How to Report 1099-B: Form 8949, Schedule D, and Wash Sales

To report a 1099-B, list each sale on Form 8949, total the sections, carry those totals to Schedule D, and bring the net gain or loss onto line 7 of your Form 1040. Your broker files a copy of the same 1099-B with the IRS, so the figures on your return must match what the broker reported. A mismatch can produce a notice or an accuracy-related penalty of 20% of any underpaid tax.¹

Read the 1099-B First

A broker issues a 1099-B for each person who sold stocks, bonds, mutual funds, options, or other securities during the year, whether the trades made money or not.² Four boxes do the real work on your return:³

Box 1b (date acquired) and Box 1c (date sold) together set your holding period, which decides whether the gain is short-term or long-term.
Box 1d is gross proceeds — the cash credited to your account from the sale.
Box 1e is cost basis, meaning what you originally paid plus adjustments like reinvested dividends or commissions.
Box 1g is any wash sale loss the broker has disallowed.

Box 1d minus Box 1e gives the gain or loss on that trade. Positive is a taxable gain; negative is a capital loss that can offset other income.

Covered vs. Non-Covered

Whether the broker had to send cost basis to the IRS depends on when you bought the security. Stocks bought before January 1, 2011, mutual funds bought before January 1, 2012, and most bonds bought before January 1, 2014 are non-covered.³ For those, Box 1e may be blank or shown only as a courtesy. You are responsible for the basis from your own records, and the transaction goes on a different section of Form 8949.

Sort Trades Before You Write Anything

Form 8949 has six category boxes at the top, and every trade goes into one of them. Two questions decide which:⁴

Short-term (held one year or less) or long-term (held more than one year)?⁵
Did the broker report basis to the IRS?

That gives you six buckets:

Box A (short-term, basis reported) and Box D (long-term, basis reported). Most recent brokerage sales.
Box B (short-term, basis not reported) and Box E (long-term, basis not reported). Non-covered securities.
Box C (short-term) and Box F (long-term). No 1099-B was issued at all.

Use a separate Form 8949 for each category you have trades in. Short-term and long-term gains are taxed differently, and separating covered from non-covered lets the IRS reconcile against what the broker reported.

Fill In Form 8949 Line by Line

For every trade in a category, enter the description of the asset, date acquired, date sold, proceeds, and cost basis. If the numbers need to be corrected, put a code in column (f) and the dollar amount of the adjustment in column (g).⁶ The most common code is “W” for a wash sale, and the disallowed loss goes in column (g) as a positive number.

When every trade in the category is entered, total columns (d), (e), and (g) and compute the net gain or loss.

Move the Totals to Schedule D and Form 1040

Schedule D is the summary. Short-term subtotals from Form 8949 flow to Part I of Schedule D on the line matching the category box you used; long-term subtotals go to Part II.⁷ Schedule D nets short-term against long-term and produces the single figure that appears on line 7 of Form 1040.

The Shortcut That Skips Form 8949

If every one of your trades had basis reported to the IRS and none of them need adjustments, you can bypass Form 8949 and enter the totals directly on Schedule D — line 1a for short-term, line 8a for long-term.⁸ Anything in Box 1f or 1g of the 1099-B, any wash sale, collectible, or Qualified Opportunity Fund transaction, and the shortcut is off the table. You file Form 8949 line by line.

Wash Sales Are the Adjustment You’ll Most Likely Face

You cannot deduct a loss on a security if you buy a substantially identical one within 30 days before or 30 days after the sale.⁹ The broker flags the disallowed amount in Box 1g. On Form 8949, enter the sale as usual, put code “W” in column (f), and enter the disallowed loss as a positive number in column (g).⁶ The loss is not lost; it gets added to the basis of the replacement shares and comes back when you sell them.

Tax software imports the wash sale and handles the adjustment. Filing by hand and forgetting it is a fast way to trigger a mismatch notice.

Capital Losses and the $3,000 Limit

Losses first offset gains of the same character, then the other character, and any net loss left over reduces ordinary income by up to $3,000 per year ($1,500 if married filing separately).¹⁰ Anything above that carries forward indefinitely until it’s used up.¹¹ Schedule D walks you through the netting; you don’t compute it separately.

If the 1099-B Is Wrong

Brokers get cost basis wrong more often than you might expect, especially on shares from employee stock plans, dividend reinvestment, corporate mergers, or inheritance. Contact the broker first and ask for a corrected form. If a corrected 1099-B doesn’t arrive in time, report the correct numbers on your return and use the adjustment columns on Form 8949 to reconcile the difference.¹² If the broker still hasn’t issued a correction by the end of February, you can call the IRS at 800-829-1040. Filing the broker’s wrong number just because it’s on the form does not shift the tax liability; you owe the correct amount either way.