IRS Form 8949 Instructions (2024)

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If you have sold or disposed of investments in the past year, you may need to report those transactions on your tax return. More importantly, by filing IRS Form 8949 with your income tax return, you can reconcile the transactions as your broker or financial institution reported them to you and the Internal Revenue Service.

In this article, we’ll cover everything you need to know about IRS Form 8949. Let’s begin by walking through this tax form, step by step.

Table of contents

  • How do I complete IRS Form 8949?
    • Part I: Short-term transactions
    • Part II: Long-term transactions
  • Video walkthrough
  • Frequently asked questions
  • Where can I find IRS Form 8949?
  • Related tax articles
  • What do you think?

How do I complete IRS Form 8949?

There are two parts to this form:

  • Part I: Short term transactions
  • Part II: Long term transactions

Let’s start with Part I.

Part I: Short-term transactions

In Part I of Form 8949, you will list all short-term transactions that occurred during the tax year. Typically, short-term transactions are transactions that involve capital assets which you’ve held for one year or less.

At the top of the form, enter your name and Social Security number. If you do not have a Social Security number, enter your individual taxpayer identification number (ITIN). If you’re filing on behalf of a corporation or other entity, you may need to enter an employer identification number (EIN).

Box A, Box B, or Box C?

At the top of Part I, you’ll notice boxes marked A, B, and C. You will need to check exactly one of these boxes, depending on the type of short-term transaction you are reporting:

  • Box A: Check Box A to report transactions where the transaction and basis was reported to you and the Internal Revenue Service on Form(s) 1099-B.
  • Box B: Check Box B to report transactions where the transaction was reported to you and the IRS, but the basis of the asset was not.
  • Box C: Check Box C to report transactions where the transaction was not reported to you at all on Form 1099-B

For taxpayers who have transactions in more than one category, you will have to file a separate Form 8949 for each type of transaction.

For example, John Smith is reporting 3 short-term transactions reported to him by his broker on Form 1099-B. Two transactions have the correct basis, while the third transaction is missing its cost basis. John would report the two transactions with correct basis on one Form 8949 with Box (A) checked, and the third transaction on a separate form with Box (C) selected.

Also, for married couples, you may have to complete a separate Form 8949 for each spouse.

IRS Form 8949 Instructions (1)

Line 1

In Line 1, you should record each transaction separately, unless you can aggregate transactions or you meet one of the exception criteria, listed further in the article. Otherwise, you’ll need to complete columns (a) through (h) for each transaction.

Column (a): Description of property

In column (a), include a brief description of the property disposed of. For stocks or mutual funds, you should include the number of shares. You may use ticker symbols or symbols as long as they match the descriptions shown on your Form 1099-B or 1099-S (substitute statement).

When listing digital assets, you should include the full name or an abbreviated symbol of the digital asset, and the exact number of units sold or disposed of. If possible, include the sale transaction number.

Column (b): Date acquired

Enter the date that you acquired the property. For stocks, bonds, or mutual funds, this is the same as the trade date. For short sales, this would be the date that you acquired the property

On Forms 1099-B, refer to Box 1b to determine the date of acquisition.

For inherited property, you’ll enter this in Part II, as inherited property generally is subject to preferred capital gains treatment at long-term rates.

If you acquired stock over various dates, such as in a dollar cost averaging strategy, you may enter ‘VARIOUS’ in Column (b). However, you must still report short-term gains and losses in Part I, and long-term gains and losses in Part II.

Column (c): Date sold or disposed of

In Column (c), enter the date that you sold or disposed of the property. For stocks, bonds, and other securities traded on investment exchanges, this will be the trade date.

If you received a Form 1099-B, refer to Box 1c to determine the date of sale or disposition.

Column (d): Proceeds

Column (d) contains the sales price, or proceeds, of the sales transaction. How you report this depends on whether you received a Form 1099-B or Form 1099-S.

If you received a brokerage statement:

Enter the proceeds shown on the form or statement that you received. If there are selling expenses or option premiums not reflected on the statement, then you may need to adjust either the proceeds or the basis by entering ‘E’ in Column (f), then the necessary adjustment in Column (g).

If you did not receive a brokerage statement:

To report a transaction for which you did not receive a brokerage statement, then enter the net proceeds for the transaction. The net proceeds are gross proceeds minus transaction costs, such as fees, commissions, or taxes.

If you sold a call option, and it was exercised, then you will need to adjust the sales price of the sold property for any option premiums. Refer to the instructions for Schedule D for detailed instructions.

Column (e): Cost or other basis

The cost basis of any property that you purchase is usually the cost. This includes the purchase price as well as any transaction costs, such as fees or commissions.

