IRS Form 8949

From AIM Financial | Tax Preparation Services in Grand Rapids, Kentwood, Wyoming, and West Michigan

Did you sell stocks, mutual funds, cryptocurrency, or other investments during the year? If so, you may need to report those transactions on your federal income tax return. IRS Form 8949, Sales and Other Dispositions of Capital Assets, helps taxpayers calculate and report gains and losses from the sale or exchange of investments and other capital assets.

For individuals and families preparing their taxes in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan, understanding Form 8949 can help prevent reporting errors and identify the correct tax treatment of investment transactions.

AIM Financial helps taxpayers understand IRS tax forms and prepare returns that accurately reflect their financial activities.

What Is IRS Form 8949?

Form 8949 is used to report sales and exchanges of capital assets, including many stocks, bonds, investment holdings, digital assets, and other property. It helps reconcile transaction information reported by brokers and other sources with the amounts entered on your tax return.

The totals from Form 8949 generally flow to Schedule D (Form 1040), Capital Gains and Losses, where capital gains and losses are combined and calculated for the return.

Not every transaction requires an individual entry on Form 8949. Certain transactions can be reported directly on Schedule D when they meet the applicable IRS requirements. The correct approach depends on the information reported by the broker and whether adjustments are necessary.

Who May Need to File Form 8949?

You may need Form 8949 if you sold or exchanged capital assets during the tax year. Common examples include:

• Selling shares of stock or mutual funds.
• Selling bonds or other investment securities.
• Selling or exchanging cryptocurrency or other digital assets held as investments.
• Selling certain personal property at a gain.
• Disposing of inherited investment property.
• Reporting adjustments to information provided on Form 1099-B, Form 1099-DA, or Form 1099-S.

For example, a West Michigan taxpayer who sells shares through an investment account may receive a Form 1099-B from the broker. Someone who disposes of digital assets may receive Form 1099-DA or may need to use personal transaction records to determine the correct reporting.

Receiving an information statement does not necessarily mean the reported amount is the taxable gain. The original cost and any applicable adjustments are important.

How Do You Complete IRS Form 8949?

Form 8949 may look complicated at first, but understanding its main sections makes the process easier.

Step 1: Gather your transaction records

Collect brokerage statements, Forms 1099-B and 1099-DA, sales records, purchase confirmations, and digital asset transaction histories. You may also need records of commissions, fees, stock splits, inherited property values, or other adjustments.

Good recordkeeping is especially important when investments were purchased over several years or transferred between accounts.

Step 2: Determine whether the transaction is short-term or long-term

Form 8949 has two main parts:

• Part I — Short-term transactions: Generally, assets held for one year or less before being sold.
• Part II — Long-term transactions: Generally, assets held for more than one year before being sold.

The holding period can affect the tax rate that applies to a gain. Special rules may apply to certain transactions, so the purchase and sale dates must be reviewed carefully.

Step 3: Enter the sale and cost information

The form asks for information such as a description of the property, acquisition date, sale date, sales proceeds, cost or other basis, and any applicable adjustments.

Your cost basis generally begins with what you paid for the investment, including eligible acquisition costs. Adjustments may be needed for events such as stock splits, certain distributions, or other changes affecting basis.

For example, if you purchased stock for $2,000 and later sold it for $2,800, your preliminary gain would be $800 before considering applicable fees or adjustments. The taxable result may differ if your basis needs to be adjusted.

Step 4: Correct any reporting differences

A broker may report proceeds and cost basis to the IRS, but the information may not always tell the entire story. Some transactions require adjustments to avoid reporting the wrong gain or loss.

Examples include transactions involving nondeductible wash-sale losses, certain inherited assets, or other situations in which the reported basis needs correction. Do not change reported figures without a valid reason and supporting documentation.

Step 5: Transfer the totals to Schedule D

After completing the applicable sections of Form 8949, use the instructions to transfer the totals to Schedule D. Schedule D combines the relevant transactions and helps determine the overall capital gain or loss reported on the tax return.

Use the Form 8949 instructions for the specific tax year being filed. The form and reporting categories can change.

What About Cryptocurrency and Other Digital Assets?

Digital asset reporting is an important consideration for taxpayers who buy, sell, exchange, or otherwise dispose of cryptocurrency.

For the 2025 tax year, the IRS Form 8949 instructions include separate categories for short-term and long-term digital asset transactions. This reflects changes to the form’s reporting structure.

Selling cryptocurrency held as an investment can create a capital gain or loss. Exchanging one digital asset for another or using digital assets to purchase goods or services may also be a taxable disposition, depending on the circumstances.

However, not every digital asset transaction belongs on Form 8949. Digital assets received as wages or business income, for example, may need to be reported under the rules that apply to that type of income. Taxpayers should keep records of acquisition dates, sale dates, proceeds, and cost basis.

Common Form 8949 Mistakes to Avoid

When preparing a tax return, watch for these common errors:

• Reporting sales proceeds as if they were the taxable gain.
• Omitting investment sales because no tax was withheld.
• Using an incorrect cost basis.
• Failing to report digital asset disposals.
• Mixing short-term and long-term transactions.
• Overlooking adjustments such as wash-sale rules.
• Assuming that a broker’s statement eliminates every reporting responsibility.
• Using the wrong year’s form or instructions.

Accurate reporting starts with complete records and a clear understanding of how each transaction should be treated.

How AIM Financial Can Help With Form 8949

Investment sales can make tax preparation more complicated, particularly when you have multiple brokerage accounts, cryptocurrency activity, inherited investments, or transactions that require adjustments.

AIM Financial provides tax preparation assistance for individuals and families in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan. We can help review your tax documents, identify relevant reporting requirements, and work through capital gain and loss information for your federal income tax return.

If you sold stocks, investments, or digital assets and are unsure how to report them, contact AIM Financial for tax preparation assistance. Addressing these questions before filing can help reduce mistakes and make the tax filing process more manageable.

Final Thoughts

IRS Form 8949 is an important tool for reporting capital asset transactions and reconciling sales information with your tax return. Understanding your cost basis, holding period, and applicable adjustments can make a significant difference in calculating the correct gain or loss.

For help understanding IRS forms and preparing your taxes in the Grand Rapids area, contact AIM Financial.

This article is for general educational purposes and is not individualized tax advice. Reporting requirements depend on the facts of each transaction and the applicable tax year. Consult the official IRS form and instructions before filing.