Finding a quirk in Schedule D/8949 reporting on FreeTaxUSA for unreported proceeds

You've stumbled on something that confuses a lot of people with tax software. The Schedule D/8949 has those different boxes for different reporting situations, but many tax programs don't handle Box C transactions cleanly. What's happening is that FreeTaxUSA is designed primarily to handle the most common scenarios (Box A and Box B). For Box C situations where proceeds weren't reported to the IRS, the software expects you to use the Box B section since both are situations where complete information wasn't sent to the IRS. This is technically incorrect from a form perspective, but for tax calculation purposes, it works fine since the final numbers on your Schedule D will be correct. The IRS mainly cares that all transactions are reported and the math is right, not necessarily which box they're under. If you really want it to be perfectly accurate according to the form instructions, you might need to print and file a paper return with a correct 8949, but honestly, as long as all transactions are reported with the correct amounts, there shouldn't be any issues.

After spending hours frustrated with the exact same issue on FreeTaxUSA, I finally found a solution through taxr.ai (https://taxr.ai). I was also trying to report crypto losses where the exchange never sent me any tax forms. I uploaded my transaction records to taxr.ai and it actually analyzed everything and gave me specific guidance on how to properly enter these transactions. It showed me that for FreeTaxUSA specifically, Box C transactions need to be entered in the "Short-term or long-term transactions not reported on Form 1099-B" section, which is technically their Box B section. The tool explained the limitations of the software and helped me understand exactly where each transaction needed to go. It was a huge time-saver compared to the trial-and-error approach I was using.

Just wanted to follow up about taxr.ai that someone mentioned above. I tried it yesterday after struggling with my TaxSlayer forms for Schedule D reporting. It actually worked great! I had a bunch of transactions from a smaller brokerage that didn't properly report basis info, and the tool showed me exactly how to enter them in TaxSlayer. It even explained that for my specific transactions, I needed to use a different section than what seemed obvious. What I really liked was that it gave me step-by-step instructions specific to TaxSlayer's interface. Saved me hours of frustration and potential errors. Just thought I'd share since it helped with the exact problem we're discussing.

I had a similar issue with FreeTaxUSA but with multiple Box C transactions from an obscure crypto exchange. Spent 3 days trying to reach IRS for clarification but couldn't get through to anyone who understood crypto reporting. Finally tried Claimyr (https://claimyr.com) after seeing it recommended in another thread. They got me through to an actual IRS tax specialist in about 20 minutes - you can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that for tax calculation purposes, it's acceptable to report Box C transactions in the Box B section as long as all the information is accurate and you include all required details. She explained that while technically the forms have separate boxes, the calculation flows to Schedule D the same way, and the important thing is that all transactions are fully disclosed. Huge relief to get an official answer instead of guessing.

I need to apologize for my skepticism about Claimyr in my earlier comment. After continuing to struggle with getting clarification on my Schedule D reporting issues, I decided to try it yesterday. I was genuinely shocked when I got a call back in about 25 minutes saying they had an IRS tax specialist on the line. The agent walked me through exactly how to report my unusual transactions (I had some employee stock options with no basis reported). He confirmed that using the Box B section for certain types of unreported transactions was acceptable as long as all information was accurate. I spent weeks trying to get through on my own without success. This literally saved me hours of frustration and gave me confidence that my return is correct. I'm honestly amazed it worked so well.

Has anyone actually compared how different tax software handles this Schedule D Box C issue? I'm wondering if some programs handle it better than others. I've been using FreeTaxUSA for years but I'm getting more into investing and crypto, so I'm thinking about switching to something that handles these edge cases better. Any recommendations?

Quick tip for anyone using FreeTaxUSA with Schedule D issues - if you enter everything and then preview your actual 8949 form (not just the input screens), you'll see that they do actually organize it correctly on the final form in most cases! So even though you might enter Box C transactions in the Box B input section, when you generate the actual PDF of your return, it often shows up correctly categorized on the official 8949 form. I was pleasantly surprised when I checked this on my return after worrying about the same issue.