Schedule D (Form 1040) is the summary form for capital gains and losses: it totals the sales you list on Form 8949, adds gains from partnerships, trusts and a few other forms, and applies your capital loss carryover. You can deduct capital losses up to your capital gains plus $3,000 ($1,500 if married filing separately), as of October 2026, and carry the rest forward.
If you sold shares, crypto, a rental or a second home, Schedule D is where the result lands. Most of the detail sits on Form 8949, and the order matters: the IRS says to complete Form 8949 before you fill in the Schedule D lines that pull from it. Everything below comes from the 2025 Schedule D instructions.
What Schedule D is used for
- Totalling the gains and losses you report on Form 8949.
- Reporting some transactions that don't need Form 8949 at all (see below).
- Gains from Forms 2439 or 6252 or Part I of Form 4797, and gains or losses from Forms 4684, 6781 or 8824.
- Gains or losses passed through from a partnership, S corporation, estate or trust.
- Capital gain distributions you didn't report directly on Form 1040, line 7a.
- Your capital loss carryover from 2024 to 2025.
Short-term or long-term
The split is about how long you held the asset. Held 1 year or less, it's short-term (Part I). Held more than 1 year, it's long-term (Part II). Most things you own for personal use or investment count as capital assets, including your house, furniture, car, stocks and bonds. For 2025 the form also has new boxes for digital asset sales reported on Form 1099-DA.
When you can skip Form 8949
You can put aggregate totals straight on line 1a (short-term) or line 8a (long-term) for transactions where all of these are true:
- You received a Form 1099-B or 1099-DA showing basis was reported to the IRS.
- There are no adjustments shown in box 1f or 1g of Form 1099-B (box 1h or 1i of Form 1099-DA).
- The Ordinary box isn't checked, and the QOF box on Form 1099-B isn't checked.
- The sale isn't of collectibles.
For everything else, list the sale on Form 8949. Your broker's Form 1099-B tells you which box each sale belongs in.
Losses, carryovers and wash sales
| Rule | What the instructions say |
|---|---|
| Annual loss limit | Capital gains plus $3,000 ($1,500 married filing separately) |
| Unused losses | Carried to future years; report every gain and loss even if you can't use them all this year |
| Wash sale | No loss deduction if you buy substantially identical stock or securities within 30 days before or after the loss sale, including inside an IRA or Roth IRA |
| Related parties | No loss on sales between family members, or between a company and someone owning more than 50% of it |
| Business property | Sales of property used in a trade or business usually go on Form 4797 instead |
A disallowed wash sale loss isn't lost for good: it's added to the basis of the replacement shares. Box 1g of Form 1099-B generally shows any wash sale loss your broker spotted. Dollar figures here are as of October 2026.
Carrying a loss forward
If your 2024 Schedule D, line 21, showed a loss and your losses were bigger than the limit, the leftover carries into 2025. The Capital Loss Carryover Worksheet in the instructions splits it into a short-term and a long-term carryover, and each goes on its own line (6 and 14). Couples who once filed jointly and now file separately can't share a joint carryover: it can be deducted only on the return of the spouse who had the loss. Keep last year's return to hand, because the worksheet starts from it.
New for 2025
Two changes stand out. Boxes for digital assets reported on the new Form 1099-DA now appear alongside the usual Form 1099-B boxes, so crypto sales flow through Form 8949 and Schedule D the same way share sales do. And if you deferred a gain by investing in a qualified opportunity fund and you've reached the 7-year holding period, you may be eligible for a basis adjustment, figured on Form 8997.
Selling your main home
If you meet the ownership and use tests (generally owning and living in the home for at least 2 of the 5 years before the sale), you can exclude up to $250,000 of gain, or up to $500,000 if married filing jointly and the conditions are met, as of October 2026. If all the gain is excluded and you didn't get a Form 1099-S, you may not need to report the sale at all; if you must report it, it goes on Form 8949 with the exclusion shown as an adjustment.
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Special rates to know about
Some long-term gains don't get the standard capital gains rates. Collectibles gain is taxed under the 28% rate gain rules, and unrecaptured section 1250 gain from depreciated real estate has its own worksheet. If either applies, the Schedule D worksheets in the instructions handle the calculation.
The verdict
For most investors, Schedule D is a two-step job: fill in Form 8949 (or use the line 1a and 8a shortcut for clean 1099-B sales), then let Schedule D total it up. The places people lose out are wash sales and forgotten carryovers, so check last year's Schedule D line 21 before you start, and don't rebuy the same shares within 30 days of selling at a loss.
Frequently asked questions
How much capital loss can I deduct in a year?
Up to your capital gains plus $3,000, or $1,500 if married filing separately. Any excess carries forward to future years.
Do I need Form 8949 with Schedule D?
Usually, but not for sales where your 1099-B shows basis reported to the IRS with no adjustments; those totals can go straight on line 1a or 8a.
What counts as long-term on Schedule D?
An asset held for more than 1 year. Held 1 year or less, the gain or loss is short-term.
What is a wash sale?
Selling stock or securities at a loss and buying substantially identical ones within 30 days before or after. The loss can't be deducted then.
Do crypto sales go on Schedule D?
Yes. For 2025, digital asset sales reported on Form 1099-DA flow through Form 8949 and Schedule D, with their own boxes.
