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Just received 1099 for 2020. My wash sale loss disallowed is $47,000 & my net loss is -$770. I just want to know how much tax I'll need to pay approximately.

I recently learned what the wash sale is, so I don't do it anymore but have done lots of trading last year. Your help is greatly appreciated, thank you.

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  • What were the details of the wash sale (all sales/buys and dates)? It may have been disallowed on your 1099 but actually be allowable.
    – D Stanley
    Feb 17 at 23:52
  • Everything is from 2020. Total short term proceeds amount $737,999.35 / Cost basis $785,557.35.
    – John
    Feb 17 at 23:59
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With the numbers you gave, your taxable income from this brokerage would be:
proceeds 737,999.35 - Cost basis $785,557.35 + wash sale loss disallowed $47,000 = -$558 (you said -$770; I assume the 47000 was rounded).
Note that the wash sales listed here are history, and don't really have any impact. The number is not included in the shown 'Cost Basis', so you need to consider it, that's all. Wash Sales are not as bad as they sound, they just delay losses, worst case into the following year.

Nobody can say what your overall taxes are, because we don't know your income situation.

But if I assume you have some other income, and no other 1099-B, the $770 loss will reduce your taxable income, and you pay potentially some hundred $ less taxes - whatever your percentage bracket is, 0-30 % will save you 0 - 232 $ taxes.
In other words, the overall impact from this 1099-B is worst case no impact (if you have more 1099-B with more losses), or paying a bit less taxes.

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  • Thanks, everyone was telling me you MUST avoid wash sale so I was afraid that I would be taxed off $47,000...Thanks for your answer.
    – John
    Feb 18 at 12:27
  • The loss is delayed until you dispose of the new lot (the one purchased near the sale that realized a loss) -- for active traders that will almost certainly not be later than the next year, but for some people it could be longer, even decades. Feb 19 at 5:19
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The gist of this is that if you realize a loss and within 30 days before or after realizing your loss you acquire replacement shares, you have a wash sale. Then, some/all of the realized loss is disallowed. Disallowed means that the loss must be carried forward until the replacement shares are disposed of.

None of this is a problem if all positions are closed by the end of the year (short positions must be closed 2 days before the end of the year) and no replacement shares are subsequently acquired in January.

If replacement shares are not closed by the end of the year, you cannot deduct the loss in that tax year and they are deferred until the next year, increasing your tax liability.

Your 8949 form should lay out the details of your various trades and indicate what your taxable amount is.

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