Tax Question: What requires a Form 8453?

[Weathering]

My tax return currently has individual stock sales listed for all share transactions of non-covered shares and all wash-sale transactions. For all covered shares, I am aggregating the share transactions. FreeTaxUSA is saying I need to mail in Form 8453, so I'm going to review my return, before filing it with the IRS, to see what is triggering this requirement. If I can't figure out what transactions need to be sent to the IRS, then I'll have to send in my entire 20+ page 1099B.

What exactly are the transactions that cannot be aggregated without sending in a Form 8453?

[sycamore]

Looking at form 8453 https://www.irs.gov/pub/irs-pdf/f8453.pdf, the relevant box you'd check seems to be "Form 8949, Sales and Other Dispositions of Capital Assets (or a statement with the same information), if you elect not to report your transactions electronically on Form 8949"

But you obviously want to report your transactions electronically on 8949, whether aggregated or individually.

Maybe FreeTaxUSA has some sort of limitation in regard to 8949?

Did FreeTaxUSA give any more specific indication as to why you need to mail in 8453?

Maybe it's something unrelated to the capital asset sales? Take a look at 8453 and see if any of the other checkboxes apply to you.

[secondcor521]

It's probably that you have entered multiple transactions on a single row. This will result in an "M" adjustment code on that line of the 8949, which in turn I think triggers the 8453 requirement. It's described in the instructions for Form 8949 page 4 column 2 at https://www.irs.gov/pub/irs-pdf/i8949.pdf in the section entitled "E-file".

If you do not aggregate the transactions and instead list them individually, then you won't need to use the "M" adjustment code and your tax software will probably not tell you to file the 8453. Whether this is a viable option probably depends on how many transactions you would have to enter individually, and how willing you are to type it all in. There are a few other options listed in the 8949 instructions where cited above.

[Weathering]

Thank you. I’ll look into it some more tomorrow. It’s boggling to me because my finances haven’t changed much in 15 years yet this is the first time I’m being asked for this by tax software. I’m thinking it is a case where I went down the path of aggregate entries (which would trigger an 8453) but then went back to single out the non-covered shares and wash sales. However, the software may not have unchecked the requirement for an 8453 after I made the changes.

I’ll probably just print out the 8453 and include the 1099B pages for non-covered shares and wash-sales (they were all in one account).

[Weathering]

This is the line in my Form 8949 that FreeTaxUSA believes requires a Form 8453 to list the individual transactions:
[Box A is checked stating these are short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS]
(a) Vanguard Marke See Stmt (d) Proceeds: 4,542,441 (e) Cost: 4,393,449 (f) Codes: MW (g) Amount of Adjustment: 62,910 (h) Gain: 211,902

Is it correct that this aggregation of covered share transactions would need to be listed individually?

[sycamore]

This is the line in my Form 8949 that FreeTaxUSA believes requires a Form 8453 to list the individual transactions:
[Box A is checked stating these are short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS]
(a) Vanguard Marke See Stmt (d) Proceeds: 4,542,441 (e) Cost: 4,393,449 (f) Codes: MW (g) Amount of Adjustment: 62,910 (h) Gain: 211,902

Is it correct that this aggregation of covered share transactions would need to be listed individually?

I don't know the answer.

But I think code W means there was a wash sale. Maybe that's the key? I don't think code M by itself would trigger 8453.

[Weathering]

I completed my tax return. Instead of individually typing in the transactions, I summarized them. Then printed Form 8453 and mailed it in with the pages of my 1099-B for these transactions (put two stamps on it because it was borderline on weight).

Now I'll join the "Refund Timeline" thread and wait to see if my return is considered e-filed (with a 3-week refund timeline) or paper/mailed (with a 6-week refund timeline).

[Cheez-It Guy]

I'm reviving this thread because I just e-filed earlier tonight and was surprised to be prompted to print and mail Form 8453 with supporting documentation only AFTER filing. A couple of things conspired for this outcome, and I still don't fully understand it, although I've certainly learned some lessons for the future.

I was using TurboTax Deluxe download edition on a Mac. For quite a few years, I have logged charitable contributions in Intuit's "ItsDeductible" online tool to make for easy import at tax time. However, I really just give once or twice to my donor-advised fund during the year, so the benefit is actually minimal versus someone who has a lot of different kinds of donations throughout the year. Mainly it allows me to pre-enter all the dates, cost basis, value, and supplementary info. I should have taken a hint in mid-2022 when they said they would be canceling it, and then soon changed course. I still tried to use it this year. Perhaps not next year. . .

