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What Is the Penalty for Not Correctly Reporting a Wash Sale?

Failure to report a wash sale can result in a 20% penalty for substantial understatement of income tax plus interest on the underpayment.
Greeks.Live21.11.25

What Is the Penalty for Not Correctly Reporting a Wash Sale?

Failure to correctly report a wash sale can lead to an understatement of taxable income, which can result in a penalty for substantial understatement of income tax (20% of the underpayment). The IRS may also charge interest on the underpaid tax.

Correct reporting is essential to avoid these financial penalties.

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