If you sell stocks, mutual funds, real estate, cryptocurrency, or other investment assets, you might need to report those transactions on a Schedule D form. The IRS wants to know how much you received from these sales vs. what you originally paid for those investments, so it can tax eligible gains (aka profit) or allow you to deduct eligible losses. Here’s how to know whether you need to file a Schedule D form and what to put on it.
What is Schedule D?
Schedule D is a tax form reporting the sale of capital assets—personal property, like a home, car, collectibles, stocks, and bonds, typically bought as an investment. If you need to include Schedule D with your tax return, you’d use the form to calculate and report whether you made a gain or a loss on those sales.
For example, if you bought stock shares for $10,000 in January through a taxable account and sold them for $12,000 in December, you’d report that on Schedule D and calculate a gain of $2,000 on the same form. Do the same for all the tax year’s investment sales and then tally them up to see if you owe taxes on these transactions.
Who has to file Schedule D?
Anyone selling investments in a taxable brokerage account, certain real estate, or businesses should file Schedule D. Even if you reinvest money you’ve made from selling investments, taxes on sales through taxable accounts are due annually and you need to report those sales on this form.
Note that you do not need to file Schedule D for trades in an individual retirement account (IRA) or workplace retirement plan. That’s because taxes are deferred on many of those accounts—as long as the money stays in the account. In other words, you don’t pay taxes until you make withdrawals. (With Roth IRAs and other Roth accounts, though, you might never pay taxes on withdrawals if certain conditions are met.)
If you sell real estate that isn’t your primary residence, you need to report those transactions on Schedule D. You would also need to report the sale of your primary residence, but you may be able to exclude a portion of the profits, up to $250,000 for a single filer or up to $500,000 if you are married filing jointly.
People who sell a partnership, S-Corporation, or estate trust or plan to claim a deduction for totally unpaid nonbusiness bad debts also need to file Schedule D.
Where can you get Schedule D?
You can get the Schedule DOpens in a new window form on the IRS website as a downloadable PDF. Either fill it out electronically or print it and file with a paper return. If you use tax-filing software, it will complete the Schedule D for you based on your replies.
Where do you get the information to file Schedule D?
You get the information to file Schedule D from certain 1099 forms. They should be sent to you after you’ve sold a capital asset, usually early in the year following the tax year during which the transaction took place. Your investment broker provides you with a 1099-B form, which summarizes the capital gain tax results of selling stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other securities. When you sell real estate, on the other hand, the person responsible for closing should prepare a 1099-S for you. Or you might receive a 1099-K, which is for payment for goods or services (not from family or friends) through payment apps or online marketplaces.
How to file Schedule D
To file Schedule D, you’ll need to complete each of the 3 relevant parts of the form.
Part 1: Summarize all your short-term capital gains and losses for assets you held for 1 year or less. The IRS has you separate long- and short-term assets because it charges different capital gains tax rates for each. Short-term gains are taxed at your marginal tax rate, according to federal income tax brackets. Tally up how much you paid for these assets and then how much you received for selling them to see if you netted a gain or loss.
Part 2: Complete the same calculation for your long-term assets. These are assets you held for more than 1 year before selling. Long-term gains are generally taxed at lower rates, which max out at 20%. According to the IRS, most people won’t pay more than 15% on most net capital gains in tax years 2024 and later.1
Part 3: Combine the results of your short-term and long-term capital gains. If one category is a net loss and the other is a gain, you can subtract the losses from the gains, even if they’re not the same types of losses and gains. For example, you could subtract your long-term losses to reduce your short-term gains.
If you had a net gain for the year, calculate how much you owe in taxes based on the amount and short-term tax rates for short-term gains and long-term rates for long-term gains.
Alternatively, if you have more losses than gains for the year, you can deduct up to $3,000 of those losses against your personal income tax for the year—and unused losses for one year can offset income in later years. Schedule D tells you where to report these numbers on form 1040, which serves as your US tax return.
When do you have to file Schedule D by?
You must submit your Schedule D and tax return by the annual filing deadline. This is generally on April 15, or the next business day if April 15 falls on a weekend or holiday.
You could apply for an extension if you need more time to prepare your 1040 form and Schedule D. This gives you an extra 6 months, until mid-October, to complete your return. However, any taxes you owe are still due in mid-April. You should pay as close as possible to your estimated bill to avoid penalties.
Things to keep in mind when filing Schedule D
As you prepare to file Schedule D, there are a few other points to remember.
Preparing Form 8949
It’s possible you’ll need to complete Form 8949 to go with your Schedule D. This form is also known as Sales and Other Dispositions of Capital Assets, and you’ll complete it before handling the calculations on Schedule D.
Form 8949 asks you to list the specific details for each of your transactions, including:
- The description of the property (such as 100 shares of XYZ company stock)
- The dates you bought and sold or disposed of the asset
- The amount you received from the sale
- Your cost basis: the price you paid to purchase that investment, including any costs such as broker's fees or commissions
- Your gain or loss from the transaction
Form 8949 gives the IRS the complete list of all your transactions, which you then summarize for the final calculations on Schedule D.
You don’t need to complete Form 8949 if your broker reported each sold investment’s cost basis directly to the IRS. If there are any investments for which your broker didn’t report the cost basis, you’ll need to complete Form 8949 in addition to Schedule D.
Reporting all transactions
While you will get a 1099 for most transactions, there are situations when you might not. For instance, if you invest in crypto outside of a formal exchange, you might not receive a 1099 for your trades. The IRS still requires you to report these transactions, including your gains and losses, on Schedule D so that you pay taxes on crypto if necessary. Otherwise, you could owe additional taxes and penalties if the error is caught through an audit.
Planning for taxes
Keep Schedule D tax calculations in mind when making your investment decisions. If you have held assets for nearly 1 year, could you hold onto them until they reach long-term status? That could reduce your tax bill.
As you approach the end of the year, check whether you have any taxable gains. If so, have any assets in your portfolio lost value? You could sell those to lock in tax-deductible losses through a process called tax-loss harvesting, which could offset your taxable gains and possibly generate a personal income deduction.
Preparing Schedule D could be complicated. Consider consulting a tax professional to help you properly file Schedule D and your tax return.