This year, between TurboTax and ItsDedictible, it did something it's never done previously. I had entered the donation (of appreciated and long-term held mutual fund shares) the same way I always do. I typically purposely reference the previous year's entry for consistency. Even though I already had it generally classified as "stock" on ItsDeductible and had listed the ticker symbol (some VDEQX I was looking to deplete), TurboTax still asked me to further classify it after import. The best selections were "Publicly Traded Stock" and "Securities (Not Stock)". I think the fateful decision was selecting securities instead of stock. On the generated Form 8283 for Noncash Charitable Contributions, this apparently kicked it from Section A which it had been every previous year to Section B (with the "Securities" checkbox ticked), and this is what prompted the request for Form 8453 to be mailed after filing (no notification that such would be required until AFTER submission, unfortunately -- that would have been a red flag to review since I've never needed to physically mail anything when e-filing).

This really would have been helpful to know before submitting by e-file, not after. A lesson will be to review first in Forms mode, as this was done in EasyStep / Interview mode. After the fact, I tried many different ways of importing from ItsDeductible in test returns and it only ever classified it as "Items You Valued" rather than "Stock" even though the questions it asked were more stock-related. If I answered in a certain way, I could eventually get it to kick back to Section A on Form 8283, but unfortunately what I e-filed had it listed in Section B despite the descriptions containing the fund name and the checkbox for "Securities" selected. I'm a little unclear what type of securities are really supposed to go in Section B, but it has a checkbox for them. Importantly, the misclassification does not affect the AMOUNT of the claimed refund.

My Federal and State returns have already been "Accepted", but ideally I don't want this to hugely delay the expected Federal refund, which I again specified mostly in Series I Paper Savings Bonds. So what would be recommended from among the below?:

1. Wait a little while to see if my refund posts without any further interaction ($8 direct deposit, rest as mailed savings bonds), and consider the matter closed if it does and if I don't receive further notice (would that be "safe" to do, having never sent the form TurboTax says I should send?).
2. Call the IRS and ask for a specific recommendation under the circumstances (maybe they can do a manual correction for me?).
3. Go ahead and mail Form 8453 with Form 8283 and my contribution confirmation from Vanguard Charitable to Austin, Texas.

I know not to attempt to file again with corrections during this window as this would cause an even bigger mess. I have already corrected my return in TurboTax to put the information in the right section. However, if I do #3 above, should I additionally include a copy of Form 8283 the way I think it should have been completed and / or an explanatory cover letter?

Seems like a bit of an edge case the way this all came together, but maybe it can help someone else avoid the same mistake this year, because I did it as close as possible to the way I normally do regarding the import, and between TurboTax and ItsDeductible (both Intuit products), they generated a different output than they ever have before. But shame on me for not checking forms. Nothing seemed obviously amiss in the summary screens or the refund amount. I won't make that mistake again.

Thanks in advance for any suggestions anyone can offer on this one. I know it will all work out eventually, but I hope it doesn't sabotage my Series I Bonds in the process.

[Cheez-It Guy]

The instructions accompanying Form 8453 say to mail it within 3 days of being notified that your federal return has been accepted, which occurred last night, so I guess I may try the calling the IRS route today. I can wait on hold for long periods of time while performing my normal work duties. Will report result, even if result is an endless hold. Still appreciate any feedback.

[Cheez-It Guy]

I had a pretty positive experience calling the IRS this afternoon. I did have to look up the secret phone tree to get in line for a real person after striking out a few times and being automatically disconnected. Once I followed the right path, I probably only waited 2-3 minutes at most. I had been prepared for over an hour. The agent was very helpful, courteous, and patient. Best suggestions were to either wait until the IRS attempts to process and then wait for mail correspondence if something is missing, or to proactively mail a corrected form, a cover letter, and a tax substantiation document for the donation (what I plan to do in hopes to expedite resolution). She said I should NOT send Form 8453 since in this case it wouldn't have been required if Form 8283 had been completed correctly to begin with (thanks, TurboTax). Also, I might get audited, but that's OK. I have all the backup I need. Just hope I still get my Savings Bonds -- but if not, life goes on.

[Cheez-It Guy]

Refund got approved, so all appears well.

I did mail a letter and justification, but I don't think it's had time to be received and processed and to have any impact on the status of my return, so I'm out a stamp, an envelope, and some time. But it was a good exercise.