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Tax Tip: Calculating Investment Income

Comstock/Thinkstock(NEW YORK) --  If you had investment income from stocks last year, its important that you get your numbers right in time to file your tax returns.

As Eric Smith of the IRS explains, "People often make mistakes in calculating the gains and losses on the sale of stock."

Smith says taxpayers will need two forms: "With the form 8949, you're going to seperate your short-term activity, your long-term activity.  You're going to separate transactions where you have basis reported to you on the form 1099."  This involves the cost basis rule.

Kathy Pickering, who runs the H&R Block Tax Institute, adds that there's a change this year.

"Brokers and financial agencies are issuing those forms that show your stock transactions.  This year they have to report the basis on those transactions," she says.

In past years they didn't have to report as much information about stock values.

"For those who've had to file this in the past, you know, it can be a little bit tough to try to calculate the basis that will make it easier," Pickering says.

Copyright 2012 ABC News Radio

ABC News Radio