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I am college student who is claimed as a dependent on my parents' tax return. At the start of 2020, I decided to step into investing and I swing-traded stocks and crypto throughout the year. At the end of the fiscal year, I calculated my net gains and losses, and the total number amounted to only around $250. Other than that, I am unemployed so I don't have any other wages.

I used the IRS Tax Assistant Survey to determine if I need to file. Based on the survey I took on their official website, it says that I am not required to file. However, I should file to avoid the possibility of receiving a notice.

Based on the survey, I should be all clear. However, I'm afraid that because of my large annual trading volume (sum of all my transactions greater than $60K), I might receive a notice.

This is my first time, so I don't know what type of notice that might be. I guess another sub-question is that even if I'm not required to file and receive a notice, what do I do then?

This is for US tax filing.

I did receive several 1099 forms. I do not have any taxes withheld.

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    Did you receive any tax forms from your broker? Did you have any taxes withheld?
    – mhoran_psprep
    Apr 20, 2021 at 22:45
  • You're sure you didn't have any wash sales or anything like that?
    – Daniel
    Apr 20, 2021 at 22:45
  • I did receive 1099 forms from various brokers and crypto exchanges. I don't have taxes withheld. I would say that out of my hundreds of trades, there are some trades that can be considered wash sales. However, I don't see how it would affect me because I had sold all my positions by the end of the fiscal year. So for instance, I bought a stock for 50, sold for 40 the next day. I bought it back at 45 and sold at 55. If the wash sale rule doesn't apply, I break even. Even if it does apply, I still break even (45+10)-55=0, no?
    – ARJ
    Apr 20, 2021 at 23:14
  • You might receive a notice from who? What exchange were you using to trade the crypto? Your understanding of wash sales is correct, it makes no difference if everything including the final sale happens in the same year and you didn’t re buy any of the position for 30 days
    – quid
    Apr 21, 2021 at 5:03
  • I might receive a notice from the IRS, at least that's what it says on their website. I used Coinbase, Binance US, and Cash App.
    – ARJ
    Apr 21, 2021 at 19:50

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It's a good chance for you to learn how to calculate your investment income, maybe by using a free tax filing website. If you do the calculations correctly and come up with $1100 or less in investment income, then you don't need to file a return.

If you receive a notice, you can reply and tell the IRS that your investment income is $xxx and you are not required to file a return.

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  • Thanks for the answer! One more question though. In regards to wash sales, correct me if I'm wrong with my thought process of how they work. Let's say I buy a stock for 50 and sell for 40 the next day. I buy it back at 45 the day after and sell at 55 the following day. This is considered a wash sale, but aren't the outcomes the same? 40-50+55-45=0 and 55-45-10(from the previous loss)=0.
    – ARJ
    Apr 21, 2021 at 0:06
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    @ARJ: if you dispose of the 'replacement' lot within the same year, yes. Where wash sale matters is if you sell lot 1 for a loss in year 1 and within 30 days buy lot 2 and don't sell lot 2 until year 2, you must exclude the loss in year 1, and wait until year 2 to claim it.
    – dave_thompson_085
    Apr 21, 2021 at 4:02

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