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Form 8949 is used to report the sale or exchange of capital assets, such as stocks, real estate, or cryptocurrencies to the IRS. It details the purchase and sale dates for each transaction, as well as the proceeds, cost basis and any adjustments. This information is then transferred to Schedule D, where gains or losses are totaled for tax purposes, with sections for short-term and long-term transactions. Accurate reporting on Form 8949 is essential for properly calculating capital gains or losses and complying with IRS requirements.

","

If you want to lower your taxes on investments, a financial advisor can optimize your portfolio to lower your tax liability.

","

What Is Form 8949?

","

Form 8949 is an IRS tax document used to report gains and losses from the sale or exchange of capital assets. The form captures detailed information about each transaction, such as dates the asset was acquired and sold, sales proceeds, cost basis and any necessary adjustments. These adjustments account for factors like disallowed losses from wash sales (selling a security at a loss and rebuying it or a substantially identical security to prevent the loss from being deducted for tax purposes) or adjustments related to inherited property.

","

One of the key purposes of Form 8949 is to categorize transactions by how they are taxed. It separates short-term gains or losses (from assets held for one year or less) from long-term gains or losses (from assets held longer than one year), which are taxed at different rates. Taxpayers must also indicate whether and how the transactions were reported to the IRS on Form 1099-B.

","

By requiring taxpayers to list individual sales, Form 8949 provides a comprehensive view of all taxable events, helping to ensure proper calculations when completing Schedule D.

","

Who Needs to File Form 8949?

","

Anyone who sold capital assets during the tax year may need to complete Form 8949, especially if the transactions are reported on Form 1099-B or 1099-S, or were not reported to the IRS at all. This includes:

","

Individuals selling stocks, bonds, cryptocurrency, or other capital assets
Homeowners who sold real estate that was not their primary residence

","

If there are multiple transactions, each needs to be listed, even if there were no profits earned. Any short-term or long-term capital gains or losses must be categorized based on how long the asset was held.

","

Completing Form 8949: Parts I and II

","

Form 8949 is divided into two parts to separate short-term and long-term transactions.

","

Part I is for short-term gains and losses, which apply to assets held for one year or less. Part II covers long-term gains and losses, applying to assets held for more than one year. This distinction is significant because short-term gains are taxed at ordinary income rates, while long-term gains generally benefit from lower, preferential tax rates.

","

Both parts of the form require taxpayers to report transactions based on whether the sales were reported on Form 1099-B. There are three checkboxes in both Part I and Part II:

","

Box A: For transactions reported on Form 1099-B with cost basis provided.
Box B: For transactions reported on Form 1099-B without cost basis.
Box C: For transactions not reported on Form 1099-B.

","

Accurately assigning transactions to the right part and box helps ensure proper tax treatment.

","

Once all transactions are listed, totals from both parts are carried over to Schedule D, where gains or losses are totaled. If the form includes adjustments (e.g., for wash sales), those must be listed in the adjustment column with appropriate codes.

","

Reporting Gains and Losses

","

","

Each line of Form 8949 requires detailed information about the asset sold, including:

","

Description of the asset: Specify the security, cryptocurrency or property
Date acquired: The original purchase date
Date sold or disposed: When the sale or transfer occurred
Proceeds: The amount received from the sale
Adjustments, if any: Adjustments can be made for things like transaction fees or wash sales

","

After listing these details, subtract the cost basis from the proceeds to determine the gain or loss, which you will then list in column (h). Note that wash sale rules may apply if a similar asset was bought shortly before or after selling the original one, disallowing the loss for that year.

","

When to Use Adjustment Codes

","

In some cases, an adjustment to the gain or loss is necessary. For example, if a broker didn’t report the correct cost basis on the 1099-B or a wash sale occurred, adjustments will need to be reported on Form 8949.

","

Common adjustment codes include:

","

Code W: For a wash sale
Code B: When the basis reported by the broker on Form 1099-B is incorrect
Code O: For cases involving adjustments not covered elsewhere
Code T: You received a Form 1099-B (or substitute statement) and the type of gain (or loss) shown in box 2 is incorrect

","

If an adjustment is made, enter the appropriate code in column (f) and the amount of the adjustment in column (g).

","

Transferring Totals to Schedule D

","

Once all transactions are listed and gains or losses are calculated, the totals from Part I and Part II of Form 8949 need to be carried over to Schedule D. This form summarizes the overall net capital gains and losses, distinguishing between short-term and long-term transactions.

