Per TurboTax and Wash Sales;
If you are receiving an error message because your wash sale was less than $0.49, the system follows suit and reduces this to a zero. However, it does NOT follow suit in that this field does not accept a zero dollar amount whereas the IRS does.
Here are a couple of suggestions for you as I am not sure of your complete 1099-B details and potential questions/issues you're encountering:
Wash Sale Zero Dollar suggested fix:
Given that wash sales RARELY have this type of information ever given in such small dollar amounts, systems are not prepared to properly digest the information (most all tax software systems and I've worked on most all of them). Therefore, depending on your total taxable income thus far, I would try to enter a minimal amount for this wash sale (since you stated that the system is not accepting a zero dollar value in that field) that does not affect your tax rate (effective tax rate calculated in the system). For example, if $5 does not push you into a higher tax bracket or reduce you to a lower tax bracket, then it has no effect on the outcome and might solve the problem. I did try to come up with the same scenario that you are experiencing, but given that I do not have all information, it is not making any difference what I enter or do not enter. I do hope this resolves the hold-up.
Alternatively, you can do this given the following:
If the wash sale adjustment is $0.49 or less, then it is automatically rounded to zero. This type of rounding is allowed by the IRS. Unfortunately, zero is not a valid value for this field -- thus the error message.
To resolve the issue, you can edit each individual transaction (although not from the screen in the review process) and delete the amount entered in the wash sale adjustment if it is $0.49 or less. This will clear the error message.
To do this, you will need to revisit the input section for the Form 1099-B transactions. Use the following steps:
- On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
- This opens a box where you can type in “1099-B” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you an option to “Jump to 1099-B”
- Click on the blue “Jump to 1099-B” link
- Click Edit beside the institution name
- Click Edit beside each transaction that contains a wash sale adjustment amount of $0.49 or less
- Delete the wash sale adjustment amount and click Done
If you have too many transactions that would require editing, you can consider deleting your imported information and entering a summary of the different categories of transactions reported on your Form 1099-B (short-term covered, short-term not covered, long-term covered, long-term not covered). This would require you to mail a copy (not the original) of your Form 1099-B from your brokerage to the IRS within three days of E-filing your return. The Form 1099-B would be attached to Form 8453, which will print with your return. I, personally, have not ever seen the IRS request after the fact such information, but that is the "requirement" the IRS sets forth. See below for a little more information on performing this task.
Other 1099-B Import Error Messages Suggested Resolve:
A simple fix to this is, If you are able to extract your year end statement and it provides you with totals of S/T vs. L/T transactions (you might even have 4 different categories on your statement - depending on if basis was/was not reported to the IRS, so be sure to not miss any sections of the statement), you should separate them out yourself on a spreadsheet, tally up the information for each category of transaction, and enter as such. This is, making sure, of course, that the firm you use is providing you with cost basis and sales price as well as #shs per transaction.
You can also extract to Excel, but that takes more work than step one. What the IRS is looking for is the following:
1. Net S/T Capital Gains/<Losses> , based on purchase date, cost basis, sale date, and proceeds
2. Net L/T Capital Gains/<losses>, based on purchase date, cost basis, sale date, and proceeds
In short, each section of your statement that has a total that states "Has Been Reported to the IRS", will be treated as one transaction for taxability purposes. So, if you have 1, 2, 3, or 4 of these totals lines, then that would be the corresponding number of transactions you will have. Make sure that you do not include any section that starts with "Transactions NOT Reported to the IRS" as these are categorized already by your brokerage firm for you as non-reportable pieces of information.
ALSO, make sure you do not miss any dividend and interest income, Foreign Income Taxes Paid, etc., if your statement is all you rely on to report your information to the IRS.
