taxes on wash sale disallowed if net loss is greater

[kouav1]

Hi, My Net loss is around $20,000 and my wash sale disallowed is around $7,000 so does that bring me to a $13,000 total loss or will I still owe taxes on 7k even though my loss is greater?

[Mike9241]

it's a question of whether you have net capital gains or net capital losses. the net is on line 16 of schedule D.

the wash sale disallowed losses are added to the tax basis of the substantially identical securities that caused the wash sale. so you get the loss benefit when those are sold in a fully taxable transaction (you do not again create a wash sale)

while line 16 may show a $13K loss only up to $3K may be used in 2023. the rest becomes a capital loss carryover to be used in future years.

[kouav1]

Ah I should have stated my brokerage is Robinhood and I don't manually eneter these so I have no clue as I just enter the tax form 1099b and it auto fills.

• Wash Sale Disallowed = 7k
• Net Profit = -20k

I know I am probably taxed on the 7k based on where my tax braket is unless im wrong but I also have 20k in losses so when I do file taxes then would it come out as around 13k in losses?

[fanfare]

IRS requires the broker to track and report your wash sales.

Just enter the data from the 1099-B documents as shown.

@kouav1 

[Mike9241]

the wash sale rules say if you sell a security at a loss and 30 days before the sale, the date of sale and 30 days after if you acquire substantially identical securities, the loss is not allowed. assuming a tax deferred account is not involved (purchase of substantially identical securities in an IRA account can trigger a wash sale. what's worse is there is no basis adjustment, so the loss is permanently lost.  Otherwise that loss gets add to the tax basis of the substantially identical securities that caused the wash sale. so if those are sold without creating another wash sale the loss is finally realized. However, the holding period of the original securities is tacked on so yo can convert a short-term loss into a long-term loss  

I would think the net loss of -20K excludes the wash sale losses because you can't take them. 

[fanfare]

" I am probably taxed on the 7k"

There is no tax on capital losses.

The deduction for a capital loss that is a "wash sale" is disallowed

@kouav1