Why is there Wash Sale Loss Disallowed on my 1099 when I close all positions?

Question

Say I have a $5000 in wash sale losses 1099 Wash Sale Loss Disallowed (Box 1g). Do I need to do anything at this point to try and recoup the loss? Assuming that I closed all positions shouldn't my Wash Sale Loss Disallowed be $0? Or was it because I didn't close the position at the end of the tax year?

Can I safely ignore this box, should my broker already nullified the loss when I close my position?

Answer 1

If you incur a wash sale, the loss must be deferred and it is then added to the cost basis of the replacement shares. If you close all positions by the end of the year then you get to claim your losses in that tax year as long as you do not reacquire replacement shares within 30 days in January.

If you have an end of year carry forward loss then you'll get to claim it on the following year's tax return as long as the trade(s) in question are closed in that next tax year with no subsequent wash sale violations.

Throughout your tax form it lists completed trades. If there is a wash sale, it provides the wash sale deferral amount in column (g). These are the individual deferrals. At the bottom it will show the totals. Box (h) in the Total line is your taxable gain (or loss) for the year. Assuming that you did your own reconciliation correctly, Box (h) will match your calculations unless there is a carry forward wash sale violation.