Stocks, Crypto, and More: How Form 8949 Tracks Your Capital Gains

Sold a few stocks last year? Traded crypto on an overseas exchange? Maybe even let go of that rental apartment back in the States? Congratulations—you’ve just earned yourself a date with Form 8949.

This little IRS form is where you list every taxable sale: what you paid, what you sold for, and how much you actually gained (or lost). For U.S. expats, it’s especially important because your brokerage statements or crypto platforms might be reporting sales straight to the IRS—even if you’re thousands of miles away. Form 8949 keeps you in sync with those records, and ultimately flows into your Form 1040 to determine how much tax you owe.

Bottom line? If you buy and sell investments, the IRS wants the receipts—and Form 8949 is how you hand them over.

What is IRS Form 8949?

At its core, Form 8949 is the Internal Revenue Service’s way of making sure every stock sale, crypto trade, or other disposition of capital assets is properly tracked. It’s filed alongside Schedule D and rolls up into your Form 1040, where it affects your overall tax return and final liability.

The form is split into two parts:

• Part I (short-term): Assets held one year or less, taxed at your ordinary income tax rates.
• Part II (long-term): Assets held more than one year, generally taxed at preferential long-term capital gains rates.

Each transaction gets its own line and must include details like:

• Description of property (stock, crypto, real estate, partnership interest, etc.)
• Date acquired and date sold
• Proceeds (sales price) — column (d)
• Cost or other basis — column (e)
• Adjustment codes — column (f) for things like wash sales or corrections
• Adjustment amount — column (g), if applicable
• Gain or loss — column (h), calculated after adjustments

Form 8949 is the IRS’s default way of reporting capital asset sales—but there are exceptions. If every transaction is reported on Form 1099-B with the correct basis provided to the IRS and no adjustments are needed, you can skip the form and report the totals directly on Schedule D.

In all other cases, you must file Form 8949, often preparing separate forms for each category of transaction (short-term with basis reported, short-term without basis, long-term, etc.)

For U.S. expats, this step is critical: your overseas brokerage or crypto exchange may not always report directly to the IRS. Even so, you’re required to disclose sales, holding periods, and capital gains or losses in full.

Who needs to file Form 8949?

If you’ve sold or exchanged a capital asset, chances are you’ll need to file Form 8949. That includes U.S. citizens, resident aliens, and yes—expats living abroad.

Covered assets include:

• Stocks and bonds
• Mutual funds and ETFs
• Cryptocurrency (whether on a U.S. or foreign exchange)
• Real estate—though property used for business purposes is usually reported on Form 4797 instead

That said, not everyone has to slog through every line of Form 8949. If all your transactions are already reported on a Form 1099-B (or a broker’s substitute statement) and no adjustments are needed, you may be able to skip the form and report totals directly on Schedule D.

For everyone else, Form 8949 is the IRS-approved way to itemize dispositions of capital assets—matching each sale against your acquisition details and ensuring gains or losses are properly reported.

Breaking down the categories: Boxes and parts

Form 8949 isn’t just about listing sales—it’s about sorting them into the right buckets so the IRS can see exactly how your capital gains reporting lines up with broker records. That’s where the boxes and parts come in.

Each filer has to check a box for the type of transaction:

• Box A: Short-term transactions reported on a 1099-B with basis provided to the IRS
• Box B: Short-term transactions reported on a 1099-B without basis
• Box C: Short-term transactions not reported on a 1099-B
• Box D: Long-term transactions reported on a 1099-B with basis provided
• Box E: Long-term transactions reported on a 1099-B without basis
• Box F: Long-term transactions not reported on a 1099-B

Short-term sales go in Part I, long-term in Part II—and you’ll need a separate Form 8949 for each box that applies. So if you sold stock with basis reported, crypto with no 1099-B, and a piece of real estate, that’s three forms right there.

It sounds tedious (because it is), but this system is how the IRS ensures every disposition of capital assets is accounted for, whether your broker did the reporting or you have to do the heavy lifting yourself.

How Form 8949 works with Schedule D

Form 8949 is where you do the detail work—line by line, transaction by transaction. Schedule D is where those numbers get rolled up into neat totals for the year.

