How to Complete a Schedule D Form

Three Parts:Filling Out Form 8949Completing Schedule DAvoiding Errors

Internal Revenue Service (“IRS”) Form 8949 and Schedule D are the Capital Gains and Losses section of the Form 1040. Schedule D is used to calculate and report the sale or exchange of a capital asset. Doing your taxes is always complicated, but can be frustrating when grappling with Schedule D. If you go slowly, and take breaks as needed, you should be able to fill out the paperwork on your own. To start, you will need to fill out Form 8949. This form allows you to total your gains and losses for various investments and assets obtained during the year. On your Schedule D form, you will use these values to figure out if you had a net loss/gain for the year in terms of short and long term investments.

Part 1
Filling Out Form 8949

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    Separate short term and long term gains and losses. This is mainly what you're tracking in Form 8949 and Schedule D. Your gains and losses are based on your capital assets. Capital assets are anything you own that can make or lose money throughout the year. They include things like your home, car, artwork, and collectables. They also includes investment assets like stocks, bonds, and some properties.[1][2]
    • The first section of Schedule D includes your short term gains and losses. These include any assets you've held for one year or less. For example, say you bought 8 stocks in the Nestle corporation in April of 2015. You sold these stocks in October of 2015. This would be considered a short term gain or loss.
    • The second section of Schedule D covers long term gains and losses. These are assets you've held for more than one year. For example, if you've owned stocks in GM for 5 years, you would record the gains and losses made from those stocks in the second part of Schedule D.
    • Go through all your capital assets. Make a list of short term gains/losses, and longterm gains/losses. This will simplify the process when you begin filling out your tax forms.
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    Gather specific details of each capital asset. These details are important to calculate whether you had a net gain or loss for a year. Before you even start filling out Form 8949, gather this information. Having it ahead of time will make the process go smoother.[3]
    • You will need to know the date when each asset was purchased or acquired, as well as the price.
    • If you sold an asset, you need to know the date it was sold. You should also include the price for which the asset was sold.
    • Write down any reasons you made or lost money on a capital asset. This will affect how you are taxed for that asset.
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    Determine the cost basis of your assets. This is the amount you paid for the asset, as well as any other fees associated with the asset. Take your time here. While determining cost basis may seem simple, there are some calculations that go into the process, especially when stocks have increased or decreased in value.[4]
    • Usually, cost basis is expressed as per-share basis. If you bought 1,000 shares in a company for $10,000, the cost basis would not just be $10,000. You would divide 10,000 by 1,000 to find a cost basis of $10.
    • In the event you received these shares as a gift, you would give the cost basis based on their original value. Even if you did not pay that value, it can still affect what you will be taxed on in the coming year.
    • Other factors can affect the cost basis. If your shares appreciated in value, and you then sold them, you would need to figure out how much of this sale is subject to taxes. You would need to determine the new cost basis. For example, the shares rose to $15/share when you sold, giving you $15,000. The extra $5,000 may be subject to a capital gains tax.
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    Fill out the long and short term sections on Form 8949. You will use the information gathered here. For each asset, you will give the name of the asset, or the company associated with the stocks or bonds. You will also put in the buy and sell dates, the purchase price, the sales price, and the cost basis.[5]
    • Remember, long term and short term gains and losses are different. Form 8949 includes different sections for long and short term assets. Make sure you are filling in the right sections as you complete Form 8949.
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    Calculate the total gains and total losses for each asset. Eventually, this will help you determine if you had a net gain or net loss for the year. Go through each asset on both the short term and long term gains/losses sections. Figure out whether each asset resulted in a gain or a loss for the year.[6]
    • If you gathered all your information ahead of time, things should be simple from here. You simply need to subtract the costs associated with the asset from the money earned from the asset.
    • Work slowly and use a calculator. Check your answers several times. You want to make sure your numbers are accurate when filling out your taxes.