You may not be able to use the actual cost in the following situations:

  • Inheriting property
  • Receiving property as a gift
  • Receipt of property in a tax-free exchange, involuntary conversion, or in connection with a wash sale

The basis for inherited property is generally the property’s fair market value on the date of death. For property that you received as a gift, the cost basis is usually the donor’s cost basis.

For more detailed information on how to determine the cost basis of an asset, please refer to the IRS instructions.

Column (f): Adjustment code from IRS Form instructions

To explain adjustments to gains or losses in column (g), you must enter one or more adjustment codes, as outlined in the form instructions. If more than one code applies, enter all applicable codes in alphabetical order, but do not separate them by a space or comma.

Below is a list of specific situations and their corresponding code:

If you received Form 1099-B or a substitute, and the basis in Box 1e is incorrect

Enter code B in column (f) and do one of the following:

If this transaction is reported on a Part I with box B checked, or on Part II with box E checked, enter the correct basis in column (e), then enter ‘0’ in column (g).

If you reported this transaction on a Part I with box A checked, or on Part II with box D checked, enter the basis shown on Form 1099-B or its substitute in column (e). Enter an adjustment in column (g). To learn how to make this adjustment, you’ll need to see the worksheet for basis adjustments in column (g), below.

IRS Form 8949 Instructions (2)
If you received a Form 1099-B or a substitute, and the type of gain (or loss) in box 2 is incorrect

Enter code T in column (f) then report the transaction on the correct part of Form 8949. Enter ‘0’ in column (g) if there are no adjustments required.

If you received a Form 1099-B or a substitute as a nominee for the property’s actual owner

Enter code N in column (f) then report the transaction on Form 8949 as if you were the actual owner. However, you should also enter any gains as a negative adjustment (using parentheses), or any losses as a positive adjustment in column (g).

After the adjustment, the amount in column (h) should equal zero. However, if you received capital gains distributions as a nominee, you may need to report them on IRS Schedule D.

If you sold or exchanged your main home at a gain, must report the sale or exchange in Part II, and you can exclude some or all of the gain

Enter code H in column (f) then report the sale or exchange as if you were not taking the Section 121 exclusion. Then, enter the amount of the excluded gain as a negative number in column (g).

For example, you bought your primary residence in 2015 for $100,000. In 2022, you sold your primary home in 2022 for $450,000 (after adjustments), realizing a $350,000 capital gain. As a single homeowner, you meet the criteria to exclude up to $250,000 of capital gain from your income. You would report as follows:

  • Column (d): $450,000
  • Column (e): $100,000
  • Column (f): T
  • Column (g): ($250,000)
  • Column (h): $100,000
If you received a Form 1099-B or a substitute that shows accrued market discount in Box 1f

Enter code D in column (f) then use the worksheet for accrued market discount adjustment in Column (g), with the following exceptions:

  1. If you received a partial payment of principal on a bond, do not use the worksheet. Enter the smaller of the following in column (g):
    • Accrued market discount
    • Your proceeds
  2. If you choose to include market discount in income, enter ‘0’ in column (g). then follow the instructions for code B, above.
IRS Form 8949 Instructions (3)
If you sold or exchanged QSB stock and can exclude part of the gain

Enter code Q in column (f) then report the sale or exchange as if you were not taking the exclusion, then enter the amount of the exclusion as a negative number in column (g). If this transaction is reported as an installment sale, you may need to refer to the Schedule D instructions for more detail.

If you can exclude part or all of the gain under rules outlined in Schedule D instructions for DC Zone assets or qualified community assets

Enter code X in column (f) then report the sale or exchange as if you were not taking the exclusion, then enter the amount of the exclusion as a negative number in column (g).

If you elect to postpone all or part of your gain under rules outlined in Schedule D instructions

Enter code R in column (f) then report the sale or exchange as if you were not taking the exclusion, then enter the amount of the postponed gain as a negative number in column (g).

If you have a nondeductible loss from a wash sale

Enter code W in column (f) then report the amount of the nondeductible loss as a positive number in column (g). See the Schedule D instructions or IRS Publication 550 for more details about wash sales.

If you received a Form 1099-B and the amount of nondeductible wash sale loss is incorrect, post the correct amount of the nondeductible loss as a positive number in column (g). If the amount of the loss is less than the amount shown on the statement, attach a separate statement explaining the difference.

Enter ‘0’ in column (g) if no part of the loss is a nondeductible loss from a wash sale.

If you have a nondeductible loss other than a loss indicated by code W

Enter code L in column (f) then report the amount of the nondeductible loss as a positive number in column (g).

If you received a Form 1099-B or substitute for a transaction and there are selling expenses or option premiums not reflected on the form, or a statement by an adjustment to the proceeds or basis shown

Enter code E in column (f) then enter in column (d) the proceeds shown on the form or statement.

Enter in column (e) any cost or other basis shown on the statement.

