INDIVIDUAL INCOME TAX

Filing Returns

You are required to file a South Carolina income tax return if you earn income in South Carolina and are required to file a federal return. Even if you are not required to file a federal return and you have taxes withheld from your wages, you should file a state income tax return in order to obtain a refund. Business income must be reported on Schedule C of your federal tax return. Attach a copy of your federal return to your state return when you file a Schedule C, D, E or F.

Additions to Income

The following items must be added back to your federal taxable income for South Carolina purposes:

1. Any out-of-state losses, if subtracted on your federal return
2. Interest income from state and local obligations other than those in South Carolina
3. South Carolina income tax paid if itemized and deducted on your federal return
4. Expenses related to National Guard and military reserve income

Deductions from Income

The following items may be deducted from your federal taxable income for South Carolina purposes:

1. Income from an out-of-state business if included on your federal return
2. Interest income from U.S. obligations
3. A deduction of up to $10,000 for income derived from qualified pension plans, depending upon the taxpayers age
4. Income received for weekend drills and customary training periods when serving in the military reserves or National Guard (pay for tours of active military duty is not deductible)
5. Disability retirement income received due to permanent and total disability
6. Taxable Social Security benefits included in total income on the federal return
7. 44% of net capital gains with a one year holding period
8. State tax refund, if included in income on your federal return
9. A deduction of up to $15,000 for resident taxpayers age 65 and over
10. A deduction for each dependent claimed on your federal return who has not reached the age of six on December 31 of the tax year (the deduction is 100% of the federal personal exemption)

Credits

South Carolina has a number of income tax credits, some of which include:

1. A two-wage earner credit allows a maximum credit of $210 if both spouses work.
2. A nursing home credit allows a maximum credit of $300 for payments made to a nursing home for the care of yourself or another individual.
3. A credit is allowed for income taxes paid to another state on income earned in the other state and taxed by both states.
4. A child and dependent care credit allows you to claim 7% of your allowable federal expenses for the care of a child or an elderly person, if that care is necessary for you to work.

Estimated Tax Payments

Declaration of estimated tax is the method you use to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, capital gains and prizes. You may also have to pay estimated tax if enough tax is not being withheld from your salary, pension or other income. Generally, you should make estimated tax payments if you figure your estimated tax liability will be $100 or more. If your estimated tax liability will exceed $100, you must pay in at least 90% of the tax to be shown on your current income tax return or 100% of the tax shown on your last year's income tax return, whichever is less.

The 100% rule is modified to be 110% of last year's tax liability for an individual with an adjusted gross income of more than $150,000 as shown on the return for the preceding tax year.

Part-Year Residents

If you moved into or out of South Carolina during the year, you are a part-year resident. As a part-year resident, you may consider yourself a full-year resident or a nonresident. You may choose the filing method that is most advantageous to you. If you elect to be a full-year resident, file the resident form SC1040. Report all your income as though you were a resident for the entire year. You will be allowed a credit for taxes paid to another state. If you elect to be a nonresident, file the SC1040 form with Schedule NR. You will be taxed only on income earned in South Carolina and will prorate your deductions and exemptions.

Extension to File

If you need more time to file a South Carolina income tax return, you are allowed an extension equal to the time allowed by the IRS. The first extension is automatic and allows you through August 15th to file your return. If you need additional time, you may request an additional extension through October 15th (if you have good cause for the delay in filing). To receive a state extension, attach a copy of your federal extension request to your state return when you file it. If you owe additional state income tax, you are required to file Form SC4868 and attach payment of taxes you estimate you owe. Remember, an extension only allows you additional time to file your return. Your tax must still be paid to avoid penalty and interest.  SCnetFile for Extensions allows you to file and pay your SC4868 electronically directly with the SC Department of Revenue.  You can pay your balance due by credit card or by EFW (Electronic Funds Withdrawal).

Electronic Filing Methods