The Internal Revenue Service (IRS) Form 1040 U.S. Individual Income Tax Return allows you to itemize your income. If you own stocks (capital assets), you should probably use this long form for your taxes. Here is where you report a stock loss on your income tax return.
“IRS Form 1040 or 1040NR Schedule D”
As you fill out your IRS Form 1040, you will see a section in the center of the page for your “Income.” Stocks gains (losses) are counted as income by the IRS. Write down your stock losses for the year on Form 1040 line 13. The instructions will direct you to “Attach Schedule D if required.” If not required, you must check the box.
Form 1040NR is the U.S. Nonresident Alien Income Tax Return. Tax filers should report a stock loss on line 14 of this form. The instructions will direct you to “Attach Schedule D if required.” If not required, you must check the box.
Schedule D Capital Gains and Losses is used for both the 1040 and 1040NR. The instructions request that you fill out Form 8949 before completing all of Schedule D. Schedule D has two parts: Part I for Short-Term Capital Gains and Losses Held Less Than One Year and Part II for Long-Term Capital Gains and Losses Held More Than One Year.
Schedule D lines 1a through 3 have columns d through h: d is sales price, e is cost, g is adjustment and h is for your stock gain (or loss). For negative amounts, the tax filers should write the figures in (parentheses). At this point, the IRS advises tax filers to complete Form 8949. When Form 8949 is completed, the taxpayer can continue to fill out Schedule D and may need to also fill out the Capital Loss Carryover Worksheet, 28% Rate Gain Worksheet or Qualified Dividends and Capital Gain Tax Worksheet, if they apply.
“IRS Form 8949 Sales and Other Dispositions of Capital Assets”
IRS Form 8949 is basically a place where taxpayers can list their capital assets in more detail: description in column a, price in column d and loss in column h. There is the same breakdown of Part I for Short-Term Assets and Part II for Long-Term Assets. Once you calculate the figure on Form 8949, you can transfer these to Schedule D lines 8b, 9 and 10.