Which form do taxpayers use to report capital gains and losses?

Taxpayers report capital gains and losses using Schedule D. This form specifically is designed to provide details on capital gains and losses, allowing individuals to calculate their net capital gain or loss for the taxable year. This process is essential for correctly determining the amount of tax owed or the refund due, as capital gains can significantly affect a taxpayer's overall income tax liability.

Form 1040 is the main tax return form for individuals, but it does not provide the detailed breakdown necessary for reporting capital transactions. Form W-2 is used by employers to report wages, tips, and other compensation paid to employees, while Schedule B deals with interest and ordinary dividends. These forms serve different purposes and do not apply to capital gains and losses, making Schedule D the correct choice for reporting such information.