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Video: Taxes 101: Buying and Selling Stocks

Updated for Tax Year 2016


OVERVIEW

Learn everything you need to know to report stock gains and losses on your tax return in 5 easy steps and simple tips to help you maximize your deductions this tax season.


Hello, I’m Victoria from TurboTax with some tax filing tips when it comes to buying and selling stocks.

You report your stock gains and losses in two places, Form 8949 and a Schedule D, to verify that your broker has supplied the IRS with a correct 1099-B. So follow these simple steps:

Step #1: Divide the transactions into short- and long-term because they are taxed differently. If you’ve had the stock for one year or less, it’s short-term.

Step #2: List each of the 1099-B transactions on Form 8949, plus any other capital asset transfers you made during the year in the appropriate short-term or long-term section of the form.

Step #3: List the stock, the number of shares sold, bought and sold dates, the amount you paid for it and what it sold for, and any adjustments you made to the gains and losses reported.

Step #4: For each transaction, check either Box A if your broker reported the basis of the stock sold to the IRS, Box B if the basis of the transaction was not reported to the IRS, or Box C for all other transactions. Use separate Forms 8949 for transactions where the basis was reported and transactions where it wasn’t.

Step #5: If you bought stock before the Form 8949 reporting requirements were in place, you have to figure out the buy and sell information, then report it to the IRS on a separate form. If all Forms 1099-B you received show that the cost basis for the stock you sold was reported to the IRS by the broker, then you can skip Form 8949 and just report summary information for your transactions on Schedule D.

For more tips and information to help you get your taxes done smarter, visit TurboTax.com.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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