Figuring the tax on capital gains and other investment income has long been one of the most tormenting aspects of filling out tax returns. Mercifully, the IRS and Congress have taken steps in the last several years to ease a few of the paperwork headaches. Eligible cards are American Express, Discover, MasterCard and Visa. If you're using Form 1040A, read the short checklist in the instructions to see if you're eligible to use the shortcut option or whether you have a type of distribution that requires you to file Form 1040. Any excess losses can be carried forward to a future year.
Schedule D looks more complicated to fill out than it actually is.
The form is not intuitive. Nor is it easy to understand how the long list of calculations leads to the correct result. As a consequence, Mark Luscombe, a tax analyst at CCH Inc., a legal publisher, recommends simply following the instructions line by line. Deductions provide only a partial offset. But Congress eased the reporting requirements for small investors.