IRS Form 8949 is a tax form primarily used for reporting sales and exchanges of capital assets. Form 8949 is filed along with Schedule D of your individual federal income tax form.
Learn about all of the reasons you might need to file Form 8949 and how to complete it and Schedule D.
What Is IRS Form 8949?
Form 8949, Sales and Other Dispositions of Capital Assets, is used to report the following to the IRS:
- The sale or exchange of any capital asset that’s not reported on another form or schedule
- Gains from involuntary conversions (other than from casualty or theft) of capital assets not used in your trade or business
- Nonbusiness bad debts
- Worthlessness of a security
- The election to defer a capital gain invested in a qualified opportunity fund (QOF)
- The disposition of interests in a QOF
A QOF is an investment vehicle that files either a partnership or corporate federal income tax return and is organized for the purpose of investing in qualified opportunity zone (QOZ) property. A QOZ is an economically distressed community where new investments may be eligible for preferential tax treatment.
Corporations, partnerships, estates, and trusts would use Form 8949 for many of the same reasons.
The International Revenue Service (IRS) indicates that you should complete as many copies of Form 8949 as are needed to include all the transactions if you’re filing a joint return with your spouse. The transactions may be put on separate forms according to which of you completed the transaction, or the transactions can be intermingled. You’ll enter the total from all of your and your spouse's Forms 8949 on your Schedule D.
Who Uses IRS Form 8949?
Anyone who has received one or more Forms 1099-B, Proceeds From Broker and Barter Exchange Transactions; Forms 1099-S, Proceeds From Real Estate Transactions; and/or IRS-allowed substitutes for those forms should file a Form 8949. Those Forms 1099 or substitutes would also have been sent to the IRS.
You should look carefully at the Forms 1099 you've received from your broker. If the cost or other basis for all of your transactions was reported to the IRS and you don't need to make any adjustments, you may not need to file Form 8949.
Complete information on the two exceptions that enable you to forgo filling out Form 8949 is available on pages three and four of the IRS's Instructions for Form 8949.
Your Forms 1099 should give you information on whether you should check Box A, B, or C for short-term transactions (on page one) or Box D, E, or F for long-term transactions (on page two), all for a given transaction or set of transactions. You’ll have to determine from your own records whether the transaction was short term or long term if Box 2 of Form 1099 is blank, however, and if code X is in the "Applicable checkbox on Form 8949" box.
Short-term transactions are generally those that involve assets held for a year or less, while long-term transactions are generally those that involve assets held for more than a year. There are exceptions to this general rule. It's always considered to be a long-term transaction if you sell a property that you’ve inherited or were given as a gift, even if you owned it for a year or less.
Exclude the date you entered into the transaction, but include the date you exited the transaction, when you’re determining your holding period.
Boxes A and D are for transactions that are reported on Forms 1099 indicating that basis was reported to the IRS. Boxes B and E are for transactions reported on Forms 1099 that indicate basis wasn't reported to the IRS. Boxes C and F are for transactions that weren't reported to you on Form 1099.
Where to Get a Form 8949
The IRS provides an interactive Form 8949 on its website. You can complete it online, then print it out. The form should also be available from any tax preparation software you use.
How to Fill Out and Read Form 8949
Check Box A, B, or C in Part I, depending on which reporting option applies. Enter information on all of your short-term transactions under 1—sales and exchanges—of capital assets, including stocks, bonds, and real estate, that fit that reporting category.
If you have more transactions to list than will fit on the page, you’ll have to fill out another Form 8949 with that same box checked.
Your description for each property in column (a) on Form 8949 should be based on the description given on the applicable Form 1099, if you received one.
Column (d) is for proceeds, (e) is for cost or other basis, (g) is for amount of adjustment, and (h) is for gain or loss. The gain or loss for each transaction is calculated by subtracting the cost or other basis from the proceeds and then adding or subtracting any adjustment, if applicable.
Examples of adjustments you might be required to make include increasing the basis of a property you sold by the value of any improvements you made to it, and adjusting for any stock splits that occurred before you sold shares of a company. Publication 551, Basis of Assets, provides detailed information on various increases and decreases to basis.
On line two, enter the totals of the figures in columns (d), (e), (g), and (h). Enter these same amounts on Schedule D. You'll enter the amounts on line 1b of Schedule D if you checked Box A. You'll enter the amounts on line two if you checked Box B. Enter the amounts on line three if you checked Box C.
Follow the same steps in Part II for all of your long-term transactions that fall under one of the reporting categories. Check Box D, E, or F and enter the information for all of the transactions. Add up the same columns and enter the totals on line two, as well as on Schedule D. Enter the amounts on line 8b of Schedule D if you checked Box D. Enter the amounts on line nine if you checked Box E. Enter the amounts on line 10 if you checked Box F.
In addition to the total gain or loss from transactions reported on your Form(s) 8949, you might have to use Schedule D to report:
- Certain transactions you don't have to report on Form 8949
- A gain from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, Form 6252, Installment Sale Income, or Part I of Form 4797, Sales of Business Property
- A gain or loss from Form 4684, Casualties and Thefts, Form 6781, Gains and Losses From Section 1256 Contracts and Straddles, or Form 8824, Like-Kind Exchanges
- A gain or loss from a partnership, S corporation, estate, or trust
- Capital gain distributions not reported directly on line 6 of Form 1040 or 1040-SR or effectively connected capital gain distributions not reported directly on line 14 of Form 1040-NR, U.S. Nonresident Alien Income Tax Return
- A capital loss carryover from one tax year to the next
Can Form 8949 Be E-Filed?
You must enter each transaction in separate rows of the electronic form if you want to e-file your Form 8949, or you can include Form 8949 as a PDF attachment to your return. You can also mail paper copies of both Form 8949 and Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return.
Where to Mail Form 8949
Form 8949 can be mailed along with Schedule D and your Form 1040 or Form 1040-SR to the appropriate address on page 108 of the Instructions for Form 1040 and 1040-SR.
- The primary purpose of IRS Form 8949 is to report sales and exchanges of capital assets.
- Form 8949 is filed along with Schedule D of your individual federal income tax form.
- Anyone who has received one or more Forms 1099-B, Forms 1099-S, or IRS-allowed substitutions should file a Form 8949.
- You may not need to file Form 8949 if the basis for all of your transactions was reported to the IRS and you don't need to make any adjustments to those figures.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.