How do you file a Schedule D (Capital Gains and Losses of Stock)?
I neglected to fill one out last year and because of that I have a hefty tax increase bill from the IRS sitting in my pile of mail.
They say I have 90 days to protest it in the US Tax Court.
Anyways, I would like to avoid getting another one of those this year.
Any help, input, and/or links are greatly appreciated.
I'm no tax expert but I've filed a schedule D several times. Basically you put in your stock or mutual funds buys and sells, plus in the dates you bought and sold them, then calculate your profit. You also have to classify them as short term or long term capital gains, since LT gains are taxed at a different (lower) rate.
Your broker should have sent you a 1099 that lists all the sales on the account. They also send a copy to the IRS which is how you got nailed. What is strange is that the 1099 only shows the sales, not the profit. What this means is that if you buy stock for $1000 and sell it for $2000, all the IRS knows is the sale for $2000. You have to fill in the basis (your buy price plus commision) and figure out the profit your self otherwise the IRS thinks you have a $2000 profit. It's kind of dumb but that's the way it is.
Turbo Tax makes it pretty easy, at least in their deluxe version. PM me if you have more questions. At this point your best bet might be to file an extension for this year until you get it worked out. Also don't just pay the tax bill from the IRS until you figure out your profits on those stocks, like I say the IRS doesn't know your basis and might be taxing the total sales and not just the profit.