Those of you who invest in IRAs or 401Ks have very little tax reporting to do. Whatever is required is likely entering a 1099-R for withdrawals or entering contributions that with Traditional are tax deductible.
The other possible entries exist when receiving a 1099-B. This form is supplied by your Broker and you could get more than one if having accounts with more than one Broker. The 1099-B details results of trades taken for the year. It will display trades that have been reported to the IRS showing acquisition and sales dates, proceeds and cost basic (this included trade commissions) and the resulting gain/loss.
The 1099-B also displays trades that WERE NOT reported to the IRS. These will show similar details plus wash sales disallowed losses etc and get entered on form 8949. I should mention that those trades that have been reported can be entered en masse without details as long as they are a group in terms of SHORT TERM or LONG TERM trades.
The data from 8949 goes to the Sch D as does the reported trades.
Sch D is also used for other transaction gain/losses like certain property:
Use Schedule D (Form 1040 or 1040-SR) to report the following:
The sale or exchange of a capital asset not reported on another form or schedule.
Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit.
Capital gain distributions not reported directly on Form 1040 (or effectively connected capital gain distributions not reported directly on Form 1040-NR).
Non business bad debts.
It takes a bit of time to correctly and accurately prepare a Sch D so have your documents ready and at hand.
I have a few clients who trade often and one that is a Professional Day Trader. There is a special designation for Professional Traders. Here is a good article describing it and the requirements for the designation. https://thismatter.com/money/tax/securities-trading-business-taxation.htm
If you need assistance or have a Sch D question, call me.
I hope you had some good gains in 2020 and even when taxed the rate is favor5able. I always say, don't feel too bad about paying some tax because it means you are making money. My purpose as an Accountancy is to make sure you pay the lowest legal tax available.
Best,
Donn Marier
DM-Your Own CFO