Here’s how it fits together:

• Each sale or exchange of a capital asset gets listed on Form 8949, with its date acquired, date sold, cost basis, and gain or loss.
• The totals from each category (short-term and long-term) then flow onto Schedule D, where you see your net capital gain or loss for the year.
• Capital losses reported on Form 8949 can offset capital gains dollar-for-dollar. If your losses exceed your gains, you can use up to $3,000 against ordinary income and carry the rest forward to future tax years.

From there, Schedule D links directly into your Form 1040, adjusting your AGI and ultimately your tax liability.

Special cases and adjustment codes

Some capital asset sales are straightforward—you report the price you paid, the price you sold for, and you’re done. Others require a bit of editing, and that’s where adjustment codes step in.

Adjustment codes tell the IRS why the gain or loss you’re reporting doesn’t match what’s on a broker statement. Common examples include:

• Wash sales (Code W): When you sell a stock at a loss and buy it back within 30 days, that loss isn’t deductible.
• Incorrect cost basis (Code B): If your broker misreported your basis, you’ll need to adjust it.
• Other adjustments: Such as corporate actions, returns of capital, or nondeductible losses.

Once the code is entered, the corrected gain or loss goes in Column (g). This ensures your totals reflect what the IRS actually allows, not just what the broker reported.

There are also special situations to flag:

• Qualified dividends and Qualified Opportunity Fund (QOF) investments may receive preferential tax treatment.
• Lump-sum distributions can trigger unique rules on reporting.
• Substitute statements from brokers (instead of Form 1099-B) are acceptable, but you still need to make sure the data is slotted into the right boxes and categories.

Cryptocurrency and other alternative assets

The IRS has made one thing crystal clear: crypto is property, not currency. That means every sale, swap, or trade is a taxable event—and belongs on Form 8949.

Key points to know:

• Reporting every trade: Selling Bitcoin for cash, swapping ETH for Solana, or even using crypto to buy something—all of it is taxable.
• No 1099-Bs from many exchanges: Traditional brokerages send you a neat form, but many crypto exchanges (especially overseas) don’t. That means you must track purchase price, sales price, and holding period yourself.
• Qualified Opportunity Funds (QOFs): If you reinvest capital gains into a QOF, special reporting rules apply. Form 8949 documents the deferral or potential exclusion of those gains.
• Accuracy matters: With digital assets, misreporting—or skipping the right check box—can quickly raise IRS scrutiny.

Filing and compliance essentials

Form 8949 isn’t just another box to check—it’s one of the most common triggers for IRS notices if done incorrectly. A few essentials to keep in mind:

• E-file vs. paper filing: Most modern tax software integrates Form 8949 seamlessly into your return, pulling totals into Schedule D and then onto Form 1040. Paper filing is still an option, but given the transaction detail involved, e-filing is both faster and safer.
• Mutual funds, ETFs, and pooled investments: Mutual funds, ETFs, and other pooled investments can generate many transactions—but not every dividend reinvestment is a sale. Dividend reinvestments count as new purchases and increase your cost basis. You only report sales of shares on Form 8949 when you actually dispose of them. Capital gain distributions from funds are reported on Form 1099-DIV and may flow to Schedule D, but they don’t require a Form 8949 line unless there’s an actual sale.
• Accuracy matters: Mismatches between your form and broker reports are one of the top reasons taxpayers get IRS letters. Double-check cost basis, holding periods, and adjustment codes before filing.
• Know when to call in help: If you’ve got dozens (or hundreds) of trades—stocks, crypto, or foreign exchanges of capital assets—the safest move is working with a tax professional who can ensure compliance and minimize tax liability.

The bottom line on your capital gains

Form 8949 may not be glamorous, but it’s the IRS’s favorite way to keep tabs on your gains and losses. Fill it out correctly, and your tax liability is calculated smoothly, your tax preparation is less stressful, and you stay on the right side of U.S. compliance.

If you’re an expat juggling foreign brokers, crypto wallets, or investments scattered across time zones, “smooth” might not be how you’d describe it. That’s where Bright!Tax comes in. Our expat tax experts specialize in helping Americans abroad untangle the rules, claim every deduction and credit, and file with total confidence.

Get in touch with Bright!Tax today, and let’s make your next tax season a lot less complicated—and maybe even a little more rewarding.

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