What Form 8949 Is For
IRS Form 8949 (2014) reports the sale or exchange of capital assets such as stocks, bonds, mutual funds, and real estate. It lists each transaction’s purchase price, sale date, proceeds, and gain or loss. Working with Schedule D, it summarizes total capital gains and losses. Individuals, corporations, estates, and trusts utilize it to reconcile Forms 1099-B or 1099-S, ensuring accurate reporting of investment income to the IRS.
Access structured guidance on essential IRS forms through our IRS Form Help Center to support accurate capital asset reporting.
When You’d Use Form 8949
You’ll need to file IRS Form 8949 (2014) if you sold, exchanged, or otherwise disposed of capital assets—such as stocks, bonds, mutual funds, or real estate—during the 2014 tax year. The form reports each sale’s date, price, gain, or loss, helping the IRS verify your investment income against the information reported by your broker or closing agent.
Situations that Require Filing
- Capital Asset Sales: Any sale or exchange of property held for investment or personal use that results in a gain or loss.
- Late Filings: If you forgot to include these transactions on your original Form 1040, file an amended return (Form 1040X) with a corrected Schedule D and Form 8949.
- Corrected Information: If your broker issues a revised Form 1099-B, or you discover missing transactions or errors in cost basis reporting.
Failing to report these transactions can lead to penalties, additional tax, or interest charges, so it’s essential to submit the form whenever you have taxable capital transactions.
Key Rules or Details for 2014
When completing IRS Form 8949 (2014), it is essential to follow the reporting rules that applied for that tax year to ensure accurate reporting of capital gains and losses. Each sale or exchange of a capital asset must be classified correctly as either short-term or long-term and entered in the corresponding section of the form.
- Short-Term vs. Long-Term: Assets held for one year or less are considered short-term, while those held for more than one year are long-term. Long-term gains generally receive lower tax rates than short-term gains.
- Broker Reporting: For 2014, brokers had to report the cost basis of most stocks on Form 1099-B, allowing the IRS to confirm that reported amounts matched your federal return.
- Inherited Property and Loss Rules: Inherited assets are always valued at their fair market value as of the date of death, serving as the basis for their long-term treatment. The wash sale rule disallows losses when repurchasing similar stock within 30 days. Taxpayers may deduct up to $3,000 in capital losses ($1,500 if married filing separately) each year, with any unused losses carried forward.
If prior filings omitted capital asset sales, learn how to restore compliance using our guide to filing unfiled federal returns.
Step-by-Step (High Level)
- Gather Records: Collect Forms 1099-B and 1099-S, broker statements, and notes on assets owned, including personal property, business holdings, or your primary home. Having complete records ensures that every gain or loss can be accurately determined.
- Sort Transactions: Divide sales into those producing a short-term capital gain and those qualifying for long-term capital gains. Identify any adjustments that must be excluded, such as wash sales, and mark the rest that require specific codes on Form 8949.
- Complete the Form: Enter each sale’s description, dates, proceeds, and cost basis. Total each category and transfer the figures to Schedule D. Note your filing status—such as married filing jointly—if it affects reporting limits.
- Prepare and Submit Returns: Move totals to your tax return and, if applicable, your state tax return. Use IRS e-file to electronically file your tax return, ensuring that you check for the browser’s locked padlock icon before entering your account information to safeguard your money and personal data.
- Finalize and Follow Up: Pay any outstanding balance, claim your refund, and retain the proof for the current tax year. If any forms are lost, contact your broker or the IRS for further information. Respond promptly if a notice with “Form 8949” in the subject requests clarification on the reported profit.
Common Mistakes and How to Avoid Them
You must report your capital gains and losses accurately when filing IRS Form 8949 (2014). The following are common mistakes and how to avoid them:
- Incorrect transaction classification: A typical example is recording a long-term sale as a short-term sale. Review the criteria carefully—assets held one year or less are short-term, and those held longer are long-term. Avoid this issue by confirming purchase and sale dates before entering data.
- Incorrect cost basis entry: Using an incorrect purchase price or failing to make necessary adjustments can result in distorted financial results. Compare your records with Form 1099-B to confirm accuracy before filing.
- Missing adjustment codes: Forgetting to include wash-sale or exclusion codes can trigger IRS notices. Refer to the adjustment code chart in the IRS instructions to ensure all codes are included.
- Incomplete documentation: Missing proof of sales or purchases can delay your return. Keep all trade confirmations and statements for at least three years.
What Happens After You File
After filing IRS Form 8949 (2014) with your tax return, the IRS matches your reported capital gains and losses with broker data from Forms 1099-B or 1099-S. If differences appear, you may receive a CP2000 notice. Respond with supporting documentation and retain all records for at least three years for verification purposes.
If the IRS identifies differences between your Form 8949 entries and broker data, review our detailed guide to handling an IRS CP2000 underreporting notice.
FAQs
Do I need to file Form 8949 if I only have capital gains distributions from mutual funds?
If you received only capital gains distributions reported on Form 1099-DIV, you generally do not need Form 8949. You can report those amounts directly on Schedule D of your Form 1040.
How do I report capital gains and losses from selling capital assets, such as stocks or bonds?
You must list each sale of capital assets on Form 8949, showing the purchase date, sale date, proceeds, and cost basis. The totals are then transferred to Schedule D to calculate your overall capital gains and losses.
What qualifies as long-term capital gains versus short-term?
A long-term capital gain applies to property held for more than one year, while a short-term gain covers assets held one year or less. Long-term gains are typically taxed at a lower rate than short-term gains.
How should I report capital gains from inherited property?
When you sell inherited property, it is automatically treated as long-term, regardless of how long you’ve held it. Use the fair market value on the date of death as the cost basis when completing Form 8949.
What if I have both capital gains and capital losses in the same year?
You’ll report capital gains and capital losses together on Form 8949 and Schedule D. Losses offset gains, and if your losses exceed your gains, you can deduct up to $3,000 ($1,500 if married filing separately) against ordinary income.
