so keeping your own detailed records is essential. This is especially true if you might change from non-resident to resident status (or vice versa) in a future year.
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Cedric Chung
I'm dealing with a similar wash sale situation as a non-resident, and this thread has been incredibly helpful! One thing I wanted to add based on my experience is that you should double-check your 1099-B carefully because some brokerages don't always correctly identify ALL wash sales, especially if you have accounts at multiple brokerages. I discovered that I had wash sales that weren't marked on my 1099-B because I sold shares at one brokerage and bought similar shares at another brokerage within the 30-day window. The wash sale rule still applies in this situation, but the brokerages don't communicate with each other to identify these cross-brokerage wash sales. So even if your 1099-B shows some wash sales, make sure to review all your transactions across all accounts to catch any that might have been missed. You'll still need to report these on Form 8949 with code "W" even if they weren't identified by your brokerage.
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