","

If the total capital losses exceed gains for the year, taxpayers can deduct up to $3,000 ($1,500 for married individuals filing separately) of the loss against other income. Any remaining losses can be carried forward to future tax years.

","

Bottom Line

","

","

Form 8949 plays a role in organizing and reporting the sale of capital assets, giving taxpayers a way to track gains and losses while meeting IRS requirements. By listing each transaction, including purchase and sale dates, proceeds and cost basis, it helps determine taxable amounts and provides space for adjustments, such as wash sales or discrepancies in 1099-B data. Transferring these totals to Schedule D offers a summary of short-term and long-term gains or losses, allowing for proper calculation of taxes owed or deductions available.

","

Tax Planning for Investments

","$4c","

Photo credit: ©iStock.com/PixelsEffect, ©iStock.com/shih-wei, ©iStock.com/Apiwan Borrikonratchata

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Itemized deductions and the standard deduction are two options that taxpayers can choose when filing their tax returns. The choice affects how much taxable income is reduced, potentially influencing the amount of taxes owed. The standard deduction is a fixed dollar amount that varies based on factors like filing status, while itemized deductions allow for a more customized approach by adding up specific eligible expenses, such as medical costs, mortgage interest or charitable donations. A financial advisor who specializes in tax planning could also help optimize your finances to lower your tax liability.

","

What Is the Standard Deduction?

","

The standard deduction is a set amount that reduces a taxpayer’s taxable income, available to most individuals when they file their federal income tax returns. This deduction requires no supporting documentation, making it a straightforward option for those who do not have significant itemizable expenses.

","

The standard deduction amount is adjusted annually for inflation and is determined by one’s filing status—single, married filing jointly, head of household or married filing separately. The simplicity of the standard deduction often makes it an attractive choice for taxpayers who either do not qualify for numerous itemized deductions or find that their qualifying expenses fall below the set threshold.

","

Filing Status	2024 Standard Deduction	2025 Standard Deduction
Single	$14,600	$15,000
Married Filing Jointly	$29,200	$30,000
Head of Household	$21,900	$22,500
Married Filing Separately	$14,600	$15,000

","

In addition to the standard deduction, taxpayers who are age 65 or older or blind can be eligible for an extra deduction amount. This additional deduction varies based on filing status and the specific condition(s) of the taxpayer. For the 2024 and 2025 tax years, the extra standard deduction amounts are as follows:

","

Filing Status	2024 Standard Deduction	2025 Standard Deduction
Single or Head of Household	$1,950	$2,000
Married Filing Jointly	$1,550 per spouse	$1,600 per spouse
Married Filing Separately	$1,550	$1,600

","

If a taxpayer is both 65 or older and blind, they can claim both additional amounts, effectively doubling the extra deduction. These additional deductions help further reduce taxable income, providing tax relief to eligible individuals.

","

What Are Itemized Deductions?

","

Itemized deductions allow taxpayers to deduct specific expenses from their taxable income instead of taking the standard deduction. This approach can be advantageous if total eligible expenses exceed the standard deduction amount.

","

Common expenses that qualify as itemized deductions include:

","

Medical and dental expenses that exceed a certain percentage of adjusted gross income (AGI)
State and local taxes (SALT) up to the federal cap
Mortgage interest
Charitable contributions
Casualty losses (in federally declared disaster areas)

","

Unlike the standard deduction, itemizing requires that you provide detailed records and receipts to substantiate the deductions claimed. However, itemized deductions offer more flexibility for those with significant qualifying expenses, providing an opportunity to potentially lower taxable income beyond what the standard deduction offers.

","

When Should You Itemize Instead of a Standard Deduction?

","

","

Taxpayers often choose to itemize when their qualifying expenses exceed the standard deduction for their filing status. Itemizing often makes sense for those who have high medical expenses, substantial mortgage interest or large charitable contributions.

","

For example, in 2025, a married couple filing jointly might find that their itemizable expenses, including $15,000 in mortgage interest, $10,000 in state and local taxes and $7,000 in charitable donations, total $32,000. Since this amount is greater than the $30,000 standard deduction for their filing status, itemizing would reduce their taxable income by an additional $2,000, leading to potential tax savings.

","

Evaluating these expenses each year can help determine whether itemizing or taking the standard deduction is more beneficial.

