Understanding Schedule D and Form 8949
Use Schedule D to report your overall capital gains and losses on your tax return. However, it’s important to know that you’ll first use Form 8949 to detail your individual transactions. The totals from Form 8949 are then transferred to Schedule D, which is used to calculate your final capital gain or loss for the year.
What to Report on Schedule D:
- Capital Gains and Losses: This includes gains and losses from selling investments like stocks, bonds, and mutual funds.
- Installment Sales: If you sell property and receive payments over several years, you’ll report these on Schedule D.
- Capital Gain Distributions: This refers to capital gains paid to you by mutual funds, real estate investment trusts (REITs), or other regulated investment companies.
- Certain Business Property Sales: Gains and losses from the sale of business property may also be reported here.
- Non-business Bad Debts: If someone owes you money and you can’t collect it, and it’s not related to your business, it can be reported as a short-term capital loss.
To ensure you’re reporting everything correctly, it’s a good idea to consult the IRS instructions for both Form 8949 and Schedule D.
