If you’ve sold stocks, cryptocurrency, real estate, or other investments in the past tax year as an individual taxpayer, you might be looking at IRS Form 8949 and wondering what to do next. Don’t worry — we can help you report asset sales without the hassle.
This guide will walk you through when to file Form 8949 and how to use this tax form to report stock sales on your income tax return.
At a glance:
- Form 8949 reports the sale of capital assets like stocks, crypto, and real estate to the IRS.
- This form is needed if your cost basis isn’t reported or requires adjustments (e.g., wash sales).
- Totals from Form 8949 are carried over to Schedule D to calculate gains and losses.
What is IRS Form 8949?
IRS Form 8949, Sales and Other Dispositions of Capital Assets, is used to report sales of capital assets such as stocks, bonds, mutual funds, cryptocurrency, real estate, and other investments. It helps calculate capital gains tax reporting by listing transaction details like the purchase price, sales price, and whether the gain or loss is short-term or long-term (different tax rates apply for each).
Schedule D vs. Form 8949
Form 8949 works alongside Schedule D to report your capital asset sales to the Internal Revenue Service (IRS). While Schedule D summarizes your total capital gains and capital losses for the year, Form 8949 gives the IRS the whole picture, providing detailed information about each transaction (like cost basis adjustments).
First, you’ll need Form 1099-B from your broker to complete Form 8949. Then, the totals from Form 8949 get carried over to Schedule D to report gains and losses.
Who needs to file Form 8949?
Not every taxpayer will need to file Form 8949 during tax filing — you’ll only need to file this form if you sold or exchanged any capital assets during the tax year.
Some scenarios that may require Form 8949 include:
- You sold or exchanged capital assets (stocks, ETFs, mutual funds, etc.) during the year.
- You sold cryptocurrency (including using crypto to buy goods/services).
- You had real estate sales that resulted in a gain or loss.
- You want to write off a non-business bad debt.
Corporations, partnerships, or estates may also use this form to report the sale of capital assets.
Form 8949 example
Below is an image of Form 8949 (page 1), which breaks down individual short-term capital asset transactions:
Page 2 contains the same information, but for long-term transactions:
What information is included on the form?
Each transaction is listed with details such as:
- Description of property (e.g., 100 shares of XYZ stock)
- Holding period (the date you acquired and sold the asset — this determines if it’s a short-term capital gain or long-term capital gain)
- Proceeds (the sales price or amount received)
- Cost basis (usually the purchase price)
- Adjustments to basis for wash sales or other basis changes
Key tips for using Form 8949
- Use tax software: TaxAct® can help you easily fill out Form 8949. When you use our tax preparation software, you can either import your transactions or enter them manually.
- Keep detailed records: Ensure you have documentation for each transaction, including purchase and sale dates, amounts, and applicable fees.
- Understand wash sale rules: Wash sales can disqualify a loss from being deducted — be mindful of repurchasing the same security too soon.
- Know the difference between short-term vs. long-term capital gains: How long you hold the asset impacts your tax rate. Short-term gains are taxed as ordinary income, while long-term gains have lower tax rates.
- Include crypto transactions: Digital assets like Bitcoin and Ethereum must be reported, even if you didn’t receive Form 1099-B.
Form 8949 instructions: How to fill out Form 8949
Form 8949 requires you to categorize your transactions based on how long you held the asset and whether the transaction was reported to the IRS. Follow these steps to complete Form 8949:
- Separate short-term and long-term transactions:
- Short-term transactions: Assets held for one year or less.
- Long-term transactions: Assets held for more than one year.
- Use the appropriate part of the form:
- Part I: For short-term transactions.
- Part II: For long-term transactions.
- Categorize your transactions:
- Check Box A, Box B, or Box C (short-term transactions) or Box D, E, or F (long-term transactions) based on whether the cost basis was reported to the IRS and whether the transactions were reported to you on Form 1099-B.
- List each sale or exchange. For each transaction, provide the following:
- Description of property
- Purchase date
- Date of sale
- Sales price
- Cost or other basis (original purchase price plus fees)
- Adjustment code and amount (if applicable)
- Summarize totals. After listing all transactions, calculate each category’s total gain or loss. These totals will be transferred to Schedule D (Form 1040) to determine your overall tax liability.
Common adjustment codes and situations
- Code W – Wash sales: If you sold a stock at a loss and bought the same (or nearly identical) security within 30 days, the IRS won’t let you deduct that loss, so you’ll need to adjust it on Form 8949.
- Code T – Incorrect cost basis: If your Form 1099-B shows the wrong cost basis, you’ll need to correct it and report the difference. Always double-check your records to make sure everything lines up.
Form 8949 FAQs
Do I need to file Form 8949 if I have a small number of transactions?
The number of transactions does not affect whether you must complete Form 8949.
However, you can skip Form 8949 and instead aggregate your transactions and report your totals directly on Schedule D if all the following apply:
- Your Form 1099-B (or substitute statement) shows that the cost basis was reported to the IRS, and there are no adjustments in Box 1f or 1g.
- The Ordinary box in Box 2 is not checked.
- You don’t need to adjust your cost basis, type of gain or loss, or the gain/loss amount reported on your Form 1099-B.
- You’re not electing to defer income from a Qualified Opportunity Fund (QOF) investment or terminating a previous QOF deferral.
Can I skip Form 8949 if my broker provides a summary?
If your Form 1099-B includes all transactions and reports the cost basis to the IRS, you may be able to report directly on Schedule D. However, adjustments like wash sales still require Form 8949.
What happens if I make a mistake?
If you misreport your cost basis or fail to file Form 8949, you might owe additional income tax. But if you notice you made a mistake, don’t panic — you can always amend your tax return using Form 1040-X if needed.
What if I sell cryptocurrency?
Cryptocurrency tax reporting follows the same rules as stocks. Selling, trading, or using crypto for purchases counts as a taxable event and should be reported on Form 8949.
How to file Form 8949 with TaxAct
TaxAct makes tax preparation easy by allowing you to e-file and automatically generate Form 8949 based on your investment transactions. When you file with us, you can enter your capital asset transactions in a few different ways:
- Import electronically from your brokerage.
- Upload a CSV file.
- Manually enter transactions in the TaxAct program.
- Enter transactions using our Stock Assistant tool.
If you need help attaching statements, check our Form 8949 FAQ.
Attaching Form 8949 in TaxAct
If your transactions are already listed on a Form 8949 statement, you can use our Form 8949 attachment option to report summary totals rather than entering transactions individually.
To enter your Form 8949 summary totals in TaxAct:
- From within your TaxAct return (Online or Desktop), click Federal. (On smaller devices, click in the top left corner of your screen, then click Federal.)
- Click the Investment Income dropdown, click the Gain or loss on the sale of investments dropdown, then click Enter totals from a statement of transactions you will attach to your return as shown below:
- You will then be able to add or edit a new form.
The bottom line
If you sold investments during the tax year, you might need to file Form 8949 to help calculate your capital gains or losses. This form will categorize your transactions for the IRS and help you make necessary adjustments to your cost basis if needed.
Thankfully, TaxAct makes capital gains tax reporting simple — we’re here whenever you’re ready to start filing.