Schedule D
Definition
The IRS tax form used to report capital gains and losses from the sale of investments, attached to your Form 1040.
Schedule D (Form 1040) is where all your capital gains and losses come together on your federal tax return. It summarizes short-term and long-term gains and losses, calculates your net capital gain or loss, and determines the tax owed on investment income.
The form is divided into two parts: Part I for short-term gains and losses (assets held one year or less) and Part II for long-term gains and losses (assets held more than one year). Each part totals your gains and losses, then Part III combines them to calculate your net result.
If you have more than a few transactions, you'll also need Form 8949, which lists individual transactions before they flow into Schedule D. Many investors can use the summary totals from their 1099-B forms directly on Schedule D if the cost basis was correctly reported to the IRS.
Schedule D also handles special situations including capital loss carryforwards from previous years, gains from installment sales, and gains reported on Schedule K-1 from partnerships. The worksheet in the Schedule D instructions determines whether your long-term gains qualify for the preferential 0%, 15%, or 20% rates.
For investors with crypto, stocks, real estate, and other assets, Schedule D is the central document that captures all capital transactions. Errors on Schedule D are one of the most common IRS audit triggers for individual returns.
Where this appears in Clarity
Clarity automatically tracks and calculates these concepts across your connected accounts.
Related Terms
Frequently Asked Questions
Do I need Schedule D if I only have crypto?
Yes. All capital gains and losses, including those from cryptocurrency, are reported on Schedule D. Crypto dispositions are listed on Form 8949 and the totals flow into Schedule D, just like stock sales.
What happens if I have a net capital loss on Schedule D?
You can deduct up to $3,000 of net capital losses against ordinary income ($1,500 if married filing separately). Any excess loss carries forward to future years via the Capital Loss Carryover Worksheet, indefinitely until used up.