Form 8949 for US Expats: How to Report Capital Gains and Losses on Foreign Investments

Form 8949 reconciles amounts reported to you and the IRS on Form 1099-B or 1099-S with the amounts you report on your return, and subtotals from this form carry over to Schedule D, where your gain or loss is calculated. For American expats, this form is essential when you sell foreign stocks, property, cryptocurrency, or other investments. The good news? Most expats who file Form 8949 can use the Foreign Tax Credit to offset or eliminate US capital gains tax on investments where they’ve already paid foreign taxes.

Whether you sold shares in a foreign company, real estate abroad, or cryptocurrency through a non-US exchange, we’ll walk you through exactly what Form 8949 is, when you need to file it, and how to report your foreign investments correctly.

You’ll have peace of mind knowing your investment sales are reported accurately, and you’re not paying more US tax than necessary.

What Is Form 8949?

Form 8949 (Sales and Other Dispositions of Capital Assets) is the IRS form you use to report every individual sale of stocks, bonds, real estate, cryptocurrency, and other investments. Think of it as the detailed transaction log that feeds into Schedule D, where your total capital gains and losses are calculated.

The form has two parts:

Part I reports short-term transactions (assets held one year or less)
Part II reports long-term transactions (assets held more than one year)

For each transaction, you’ll list:

Description of the property sold
Date acquired and date sold
Sales proceeds
Cost basis (what you originally paid, plus improvements or fees)
Gain or loss

The form then categorizes transactions based on whether your broker or financial institution reported the cost basis to the IRS. This matters because the IRS uses Form 8949 to cross-check what brokers report against what you claim.

When Do I Need to File Form 8949?

You must file Form 8949 whenever you sell or exchange a capital asset and realize a gain or loss. This requirement applies regardless of where you live or where the asset is located.

Common scenarios requiring Form 8949 for expats include:

Selling shares in a foreign company through a non-US brokerage
Disposing of cryptocurrency purchased on foreign exchanges
Selling foreign mutual funds or ETFs
Selling foreign rental property or vacation homes
Trading stocks or bonds through a US brokerage while living abroad
Selling inherited property located outside the US
Exchanging one cryptocurrency for another

Important

Even if you didn’t receive a Form 1099-B (common with foreign brokers), you still must report the sale on Form 8949. The absence of a 1099-B doesn’t eliminate your reporting obligation.

How Does Form 8949 Work with Schedule D?

Form 8949 and Schedule D work together as a two-step process:

Step 1: Form 8949 lists each individual transaction with full details. You’ll complete separate Form 8949 pages for different transaction types (short-term vs. long-term, and whether basis was reported to the IRS).
Step 2: Schedule D summarizes the totals from all your Form 8949 pages and calculates your net capital gain or loss. Schedule D also combines these investment results with any capital losses carried forward from previous years.

The final number from Schedule D flows to your Form 1040, where it becomes part of your total income calculation.

What’s the Difference Between Short-Term and Long-Term Capital Gains?

The length of time you hold an asset determines whether your gain or loss is short-term or long-term, which significantly affects your tax rate.

Short-term capital gains apply to assets held one year or less. These gains are taxed at your ordinary income tax rates, which can be as high as 37% for high earners in 2025.
Long-term capital gains apply to assets held more than one year. These benefit from preferential tax rates of 0%, 15%, or 20%, depending on your taxable income.

For the 2025 tax year (filed in 2026), the long-term capital gains tax brackets are:

0% rate: Single filers with taxable income up to $47,025 (married filing jointly up to $96,700)
15% rate: Single filers with taxable income $47,026 to $518,900 (married filing jointly $96,701 to $600,050)
20% rate: Single filers with taxable income above $518,900 (married filing jointly above $600,050)

Example: Sarah, an American expat in Germany, sold shares of a German tech company she held for 18 months. She bought the shares for $15,000 and sold them for $22,000, realizing a $7,000 long-term capital gain. Because she had held the shares for more than one year, this gain qualifies for the preferential long-term capital gains rate, rather than being taxed as ordinary income.

How Do I Complete Form 8949?

Here’s a step-by-step approach to filling out Form 8949:

1. Gather Your Transaction Records

Collect all documentation for investment sales during the tax year:

Form 1099-B from US brokers (if applicable)
Foreign broker statements showing buy and sell transactions
Records of cryptocurrency transactions
Real estate closing statements
Records of purchase dates, amounts, and any improvement costs

2. Categorize Your Transactions

Separate transactions into six possible categories based on:

Holding period: Short-term (one year or less) or long-term (more than one year)
Reporting status: Whether the basis was reported to the IRS on Form 1099-B, not reported, or the transaction wasn’t reported to you on any form

For most expats using foreign brokers, you’ll check Box C (for short-term) or Box F (for long-term), indicating transactions not reported to you on Form 1099-B.

3. Complete Each Column

For each transaction, enter:

Column (a): Description (e.g., “100 shares XYZ Corp”)
Column (b): Date acquired
Column (c): Date sold
Column (d): Sales proceeds (in USD)
Column (e): Cost basis (in USD)
Column (h): Gain or loss (subtract column e from column d)

4. Handle Currency Conversions

Convert all foreign currency amounts to US dollars using the exchange rate on the transaction date. The US Treasury publishes historical exchange rates you can use for this purpose.

5. Apply Adjustment Codes (if needed)

If you need to adjust the gain or loss reported, use the appropriate adjustment codes in columns (f) and (g). Common codes for expats include:

Code B: Incorrect cost basis on Form 1099-B
Code M: Short-term gain from Form 6252 (installment sales)

6. Total and Transfer to Schedule D

Add up all gains and losses on each Form 8949 page, then transfer these totals to the corresponding lines on Schedule D.