In column (g), enter any selling expenses or option premiums paid as a negative number. Enter any option premiums that you received as a positive number.

If you had a loss from the sale, exchange or worthlessness of small business stock (under IRC Section 1244), and the total loss is more than the maximum amount that can be treated as an ordinary loss

Enter code S in column (f) then refer to the Small Business stock section of the Schedule D instructions.

If you disposed of collectibles

Enter code C in column (f) then enter ‘0’ in column (g). Report the disposition as you would any sale or exchange.

If you report multiple transactions on a single row as outlined under one of the exceptions

Enter code M in column (f) then refer to the exceptions section of the form instructions. Enter ‘0’ in column (g) unless another code requires that you make another adjustment.

If you have an adjustment not otherwise explained

Enter code O in column (f) then enter the appropriate amount in column (g).

If you are electing to postpone part or all of your gain under Schedule D instructions for QOFs

Enter code Z in column (f) then see the form instructions on reporting an election to defer tax on eligible gains invested in a QOF.

If you are reporting your gain from a QOF that you previously deferred

Enter code Y in column (f) then refer to the form instructions on reporting a gain previously deferred in a QOF.

If no other statements apply

Leave column (f) blank.

Column (g): Amount of adjustment

In this column, enter any required adjustments to gain or loss. Enter negative adjustments in parentheses.

If you entered more than one code in column (f), enter the net adjustment in this column.

Column (h): Gain or loss

Calculate the gain or loss for each row.

First, subtract the cost basis figure in column (e) from the proceeds in column (d). From there, add or subtract any adjustments from column (g).

Enter the result in column (h) as the resultant gain or loss. Enter negative numbers in parentheses.

Line 2

In Line 2, you will enter the totals from the amounts in columns (d), (e), (g), and (h), above. Enter each total here and include these numbers on Schedule D as follows:

  • If Box A is checked, enter total in Line 1b on Schedule D
  • If Box B is checked, enter total in Line 2 on Schedule D
  • If Box C is checked, enter total in Line 3 on Schedule D
IRS Form 8949 Instructions (4)

Part II: Long-term transactions

Box D, Box E, or Box F?

At the top of Part II, you’ll notice boxes marked D, E, and F, for reporting long-term transactions, similar to Part I.

You will need to check exactly one of these boxes for the type of long-term transaction you are reporting:

  • Box D: Check Box D to report transactions where the transaction and basis was reported to you and the Internal Revenue Service on Form(s) 1099-B.
  • Box E: Check Box E to report transactions where the transaction was reported to you and the IRS, but the basis of the asset was not.
  • Box F: Check Box F to report transactions where the transaction was not reported to you at all on Form 1099-B
IRS Form 8949 Instructions (5)

Line 1

For Part II, you will follow identical instructions as in Line 1 for each transaction meeting the criteria for long-term gains (or losses) treatment.

Long term capital gains

You should treat the following types of transactions as long-term capital gains:

  • Sale of capital assets held for more than 1 year
    • Often referred to as one year, one day rule
    • Holding period for long term treatment on the sale of race horses is 2 years
  • Sale of inherited property, regardless of holding period
  • Capital gain distributions from mutual funds.
    • Always report capital gain distributions as long term regardless of how long you’ve held the mutual fund itself
    • Reported on IRS Schedule D

Line 2

In Line 2, you will enter the totals from the amounts in columns (d), (e), (g), and (h), above. Enter each total here and include these numbers on Schedule D as follows:

  • If Box D is checked, enter total in Line 8b on Schedule D
  • If Box E is checked, enter total in Line 9 on Schedule D
  • If Box F is checked, enter total in Line 10 on Schedule D
IRS Form 8949 Instructions (6)

Video walkthrough

Watch this instructional video to learn more about reporting capital asset transactions on IRS Form 8949.

IRS Form 8949 Instructions (7)

Frequently asked questions

What is IRS Form 8949 used for?

Taxpayers use Form 8949 to report sales and exchanges of capital assets. Form 8949 allows you and the IRS to reconcile amounts reported to you and the IRS on brokerage statements such as Forms 1099-B or 1099-S (substitute statements).

What is the difference between short-term capital gains and long-term capital gains?

Long term capital gains have a holding period of more than one year between acquiring and sale of an asset. Conversely, short term gains and losses have a holding period of one year or less. Long term capital gains are treated more favorably than short term gains, which are treated as ordinary income.

What should I do if there are transactions, but I didn’t receive a Form 1099?

You may still need to report the transactions on Form 8949, depending on your situation. You should check to see if there is an appropriate code for column (f) to explain any adjustments you enter into column (g).

What is a QOF?

A qualified opportunity fund, or QOF, is an economically distressed community certified by the Internal Revenue Service. Investments in QOFs may be eligible for preferential tax treatment to create economic development opportunities in communities that might not otherwise receive capital investments.

