Schedule B and D Overview and Computation

Schedule B

  1. Schedule B Interest and Dividends Are Calculated Separately from Schedule B Capital Gains/Losses (Line 9):
    Massachusetts interest and dividends are totaled in Part 1 of Schedule B; certain capital gains and losses (mostly short-term) are totaled in Part 2 of Schedule B.
  2. Schedule B Capital Gains and Losses Are Combined to Arrive at Either Schedule B Net Capital Gains or Net Capital Losses; this includes prior short-term unused losses (Line 19)
  3. Schedule B Net Capital Losses May Offset Schedule B Interest and Dividends up to Maximum of $2,000 (lines 20 and 30):
    The maximum amount of interest and dividends that may be offset by Schedule B net capital losses is $2,000.
  4. Unused Schedule B Net Capital Losses After Offsetting Schedule B Interest and Dividends up to a Maximum of $2,000 May Offset Schedule D Net Capital Gains (Lines 22):
    Any portion of Schedule B net capital losses not used against Schedule B interest and dividends is available to offset net long-term capital gains, without limitation, reported on Schedule D.
  5. Unused Schedule B Net Capital Losses after Offsetting Schedule B Interest and Dividends up to Maximum of $2,000 and Schedule D Net Capital Gains is a Carryover (Lines  23 and 40):
    The excess Schedule B net capital losses are available for carryover to the succeeding tax year..

Schedule D 

  1. Schedule D Capital Gains and Losses Are Combined to Arrive at Either Schedule D Net Capital Gains or Net Capital Losses; this includes carryover loss from prior years (Line 13)
  2. Schedule D Net Capital Losses May Offset Schedule B Net Capital Gains (Line 14):
    Schedule D net capital losses may be applied against Schedule B net capital gains, without limitation.
  3. Unused Schedule D Net Capital Losses After Offsetting Schedule B Net Capital Gains May Offset Schedule B Interest and Dividends up to Maximum of $2,000 (Line 16):
    Schedule D net capital losses are only used if the maximum $2,000 was not already offset by Schedule B net capital losses. 

    Note: Schedule B net capital losses are first applied (Line 20), then Schedule D net capital losses, but the maximum combined offset may not exceed $2,000. 

  4. Schedule D Net Capital Losses after Offsetting Schedule B Net Capital Gains and up to $2,000 Schedule B Interest and Dividends is a Carryover (Line 23):
    The excess Schedule D net capital losses are available for carryover to the succeeding tax year.

Schedule B and D Worksheets 

  • Schedule B, Line 36 and Schedule D, Line 20 Worksheet - Exemptions from Interest and Dividend Income, 12% Income and Long-Term Capital Gain Income

    The excess of allowable exemptions over Form 1, Line 10 or Form 1-NR/PY, Line 12 income may be deducted against Schedule B and D income; the order in which the exemptions may be claimed is as follows:
  1. against Schedule B income after deductions for allowable excess trade or business deductions, short-term capital losses, unused long-term capital losses and 50% long-term capital gains deduction (for collectibles and pre-1996 installment sales);
  2. against Schedule D income after netting long-term gains and losses, applying any excess Schedule D losses against Schedule B income, deducting excess Schedule B losses and deducting allowable excess trade or business deductions.

Any remaining excess exemptions may not to be carried forward to subsequent tax year.

Married filing separate taxpayers may not claim excess exemptions. 

  • Long-Term Capital Losses Applied against Interest and Dividends Worksheet for Schedule B, Line 32 and for Schedule D, Line 16.

Schedule D net capital losses, after offsetting any Schedule B net capital gain, may offset Schedule B Interest and Dividends up to Maximum of $2,000: Schedule D net capital losses are only used if the maximum $2,000 was not already offset by Schedule B net capital losses.