What Form 8949 Is For
IRS Form 8949 (2012) is used to report the sale or exchange of capital assets such as stocks, bonds, mutual fund shares, real estate, and other investments. It helps the Internal Revenue Service match the information reported by brokerage firms on Form 1099-B or Form 1099-S with the details on your tax return. Each transaction is listed individually, showing the sales price, cost or other basis, and the resulting gain or loss.
The totals from Form 8949 are then transferred to Schedule D, which summarizes your overall capital gains and losses to determine how they affect your taxable income for the 2012 tax year. Learn more about essential IRS forms that support capital gain reporting through our IRS Form Help Center.
When You’d Use Form 8949 (Including Late or Amended Returns)
You must file IRS Form 8949 (2012) if you sold, exchanged, or disposed of capital assets during the 2012 tax year. This applies to the sale of stocks, bonds, mutual fund shares, real estate, or other types of investment property. You still need to report these transactions to the Internal Revenue Service, even if you did not receive a Form 1099-B or Form 1099-S. You should also use this form when filing amended returns.
If you find a missing sale or an incorrect cost basis, submit Form 1040X with a corrected Form 8949 and Schedule D. Report any taxable gain when only part of your home sale qualifies for the exclusion. If you have a wash sale, report the adjustment in accordance with the wash sale rules. Include capital gain distributions from Form 1099-DIV or 2439. Report qualified small business stock and non-business negative debts to ensure accurate calculations. Any 2012 gain or loss must appear on Form 8949.
Key Rules and Details for 2012
When completing IRS Form 8949 (2012), it is essential to understand how transactions are classified and reported. The form separates transactions into three categories using checkboxes:
- Box A: Sales where the cost basis was reported to the IRS on Form 1099-B
- Box B: Sales reported on Form 1099-B where the basis was not reported to the IRS
- Box C: Sales not reported on a Form 1099-B or Form 1099-S
Each part of the form also categorizes transactions into short-term and long-term categories based on the holding period. Assets held for one year or less produce a short-term capital gain or loss, which is taxed at ordinary income rates. Assets held for more than one year result in long-term capital gains, which are generally taxed at lower rates. Learn the steps to bring past investment reporting up to date with our guide on filing unfiled federal tax returns for prior years.
Step-by-Step (High Level)
- Gather documents and verify data: Refer to your personal records, Forms 1099-B/1099-S, any substitute statements, and notes on purchase price, interest income, and previous capital losses.
- Classify each transaction: Group stock sales, digital assets, installment sales, and other dispositions. Mark short-term transactions or long-term transactions, and select the appropriate box (A, B, or C). Use separate forms when categories differ.
- Enter line items accurately: Record dates, proceeds, costs, or other bases to calculate gain or loss. Report sales and explicitly report stock sales. Confirm the correct basis before calculating net gain, net capital loss, and any capital loss carryover.
- Summarize and transfer totals to Schedule D: Combine long-term gains and short-term results to determine the impact on your tax rate, overall tax liabilities, and tax purposes (for example, whether you are filing jointly as married). Please note that the rules outlined here may differ for nonprofit organizations.
- File confidently: Use trusted tax software for tax preparation or work with a certified public accountant. Ensure that all necessary statements are attached as required and verify that each taxable event is included.
- Plan: Maintain records and consider timing strategies that may defer income in future years while staying compliant.
Common Mistakes and How to Avoid Them
When preparing IRS Form 8949 (2012), avoid these common errors that can lead to reporting issues or an unexpected tax bill:
- Missing or misclassified transactions: Report all asset sales and ensure every disposition of capital assets is entered correctly. Although Box D may appear on older broker statements, it generally does not apply to individual filers for the 2012 tax year.
- Confusing short-term and long-term results: Remember that short-term gains are taxed at ordinary income tax rates, while long-term gains belong in Part II and often qualify for lower rates.
- Incorrect adjustment codes: Using the wrong Code B or forgetting to include an adjustment can distort your overall gain and cause mismatches with IRS data.
- Incomplete documentation: Verify all entries with your own records and maintain detailed records for at least three years.
- Incorrect income alignment: Always verify your totals against your income level and confirm that you used the correct ordinary box for accurate reporting.
By double-checking details and organizing information carefully, you can file accurately and avoid delays or additional correspondence from the IRS.
What Happens After You File
After you submit IRS Form 8949 (2014) with your tax return, the IRS reviews the information to confirm that your reported capital gains and losses match the data on Forms 1099-B or 1099-S filed by brokers and closing agents. If everything aligns, your return is processed, and you’ll receive your refund or confirmation of any balance due.
If discrepancies are found, the IRS may send a CP2000 notice requesting clarification or additional documentation. Respond promptly with supporting records to resolve the issue. Ensure you retain all transaction statements and related forms for a minimum of three years, in case the IRS reviews or audits your filing at a later time. Review how to respond effectively to an IRS CP2000 notice when the IRS identifies differences in your reported investment activity.
FAQs
What are capital gains, and why do they matter for Form 8949 (2012)?
Capital gains occur when you sell an investment or property for more than you paid. Form 8949 helps you list each sale, allowing the IRS to verify your total gain or loss for the year.
How do I report stock sales on Form 8949?
You must report stock sales individually, showing the description, sale date, proceeds, and cost or other basis. Each transaction should be entered under the correct category—Box A, Box B, or Box C—depending on how it was reported to the IRS.
What’s the difference between short-term and long-term capital gains?
A short-term gain applies to assets held for one year or less and is taxed at ordinary income rates. A long-term capital gain applies to assets held for more than a year and usually benefits from lower tax rates.
Do I need to report digital assets on Form 8949?
Yes, digital assets, such as cryptocurrency, are considered dispositions of capital assets. You must report these sales or exchanges just like other investments, including the purchase date, sale date, and resulting gain or loss.
How are capital losses handled on Form 8949?
You should list any capital losses to offset capital gains. If your losses exceed your gains, you may deduct up to $3,000 ($1,500 if married filing separately) and carry forward the remainder to future years.