","

How to Itemize Your Deductions

","

By following these steps, you can determine whether itemizing will offer a greater tax benefit when compared with claiming the standard deduction:

","

Gather receipts and records: Collect documentation for all deductible expenses, such as medical bills, mortgage interest statements, charitable contribution receipts and state/local tax records.
Fill out schedule A: Use IRS Form Schedule A to list your itemized deductions. This form is used to calculate the total amount of deductible expenses.
Compare against the standard deduction: Calculate your total itemized deductions and compare them with the standard deduction for your filing status. Choose the option that offers you the higher amount to reduce your taxable income as much as possible.
File your tax return: If you’re itemizing deductions, attach Schedule A to your Form 1040 when filing your tax return. Ensure all supporting documentation is organized in case of an IRS audit.

","

How Will the Standard Deduction Change in 2026?

","

The 2026 standard deduction could change dramatically. The Tax Cuts and Jobs Act (TCJA) significantly increased the standard deduction, but these changes are set to expire after tax year 2025 (filed in 2026). For 2026, unless Congress extends the provisions, the standard deduction will revert to lower pre-TCJA levels, which means that taxpayers may see a reduction in the amount they can deduct automatically.

","

It is likely the deduction amounts will return to approximately half of what they are in 2026, reducing the overall benefit for many filers. This change will make it more advantageous for some taxpayers to consider itemizing again, especially if their qualifying expenses are substantial. Planning ahead and understanding how these shifts will impact your tax situation can help in making informed decisions about deductions.

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Bottom Line

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","

Whether you’re opting for the simplicity of the standard deduction or the potential savings from itemizing, making an informed decision can lead to reduced taxable income and a better tax outcome. Keeping track of expenses and staying updated with tax law changes will help maximize deductions and minimize taxes owed.

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Tax Planning Tips

","$64","

Photo credit: ©iStock.com/dtephoto, ©iStock.com/Korrawin, ©iStock.com/yasindmrblk

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Alaska residency requirements determine whether an individual qualifies for state tax benefits, including the Permanent Fund Dividend (PFD). To establish residency, a person typically must be physically present in the state with the intent to remain indefinitely. Maintaining residency often involves actions like obtaining an Alaska driver’s license, registering to vote and not claiming residency […]

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","

Ask a financial advisor how Alaska residency requirements affect your portfolio.

","

Alaska Residency Requirements

","

Establishing residency in Alaska requires more than just physical presence. The state considers a range of actions and legal ties to determine whether an individual meets the residency requirements. Here’s an overview of basic components.

","

Establishing and Maintaining Residency

","

To qualify as a resident, an individual must sever ties with any previous state of residency and take affirmative steps to establish residency in Alaska. This includes obtaining an Alaska driver’s license, registering to vote in the state and securing an Alaska-based mailing address. Simply being in Alaska does not establish residency–applicants must show they intend to remain in the state indefinitely.

","

Absences and Residency Status

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Extended absences from Alaska can impact residency status. While certain absences are permitted – such as military service, education or medical treatment – living outside the state for more than 180 days without a qualifying reason can disqualify an individual. Additionally, a person absent more than 180 days in each of the preceding five years is presumed to have relinquished their residency unless they can provide strong evidence of intent to return.

","

Residency for Dependents and Returning Residents

","

Children born to Alaska residents outside the state can gain residency upon arrival if their custodial parent remains a qualified resident. Dependents who leave Alaska and do not return upon emancipation generally forfeit their residency status. Additionally, individuals who marry non-residents do not automatically lose their residency but may need to take steps to reaffirm their intent to remain in Alaska.

","

Benefits of Establishing Residency in Alaska

","

Establishing residency in Alaska comes with several financial and lifestyle advantages. From tax savings to annual cash distributions, Alaska offers unique incentives for those who qualify as residents.

","

No State Income Tax

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Alaska is one of the few states that does not impose a state income tax, allowing residents to keep more of their earnings. This applies to both earned income and investment income, making this state particularly appealing to retirees and high-income earners. However, you should note that 107 municipalities in Alaska have a general sales tax ranging from 1% to 7%.

","

Permanent Fund Dividend (PFD)

","

One of the most notable benefits of Alaska residency is eligibility for the Permanent Fund Dividend (PFD). This annual payment, funded by state oil revenues, is distributed to qualifying residents who have lived in Alaska for the entire qualifying year and meet other residency criteria. The PFD amount varies each year based on the fund’s earnings and amounts to $1,702 for 2024.

