Mercifully, the Internal Revenue Service and Congress have taken steps in the last several years to ease a few of the paperwork headaches. And there are some options available for making certain tax calculations that can minimize the tax bite on investment income. It s not a tax saver, but it is a time saver, said Jim Seidel, an editor at RIA in New York, an information provider for tax professionals. 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 than it actually is to fill out.
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. It s one of those things where it s probably better just to blindly follow the form rather than figure out what s going on, he said. Filling out Schedule D could prove especially confusing this tax season for investors who decided to hedge their bets in the face of the market pullback last year and sold off only part of their holdings in a particular stock or mutual fund.