Where can I find IRS Form 8949?

You may find copies of Form 8949 on the IRS website. For your convenience, we’ve included the most current version in this article.

irs_form_8949Download

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IRS Form 8949 Instructions (2024)

FAQs

Who is required to file form 8949? ›

Corporations and partnerships use Form 8949 to report the following. The sale or exchange of a capital asset not reported on another form or schedule. Gain or loss on the sale or exchange by a foreign corporation of an interest in a partnership that is engaged in a U.S. trade or business.

What is the difference between form 8949 and Schedule D? ›

Use Form 8949 to reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return. The subtotals from this form will then be carried over to Schedule D (Form 1040), where gain or loss will be calculated in aggregate.

What is the difference between box A and B on form 8949? ›

The three boxes are: Transactions and your basis as reported to the IRS (Box A). You know this because the Form 1099-B you received from your brokerage or other financial firm indicates this information. Transactions and your basis that were not reported to the IRS (Box B).

Do you have to list every stock trade on your tax return? ›

You must report all 1099-B transactions on Schedule D (Form 1040), Capital Gains and Losses and you may need to use Form 8949, Sales and Other Dispositions of Capital Assets. This is true even if there's no net capital gain subject to tax.

Can I skip form 8949? ›

Instead of completing Form 8949, you can submit a substitute statement. Format your substitute statement similarly to the Form 8949 itself. First, create or get the substitute statements you want to attach to the return.

Can I file Schedule D without 8949? ›

Taxpayers can omit transactions from Form 8949 if: They received a Form 1099-B that shows that the cost basis was reported to the IRS, and. You did not have a non-deductible wash sale loss or adjustments to the basis, gain or loss, or to the type of gain or loss (short term or long term).

Why are capital losses limited to $3,000? ›

The $3,000 loss limit is the amount that can be offset against ordinary income. Above $3,000 is where things can get complicated.

Are capital gains considered income? ›

While capital gains may be taxed at a different rate, they're still included in your adjusted gross income (AGI) and can affect your tax bracket and your eligibility for some income-based investment opportunities.

Do I need to enter form 8949 on TurboTax? ›

When you enter investment sales or exchanges from Form 1099-B or 1099-S in TurboTax, we'll automatically fill out Form 8949 and transfer the info to Schedule D. You don't need to fill out the 8949 yourself.

What does code H mean on form 8949? ›

H. Report the sale or exchange on Form 8949 as you would if you were not taking the exclusion. Then enter the amount of excluded (nontaxable) gain as a negative number (in parentheses) in column (g). See the example in the instructions for column (g). You received a Form 1099-B showing accrued market discount in box 1g.

Can I summarize transactions on 8949? ›

Report Summary Transactions (per Broker) on Form 8949

On Form 8949, enter a separate row for each broker summary with totals for each Schedule D row and box. For example: There should be a separate summary line for Part I, Box A; Part I, Box B; etc., per broker statement.

Should I use form 8949 or 4797? ›

Trade or Business

Generally, the gain is reported on Form 8949 and Schedule D. However, part of the gain on the sale or exchange of the depreciable property may have to be recaptured as ordinary income on Form 4797. Use Part III of Form 4797 to figure the amount of ordinary income recapture.

How much stock can you sell without paying taxes? ›

Capital gains tax rate 2024
Tax rateSingleMarried filing jointly
0%$0 to $47,025$0 to $94,050
15%$47,026 to $518,900$94,051 to $583,750
20%$518,901 or more$583,751 or more
Aug 16, 2024

How do I not pay taxes on stock trades? ›

Hold the shares inside an IRA, a 401(k) or other tax-advantaged account. Dividends and capital gains on stock held inside a traditional IRA are tax-deferred, and tax-free if you have a Roth IRA. Dividends and capital gains on stocks in a regular brokerage account typically aren't.

Do stock sales count as income? ›

For tax purposes, when you sell an investment for more than you bought it, you realize a capital gain. This gain is taxable, and the tax rate depends on the length of time you hold the stock before selling it. Short-term capital gain: A short-term capital gain occurs when you sell assets you owned for one year or less.

What is the difference between form 4797 and 8949? ›

It's important to note that Form 4797 is used primarily for business property sales. For personal property transactions, such as the sale of a personal residence, a different form, such as Form 8949 or Schedule D, may be used.

Do I have to report stocks on taxes if I made less than $1000? ›

In a word: yes. If you sold any investments, your broker will be providing you with a 1099-B. This is the form you'll use to fill in Schedule D on your tax return.

How do you record the sale of property on a tax return? ›

Reporting the sale

Report the sale or exchange of your main home on Form 8949, Sale and Other Dispositions of Capital Assets, if: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or. You received a Form 1099-S.

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