","

Property Tax Exemptions

","

Alaska offers property tax exemptions for some residents, including seniors and disabled veterans. Homeowners aged 65 and older or those with a qualifying disability may receive an exemption on a portion of their home’s assessed value, reducing overall property tax liability.

","

Hunting and Fishing Privileges

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Residents benefit from reduced-cost hunting and fishing licenses, allowing them to access Alaska’s abundant natural resources at a lower cost than non-residents.

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What Disqualifies You From Alaska Residency?

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Specific actions can disqualify an individual from maintaining Alaska residency. These factors typically involve establishing or maintaining ties to another state or country:

","$72","

Exemptions to Alaska Residency Requirements

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Alaska allows certain exemptions to its residency requirements, particularly for individuals who must leave the state temporarily for specific reasons:

","$73","

Bottom Line

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Meeting Alaska residency requirements involves more than just living in the state—it requires establishing ties that reflect a long-term commitment while avoiding actions that indicate residency elsewhere. Residency status affects eligibility for tax benefits, state programs and the Permanent Fund Dividend, making it a significant consideration for those planning to stay in Alaska. While certain exemptions allow for extended absences, maintaining residency requires careful attention to legal and financial ties. Consider consulting a financial advisor to better understand the requirements and tax implications for your Alaska residency.

","

Tax Planning Tips

","$74","

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Taxpayers typically amend their returns to correct mistakes, claim missed deductions or report additional income. While the IRS does allow amendments, many worry that filing a Form 1040-X could increase their chances of an audit. Since tax laws are complex, making an error when amending a return could lead to further issues. A financial advisor […]

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","

Can Amended Tax Returns Raise Red Flags?

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Submitting an amended tax return does not inherently raise red flags, but it does prompt the IRS to take a second look at your filing. The IRS receives thousands of Form 1040-X submissions each year, and most are processed without issue. However, certain factors may lead to increased scrutiny, such as adding substantial new deductions or credits or making a significant change to your reported income.

","

In most cases though, if an amended return is filed correctly and honestly, it is unlikely to trigger an audit. The IRS understands that mistakes happen and provides a formal process for making corrections.

","

Red Flags That Could Trigger an Audit

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While an amended return alone is not a guaranteed audit trigger, certain red flags in your tax filings—whether original or amended—can increase your chances of being selected for review. The IRS uses an automated system to identify discrepancies and anomalies that deviate from normal taxpayer patterns. Here are four common red flags that could trigger an audit.

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Reporting a Large Income Change

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If your amended return shows a significant increase in taxable income, the IRS may have questions. For example, if you initially reported $50,000 in income but later amended the return to include an additional $25,000, this could prompt the IRS to investigate further.

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Claiming Large or Unusual Deductions

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Excessive or unusual tax deductions may stand out. Common deductions that may trigger scrutiny include:

","

Charitable contributions that exceed normal giving patterns
Large home office deductions
Uncommon business expenses that do not align with the taxpayer’s occupation

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Failing to Report All Income

","

If an employer or financial institution reports income to the IRS that was missing from your original return, an amendment that suddenly includes that income could prompt a review. The IRS cross-checks reported income against W-2s, 1099s and other official records, so omitting income—even by accident—can cause issues.

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Making Frequent Amendments or Late Filings

","

Consistently amending tax returns over multiple years or filing amendments close to the IRS deadline may draw attention. While amending occasionally is normal, repeated corrections suggest a pattern of inaccurate reporting, increasing the likelihood of closer scrutiny.

","

How to Amend a Tax Return

","

","

If you need to correct an error, claim a missing deduction or update your income, the IRS provides a formal process for filing an amended tax return using Form 1040-X. Below are five steps can help reduce the risk of errors and potential audit concerns:

","$87","

After you have filed your amended return, make sure to store a copy of it and any supporting documents in case the IRS requests further information. The IRS typically takes eight to 12 weeks to process amendments, but delays may occur during peak filing seasons.

","

Bottom Line

","

","

Filing an amended tax return is a standard practice for correcting mistakes, but many taxpayers worry about whether it will raise red flags or trigger an audit. While amending a return does not automatically lead to an IRS review, certain changes—such as reporting additional income or claiming large deductions—could lead to increased scrutiny. To minimize potential issues, taxpayers should make sure that their amended returns are accurate, well-documented and filed correctly.

","

Tax Planning Tips

","$88","

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