PA-20S/PA-65 Schedule B: 2025 PA Schedule B - Dividend Income and Capital Gain Distributions (PA-20S/PA-65 B) (2025)
Pennsylvania · Pennsylvania DOR · Used for tax years 2025
PA-20S/PA-65 Schedule B reports dividend income and capital gain distributions earned by PA S corporations, partnerships, and limited liability companies filing as either. It calculates the Pennsylvania-taxable amount to report on the PA-20S/PA-65 Information Return.
Who files this form
PA S corporations, partnerships, and limited liability companies filing as partnerships or PA S corporations for federal income tax purposes use Schedule B to report dividend income and capital gain distributions.
Report the total dividends earned by the entity itself. You do not need to separate resident and nonresident portions.
What you'll need
Have these forms and records available to complete Schedule B:
- PA-20S/PA-65 Information Return: Use the same business name and nine-digit FEIN.
- Federal Schedule K: Use Line 6a of Form 1065 or Line 5a of Form 1120S for ordinary dividends. For tax-exempt dividend income, use Line 18b of Form 1065 or Line 16b of Form 1120S.
- Federal Schedules K-1 from other entities: Include dividend income reported on these schedules.
- PA-20S/PA-65 Schedule M, Part I: Use the dividend adjustments on Line 5 and the capital gain distribution amounts in Column (d), Lines 7, 8, and 11.
- Entity books and records: Use these to identify Pennsylvania-exempt dividend income. List sources and amounts for the federal-exempt and Pennsylvania-exempt dividend income reported on Schedule B.
If Line 5 includes actual payments of foreign corporation earnings and profits covered by the Repatriation Transition Tax that were not included in taxable income in a prior year, provide a statement explaining the nature and source of those payments.
Common mistakes
- Overlooking the special treatment of mutual fund capital gain distributions: The instructions specifically note that Pennsylvania taxes these distributions as dividends.
Questions people ask
Do I need to split dividends between resident and nonresident owners?
No. Report the total dividends earned by the entity. The instructions say there is no need to distinguish between resident and nonresident portions because dividends are not a class of income on Schedule NRK-1.
Where do business or rental dividends treated as working capital go?
Report them on Schedule M, Part I. Enter the amount from Schedule M, Part I, Line 5, Column (b) and/or Column (f), on Schedule B, Line 2. Subtract Line 2 from Line 1 to calculate adjusted federal dividend income on Line 3.
Are all federally exempt dividends also exempt in Pennsylvania?
No. For regulated investment companies investing in state and local bonds, only federally exempt interest dividends derived from Pennsylvania state and local bonds are exempt for Pennsylvania personal income tax purposes. Those derived from other state and local bonds are fully taxable. Some federally taxable dividends derived from federal obligations are Pennsylvania-exempt interest dividends.
Where does the final Schedule B amount go?
Add Lines 3 through 6 to get Line 7. Subtract Pennsylvania-exempt dividend income on Line 8 from Line 7 to get Line 9. Enter Line 9 on the PA-20S/PA-65 Information Return, Page 1, Section III, Line 4.