I find entering 1099-B's into Turbotax confusing because the input fields in the software do not match the fields on the Form 1099.
I have about twenty 1099-B's with Box 1G populated (Wash sale loss disallowed). When entering the information into TurboTax, is it correct to input this information under "W (nondeductible loss from a wash sale)" as shown below?
Below is screenshot of an example 1099-B section from my broker, and then another screenshot of how I am entering into TurboTax Premium.
Here is how I am entering into TurboTax Premium
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It depends. I will provide the details of wash sales and then only you will know the answers as to what should be indicated as wash sales in your tax return.
Wash sales cannot be combined into section totals. They should be entered individually so that you can track your cost basis and know when you are allowed to use the information on a final sale.
Wash Sale Rule Defined:
Affect on Cost Basis:
As long as you are tracking the wash sales and are not using them on the tax return when you are not allowed, then you can simply enter the same cost basis as the selling price. This will reconcile your tax return with your Form 1099-B Proceeds which is what the IRS is comparing.
Wash Sale Ends:
The wash sale disallowed is not added to the net gain/loss rather it is adjusted and suspended so that it does not affect the total gain or loss for any pending wash sales. The rub is that the broker only knows when a wash sale occurs, not when a wash sale no longer exists. This can spill over between two tax years. Likewise you can have a wash sale during a tax year, and then fully dispose of the stock in the same year which would eliminate the wash sale rule for the final sale of the same stock.
It's up to you to know when you no longer have to consider the wash sale rule.
Example:
X bought 5 shares of ZZZ stock, at $5 per share, then sold it for $3 per share, however immediately before the original 3 shares were sold, X bought another 5 shares at $5.00 per share.
$25 for the first block of shares
15 is the proceeds creating a $10 loss
The $10 loss is now added to the cost of the new shares for an overall cost basis of $35.
Once the second block of shares is sold (5 shares with cost basis of $30) without any repurchase with in the 60 day window (30 days before or 30 days after the sale), and if they are sold at a loss, then no wash sale exists on the sale, and a loss is allowed.
Be sure to keep good records so that you know when to add those losses for future sales. To complete the tax return for the IRS, when summarized transactions are entered, follow the steps below.
If you are e-filing your tax return (recommended), then mail your statements along with Form 8453 to:
Internal Revenue Service
Attn: Shipping and Receiving, 0254
Receipt and Control Branch
Austin, TX 73344-0254
Hello - thank you. Let me ask another way: Assuming my broker's 1099-B information is accurate and I have disallowed wash sales, do the screenshots above reflect the correct way to enter information into TurboTax?
Unfortunately, I cannot keep track of wash sales on each individual stock I trade. In total, my 1099-B's are over 6,000 pages long with hundreds of thousands of transactions, so I take my broker's statements at face value.
All my positions are opened and closed in the same year. I have no carry-over positions between calendar years. I owned no securities in this brokerage account as of the open on January 1, 2023 and close of business on December 31, 2023 and I had no transactions in the same securities in the first 30 days of 2023 as I did in the last 30 days of 2022, and I had no transactions in the same securities that I traded in the last 30 days of 2023 as I did in in the first 30 days of 2024.
Assuming that your 1099-B is correct seems pretty reasonable to me. Yes, that is how you should enter the category summary transactions into TurboTax.
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