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Taxed for capital gains I did not make?

Long story short, I did quite a bit of day trading in 2019. Due to wash sales being disallowed, I am now being taxed more money than I actually made. Is there some sort of rollover if I pay this tax bill now? Will I get credit for it if I make actual gains in 2020?

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  • 1 month ago

    YOU desperately need to have a PROFESSIONAL review your taxes, because what you calculated is legally impossible. You DID NOT properly compute your tax liability.

    • This is coming from my supposed tax professional, unfortunately.

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  • 1 month ago

    Not exactly. Instead what happens is that the basis of the stock you bought is increased by the disallowed loss on the similar stock that you sold, so you'll pay less capital gains tax when you sell the replacement stock.

    • So I'll essentially get "credit" for the tax bill paid this year which will go toward paying fewer taxes on any gains the following year? Even on an unrelated stock.

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  • 1 month ago

    Wash sales are ignored. That's the rule.

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  • 1 month ago

    If you are being taxed more money than you made, then you are doing your return wrong.

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  • 1 month ago

    A wash sale, of course, occurs when you sell stock and then buy it back within 30 days. When you eventually sell the stock and leave it sold, then you realize the gain or loss on all the money you made or loss on the stock including extra commissions due to the previously disallowed sale, and and change in price during the period you didn't have the stock.

    For example, buy 500 shares company X on 7/1/19 at $20

    Sell it on 12/25/19 at 15

    Re-buy all 500 shares on 1/2/20 at 18 (sale on 12/25 not taxable - this is a wash sale)

    Sell permanently on 2/15/20 at 24

    First period you owned it, it was -5, next period is was +6; overall you are +$1 per share, but you can subtract all comissions and other fees to determine your acutal gain or loss.

    • It seems right now that I am being taxed on the theoretical "+6" portion without the "-5" portion being factored in at all, due to timing. Ultimately, will I be credited so that I am taxed only on the "+1" portion in the end? Including in a subsequent tax year?

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  • Judy
    Lv 7
    1 month ago

    You'll get credit for the losses when you sell the shares you bought back. You don't lose the wash sale amount, it's just delayed.

    • ...Show all comments
    • Also, does it rollover into the next tax year? If I pay this outrageous tax bill, will I be credited that amount on any gains I may make in 2020?

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  • NA
    Lv 7
    1 month ago

    Unless you rebought the stock inside an IRA, you will get the money when you sell the stock and stop trading in it.  Eg, wait 31 days.  All of the disallowed wash sales added to your basis and will decrease your future gain (or increase the loss).  That means you will pay less in tax, even thought you probably won't realize it at the time.

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