How to Enter Wash Sale Loss Disallowed in Turbotax
Understanding and correctly reporting wash sale losses can be a complex task for many taxpayers. A wash sale occurs when an investor sells a security at a loss and buys the same or a “substantially identical” security within 30 days before or after the sale. According to IRS regulations, the disallowed loss cannot be claimed on the tax return. In this article, we will guide you through the process of entering a wash sale loss disallowed in Turbotax.
Step 1: Gather the Necessary Information
Before you begin entering the wash sale loss in Turbotax, make sure you have all the necessary information. This includes the following:
– The date of the sale of the security at a loss.
– The date of the purchase of the substantially identical security.
– The cost basis of the security sold at a loss.
– The amount of the loss claimed on the sale.
Step 2: Access the Wash Sale Loss Feature
Once you have gathered all the necessary information, access the wash sale loss feature in Turbotax. To do this, follow these steps:
1. Open your Turbotax account and select the tax year for which you need to report the wash sale loss.
2. Navigate to the Investment Income section.
3. Look for the “Wash Sale Loss” option and click on it.
Step 3: Enter the Sale and Purchase Dates
In the wash sale loss section, you will be prompted to enter the dates of the sale and purchase of the securities. Enter the dates accurately, ensuring that the purchase date is within the 30-day window before or after the sale date.
Step 4: Enter the Cost Basis and Loss Amount
Next, enter the cost basis of the security sold at a loss and the amount of the loss claimed on the sale. Make sure to double-check these figures to ensure accuracy.
Step 5: Review and Confirm
After entering all the required information, review the details to ensure everything is correct. Once you are confident that the information is accurate, confirm the entry.
Step 6: Save and Continue
Once you have successfully entered the wash sale loss disallowed in Turbotax, save the information and continue with your tax return. Remember to keep a copy of the information for your records.
In conclusion, entering a wash sale loss disallowed in Turbotax involves gathering the necessary information, accessing the wash sale loss feature, entering the sale and purchase dates, and entering the cost basis and loss amount. By following these steps, you can ensure that your wash sale loss is reported accurately and in compliance with IRS regulations.