Part 2
Completing Schedule D

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    Write your totals from Form 8949 on Schedule D. On Schedule D, you will have to fill out a section for short term and long term gains and losses. Here, you'll be transferring the total gain/loss for each asset you determined when filling out Form 8949. In both Section 1 and 2, the first lines on Schedule D regard your values from Form 8949.[7]
    • As with Form 8949, make sure you're writing in the correct section. Short term gains/losses need to be in the short term section, while long term gains/losses need to be in the longterm section.
    • Recalculate the totals as you go. You want to make sure all your figures match.
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    Refer to Form 1099 B if you needed it. Depending on your circumstances, you may have had to fill out Form 1099 B. This is usually an overview of stock transactions for the year. If you invest in the stock market, you may have filled out Form 1099 B.[8]
    • Form 1099 B will have transaction details that are important to gains and losses related to stock investments. If you filled out Form 1099 B, you will have a lot of information regarding stock gains/losses on this form.
    • Schedule D will ask for totals from Form 1099 B several times. If you have filled out this form, provide the totals. If you have not filled out this form, these totals may not be relevant to your situation.
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    Deal with Line 4. Line 4 wants to know how many gains or losses you've had related to specific circumstances. The following are losses/gains you would list on line 4: installment income from sales, casualty or theft, transaction with stock options, or the exchange of business or investment property. Count how many losses or gains you have had due to these circumstances and write that number in Line 4.[9]
    • If you did not have any gains or losses due to these circumstances, write "0."
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    Fill out Line 5 and Line 6, if necessary. These lines may not be relevant to your situation, but if they are you need to fill them out. These are gains/losses not recorded in Form 8949 that you need to report to the IRS.[10]
    • Line 5 deals with gains and losses from any businesses you own. This includes S corporations, estates, and trusts. You'll be asked to report your total gains/losses for the year. If you do not own any businesses, there is no need to fill out part 5.
    • Line 6 includes any short term capital loss carryover. These are capital losses earned during the previous year that, for whatever reason, you could not report on that year's taxes.
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    Find the net short term gain (or loss) for the year. In Part 1, you're working with short term gains or losses. You simply have to add the values you copied from Form 8949 here, as well as any values you added to Line 5 or Line 6.[11]
    • You would enter the total value you find in Line 7. This value will be either positive or negative. It represents your net gain or loss for the year.
    • The IRS will use this information to determine how to tax your assets.
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    Use the same process for Part 2. Part 2 deals with long term gains and losses. As with Part 1, you would add up the totals from Form 8949. You also have to fill out some specific lines associated with Part 2, and total all the values to find your total gain/loss for the year regarding long term investments.[12]
    • In Part 2, Line 12 would include gains and losses from businesses. It's the same information you entered in Line 5, only associated with long term investments. Any capital carryover would be entered in Line 14.
    • You will write your grand total in Line 15. This is your net gain/loss for the year in regards to long term investments.

Part 3
Avoiding Errors

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    Learn the situations where you do not need Form 8949. In some situations, you do not need to fill out Form 8949. Before you waste your time filling out the form, see if you're supposed to skip that form this year.[13]
    • If you have a separate sheet of paper you made yourself, detailing your transactions, you can include that as long as it's adequately organized. This would help if you recorded things like dates of sale, purchase, and so on using scrap paper. It would save you the time of copying down information.
    • If you received from 1099-B, you may not need Form 8949. Read the instructions written on form 1099-B.
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    Make sure the figures in Schedule D and Form 8949 match. You do not want to miscalculate when dealing with taxes. A small miscalculation could delay your taxes and any refunds you receive.[14]
    • Recalculate your numbers many times. Look through Schedule D and Form 8949 to make sure your figures matched. A simple typo can set you back here.
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    Consider hiring an accountant. Schedule D can be very confusing, especially if you do not typically do your own taxes. If you're struggling to complete the information, reach out to an accountant. Try to find a reasonably priced accountant in your area who can help you sort out of the forms. You do not want to make a mistake on your Schedule D form.
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    Take a break if you get frustrated. You're more likely to make a mistake if you're feeling stressed or frustrated. In the event you begin to feel overwhelmed, take a break. You will return to the situation recharged and revitalized.[15]
    • Go for a short walk. Watch a movie. Take 15 minutes to read a book or chat with a friend online.
    • If you're getting particularly frustrated, you may want to set the forms aside for the night. You can return to them in the morning with fresh eyes. They may make more sense to you after some distance.

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Categories: Taxes and Fees