I sold options that expired out-of-the-money worthless - am I selecting the right choices on the federal review?

[KonfusedKent]

I suspect that TurboTax is flagging these as the cost basis is 0. What happened was that on the opening of the position, I sold the contract for some amount (say $200). Then on some later date, the contract expired worthless.

I am not sure if I am entering this correctly on two questions:
"How did you receive this investment" - did I "purchased it" or "short sale"? The latter sounds more correct.
Then it asks for situations that apply to this sale "This was a worthless security" sounds correct (true on close of that day or after). Is that right? Because I checked this box for one item, and then it lowered my tax liability (I doubt this is correct...). Also, how would I return and correct this?

Thanks in advance!

[fanfare]

@KonfusedKent 

If an option that was granted (written) expired, enter the expiration date in column (b) and enter “Expired” in column (e).

From this you can see that a short is always a short term capital gain or loss, no matter how long you are short.

your proceeds is the premium you received.

the cost basis is zero. (IRS says enter EXPIRED, but TurboTax won't do that for you.)

you don't report this as worthless securities.

[KonfusedKent]

Thanks for the clarification! But how do I go back and enter these values?

[fanfare]

@KonfusedKent 

The easiest way to report your trading activity is to use aggregation aka enter a summary.
Detail Reporting Exception: if you summarize Category A or Category D, Form 8949 is not needed for transactions without adjustments. No mailing is necessary. No attachment is necessary.

Your option trades are all Box A or Box D transactions.

If you have wash sales, it gets more complicated since those adjusted transactions have to be itemized on Form 8949 and the summary totals adjusted accordingly.

Enter the wash sales on Form 8949, then use the subtotal results on the bottom of that form (Line 2) to know how much to subtract which gives you the Schedule D line 1a totals. Be sure to NOT check the adjustments box in the summary window.