What If I Sold Foreign Property?

When you sell foreign property, you report capital gains or losses on Form 8949 and Schedule D on your annual tax return. The calculation works similarly to other investments:

Determine your cost basis (original purchase price plus improvements)
Calculate the gain or loss (sale price minus cost basis and selling expenses)
Convert foreign currency amounts to USD using exchange rates on purchase and sale dates
Determine if the gain is short-term or long-term based on the ownership period

For foreign real estate, additional considerations include:

If the property was your primary residence and you meet IRS requirements, you may exclude up to $250,000 of gain ($500,000 for married filing jointly) using the Section 121 exclusion
Rental properties require depreciation recapture calculations
If you deposit sale proceeds into a foreign bank account, you’ll almost certainly need to file an FBAR if your total foreign accounts exceed $10,000

How Can I Avoid Double Taxation on My Foreign Investment Gains?

Many countries tax capital gains, which could leave you paying tax twice on the same investment gain. The Foreign Tax Credit prevents this double taxation.

The Foreign Tax Credit (FTC) allows you to claim a dollar-for-dollar credit against your US tax liability for foreign taxes paid on the same income. Here’s how it works:

Example: James, a US expat in the UK, sold shares in a British company for a $10,000 long-term capital gain. He paid £1,900 (approximately $2,400) in UK capital gains tax on this sale. On his US return:

His Form 8949 reports the $10,000 gain
His US tax on this gain at the 15% long-term rate would be $1,500
He claims a Foreign Tax Credit of $1,500 on Form 1116
Result: He pays no additional US tax because his UK tax paid ($2,400) exceeds his US tax liability ($1,500)

The FTC ensures you’re never taxed twice on the same investment income. However, you must file Form 1116 to claim the credit, and the credit cannot exceed your US tax liability on that specific income.

Do I Report Cryptocurrency Sales on Form 8949?

Yes. The IRS treats cryptocurrency as property, not currency, meaning all crypto transactions are capital gain or loss events requiring Form 8949 reporting.

You must report:

Selling cryptocurrency for fiat currency (USD, EUR, etc.)
Exchanging one cryptocurrency for another
Using cryptocurrency to purchase goods or services
Receiving cryptocurrency as payment for services (this is ordinary income, not capital gains)

Each transaction requires careful record-keeping of:

Date acquired and date sold/exchanged
Cost basis in USD at time of acquisition
Fair market value in USD at time of disposal
Resulting gain or loss

Many expats use foreign cryptocurrency exchanges that don’t issue Form 1099-B, which means you’re responsible for tracking and reporting every transaction manually.

What If I Made Mistakes on Previous Years’ Form 8949?

If you discover errors on previously filed Form 8949 returns, you can file an amended return using Form 1040-X.

Typical reasons expats amend include:

Discovered unreported foreign investment sales
Incorrect currency conversions
Failed to claim the Foreign Tax Credit
Miscalculated cost basis

For expats who haven’t filed Form 8949 for foreign investment sales in past years, the Streamlined Filing Compliance Procedures may help you catch up with reduced or eliminated penalties if your failure to file was non-willful.

What’s the Difference Between Form 8949 and FBAR?

Form 8949 and FBAR serve completely different purposes:

Form 8949 reports capital gains and losses from selling investments. It’s part of your income tax return and determines what you owe in taxes.
FBAR (FinCEN Form 114) reports foreign bank and financial accounts with aggregate balances exceeding $10,000. It’s purely informational and doesn’t calculate taxes.

You might need both forms if you:

Sold investments held in foreign brokerage accounts (Form 8949)
Have foreign accounts totaling over $10,000 at any time during the year (FBAR)

Additionally, if your total foreign financial assets exceed certain thresholds, you may also need to file Form 8938 (FATCA reporting), which has higher thresholds than FBAR but reports similar information.

What Mistakes Should I Avoid on Form 8949?

When completing Form 8949 as an expat, watch out for these common errors:

Failing to report foreign transactions: Just because a foreign broker didn’t send you a 1099-B doesn’t mean you can skip reporting the sale.
Incorrect currency conversions: Always use the exchange rate on the transaction date, not year-end rates or approximations.
Mixing up short-term and long-term: One day makes a difference. Assets held exactly one year are short-term; assets held one year plus one day are long-term.
Omitting cryptocurrency transactions: Every crypto-to-crypto exchange is a taxable event requiring Form 8949 reporting.
Not claiming the Foreign Tax Credit: If you paid foreign taxes on capital gains, claim the FTC on Form 1116 to avoid double taxation.
Forgetting about inherited property: When you inherit property, your cost basis is “stepped up” to the fair market value on the date of the original owner’s death, which can significantly reduce your capital gain.

Get Expert Help with Form 8949 and Foreign Investments

Form 8949 can become complex quickly, especially when you’re dealing with foreign brokers, multiple currencies, and potential tax credits. Many of our expat clients at Greenback come to us after attempting to file themselves and realizing they’re in over their heads.

We’ve prepared Form 8949 for thousands of expats with foreign investments, from simple stock sales to complex cryptocurrency portfolios and foreign real estate transactions. Our CPAs and Enrolled Agents know how to maximize your Foreign Tax Credit, ensure currency conversions are correct, and keep you compliant with both Form 8949 and related reporting requirements like FBAR and/or FATCA.

No matter how messy or complex your investment situation may be, we can help. You’ll work directly with a dedicated accountant who knows foreign investments and will prepare your Form 8949 right.

If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.

Foreign stocks, crypto, or property sales? Our expat tax experts handle Form 8949 so you don’t overpay.

Your clear path to accurate capital gains reporting starts here.

This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently, and individual circumstances vary. Please consult with a qualified tax professional regarding your specific situation.

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