IRS Form 8949 (2019): Capital Gains Filing Instructions

What IRS Form 8949 Is For 

IRS Form 8949 (2019) is used to report the sale or exchange of capital assets, such as stocks, bonds, real estate, mutual funds, or cryptocurrency. The form lists each transaction’s purchase price, sales price, gain or loss, and any adjustments. It helps the Internal Revenue Service (IRS) verify the accuracy of amounts reported on Form 1099-B and ensures totals flow correctly to Schedule D on your tax return. 

Taxpayers—including individuals, small business owners, and estates—use this form to document capital gains and losses from both short-term and long-term transactions, which determine how those gains are taxed under federal law.

When You’d Use IRS Form 8949

You should file IRS Form 8949 (2019) when you sell or exchange capital assets such as stocks, bonds, cryptocurrency, mutual funds, or real estate. The form reports each transaction’s purchase price, sales price, and resulting gain or loss, ensuring your capital gains and losses are properly documented for tax purposes.

You’ll typically use Form 8949 in the following situations:

1. Reporting investment sales: File when you have sold or exchanged property that affects your federal income tax return, even if the result is a loss or no gain.
   
   
2. Filing a late or amended tax return: Submit Form 8949 with an amended return if you missed the 2019 deadline or found errors in your original filing.
   
   
3. Correcting brokerage information: Update your return if a corrected Form 1099-B changes your cost basis or transaction details.

Accurate filing helps the IRS match your reported transactions, preventing processing delays or notices. Visit our IRS Form Help Center to learn more about other IRS forms linked to capital gain reporting and Schedule D requirements.

Key Rules and Details for 2019

When filing IRS Form 8949 (2019), the IRS requires details for each capital asset transaction to ensure accuracy and compliance. Every sale or exchange must include the purchase price, sales price, and resulting gain or loss. The following key rules apply for the 2019 tax year:

• Transaction categories: Each transaction must be entered in either Part I for short-term capital gains (assets held one year or less) or Part II for long-term capital gains (assets held more than one year).
  
  
• Cost basis reporting: Filers must select boxes A–F at the top of each part to show whether the cost basis was reported to the Internal Revenue Service (IRS) on Form 1099-B.
  
  
• 2019 reporting changes: The IRS required new disclosures for Qualified Opportunity Fund (QOF) investments, including deferred or eligible gains.
  
  
• Expired exclusions: The empowerment zone gain exclusion was no longer available for dispositions after 2018.
  
  
• Adjustment codes: Common codes include:
  
  
  • W – Wash sale loss is disallowed
    
    
  • B – Incorrect cost basis reported
    
    
  • E – Expenses are not shown on broker statements

These rules ensure your capital gains and losses flow correctly to Schedule D on your federal income tax return. Visit our page on IRS bank levies to learn more about enforcement actions that may occur when capital gains are reported incorrectly.

Step-by-Step Guide (High Level) 

1. Gather records: Collect Forms 1099-B and 1099-S from each taxable account, plus details for installment sales, involuntary conversions, and other dispositions. Ensure the correct basis is verified for each sale.
   
   
2. Sort by holding period: Separate short-term gains (one year or less) and long-term gains (more than a year). Compute realized gains and capital losses for all transactions reported.
   
   
3. Complete Form 8949: Enter each capital gain or loss, then carry totals to Schedule D and your Form 1040. Ensure filing statuses, such as married filing jointly, are correct because they affect your tax rate.
   
   
4. Calculate totals: Determine net gain or net capital loss and apply any capital loss carryover. These results affect taxable income and may change ordinary income brackets.
   
   
5. Consider related items: Include investment income, interest income, and any attempt to defer capital gain invested. Review potential additional tax or additional tax payment for capital gains taxes.
   
   
6. Verify rules and timing: Verify the IRS limits, the original filing deadline, and the current guidance on the IRS website. Address non-business negative debts if applicable.
   
   
7. File and keep records: Electronically file your federal and state tax returns. If you owe taxes, pay on time and keep records of your payments for future tax years.

Common Mistakes and How to Avoid Them 

Many individual taxpayers make avoidable errors when completing IRS Form 8949 (2019). The following are some of the most frequent problems—and ways to prevent them:

• Incorrect cost basis: Many filers enter the wrong numbers in Column B or Column C, which changes the calculated overall gain. Always verify figures with broker statements before completing your original tax return.
  
  
• Omitting transactions: Even if you sold only a few assets, report most transactions individually or attach summaries from other forms. Missing data can cause mismatches on your Schedule D form.
  
  
• Forgetting dividends or adjustments: Ensure that any dividends received, deductions, or adjustments affecting capital gains are correctly recorded in your tax filing.
  
  
• Choosing paper checks instead of direct deposit: Using direct deposit for refunds reduces errors and speeds up processing.
  
  
• Misreporting totals: Review all numbers carefully; inaccurate entries can distort gross income and trigger IRS notices.

Visit our Offer in Compromise page to learn more about options for settling tax balances caused by capital gain corrections or adjusted cost basis entries.

What Happens After You File 

After you submit IRS Form 8949 (2019) and your original return, the IRS reviews your data to confirm that all reported sales match information from brokers and other financial institutions. If you e-file, processing typically occurs faster, and you can track your status online. The IRS scrutinizes every transaction to calculate your short-term capital losses and long-term gains accurately. 

Any mismatch may result in a notice requesting clarification or documentation. If your return includes adjustments for nonbusiness bad debts, the IRS will verify that these were correctly reported as capital losses rather than ordinary deductions. Once everything is confirmed, the IRS finalizes your refund or balance due, applying any overpayments to future obligations or returning funds through your chosen payment method.

FAQs

Do I need to report every sale of capital assets on Form 8949?

Yes, every sale or exchange of capital assets—including stocks, cryptocurrency, or real estate—must be listed to ensure accurate tax reporting and avoid IRS mismatches.

How do I calculate my gain or loss for each transaction?

You’ll subtract the asset’s cost basis from its sales price to find your gain or loss. Always double-check your data against broker statements before filing.

Where do I report my capital gains and losses on my return?

Your capital gains and losses from Form 8949 are transferred to Schedule D, which summarizes the totals on your Form 1040 for final tax calculation.

Do I need to include investment income when completing Form 8949?

While investment income, such as dividends and interest, is reported separately, it helps determine your overall tax picture and should align with the totals on your Form 8949.

How can I correct errors if I have already filed my return?

If you discover an error, file an amended tax return or amended return using Form 1040-X and a corrected Form 8949.