Which tax form do individuals use to report capital gains and losses?

Individuals report capital gains and losses using Schedule D (Form 1040). This form specifically details the transactions involving capital assets and allows taxpayers to summarize their capital gains and losses for the tax year. Schedule D helps determine the overall net capital gain or loss, which is then transferred to Form 1040, the individual income tax return.

The importance of Schedule D lies in its ability to provide a structured method for calculating gains and losses from the sale of investments, such as stocks, bonds, and real estate, ensuring that taxpayers clearly report their investment activity to the IRS. It also accounts for different tax rates on long-term versus short-term capital gains.

While Form 1040 is the main tax form that individuals file, it does not specifically address the reporting of capital gains or losses in detail, making Schedule D essential for this purpose. Schedule C, on the other hand, is used to report income or loss from a business operated as a sole proprietorship and does not apply to capital gains. Form 1099 is not a reporting form for the taxpayer but rather a form used by third parties to report various types of income received by an individual, such as interest or dividends, not capital gains or losses.