To assist South Carolina students with their expenses of attending college, the state Legislature approved a state income tax credit for tuition paid to South Carolina colleges and universities. The following information should answer most of your questions about the tax credit.

How much is the tax credit?

You may claim a credit on your personal income tax return of 25% of the actual tuition and fees paid to the college each taxable year. The maximum credit is $850 per tax year if you attend a four-year school and $350 a year if you attend a two-year school. The credit allowed for tuition paid to private colleges is based on the average tuition paid to public four-year colleges in South Carolina.

Who may claim the credit?

The student or the parents or guardian who claim the student as a dependent on their tax return may claim the credit, whoever actually pays the tuition. If the parent and student split the cost of tuition, they also may split the credit on the tax return, but the combined credit claimed by the parent and student may not exceed the maximum amount. The credit is allowed for each student. Parents with more than one dependent in college may claim more than one credit.

How long may I claim the credit?

The credit may be claimed for four consecutive years once the student enrolls in college. The student must enroll in college within one year of graduating from high school. If the student starts college and then sits out a year before returning to college, the credit may be claimed for the time remaining in the four-year credit period.

• Students must have completed their high school education in May 1997 or afterwards to qualify.

• Students must have graduated from a South Carolina high school or completed a home school program in South Carolina. Students may also qualify if they graduated from an out-of-state prep school, so long as the parent or guardian remained a South Carolina resident.

• Students must qualify for in-state tuition.

• Students must be enrolled in a degree program or at least a one-year certificate or diploma program.

• Students must not have a criminal record. They cannot have been convicted or pled guilty or no contest to any felonies or alcohol or drug crimes in any state. This does not apply if the criminal record has been expunged.

• Students must not be in default on any student loans.

• Students may not claim the credit if they are recipients of the LIFE Scholarship or the Palmetto Fellowship. If the student loses the scholarship, a tax credit may be claimed for the time remaining in the four-year credit period.

I earned my GED rather than graduate from the traditional high school program. May I claim the tax credit?

No, you must be a graduate of a South Carolina high school program. Earning a GED does not qualify.

Which colleges may I attend to claim the credit?

Most colleges in South Carolina are acceptable under the terms of the tax credit. A complete list of the allowable colleges is included in this brochure.

Which colleges are not allowable for me to claim the credit?

Schools with the sole purpose of providing religious or theological training or conferring graduate degrees do not qualify. Any student which attends a school not listed in this handout would not qualify for the credit.

May I claim the credit for costs for my books, dorm room or meal plan?

No. The credit is available only for tuition and fees which must be paid for you to enroll in college. Room, board and other expenses are not eligible for the tax credit.

I attend a private college. Am I eligible for the tax credit?

Yes, the tax credit is available for tuition paid to most private colleges in South Carolina. The credit is based on the average tuition paid to public four-year colleges in South Carolina, not including technical or research schools. This average tuition amount will be calculated annually and will appear in the income tax instructions. The average tuition for public colleges for the Spring 1998 semester and the 1998-1999 school year is $1,727 per semester or $3,454 per school year. The average tuition will be determined annually by the Commission on Higher Education. Students attending private colleges must use this figure to calculate their tax credit, even though the actual tuition paid may be substantially more.

I attend a college which is not on the traditional semester system. What are my minimum course requirements?

Special rules apply for Converse, Furman and Wofford which are not on traditional semester systems. Students attending any of these three colleges must complete 12 course hours during both the fall and spring semesters plus additional hours during the winter or interim semester. The amount of course hours required during the winter or interim semester is six hours at Converse, eight hours at Furman and four hours at Wofford. Call Dr. Karen Woodfaulk at the Commission on Higher Education at (803) 737-2244 for information on required hours for schools not on the traditional semester system.

If I receive a LIFE Scholarship may I claim the credit for the remainder of the tuition not covered by the scholarship?

No, the credit is not available to students who receive the LIFE Scholarship.

I once received the LIFE Scholarship, but lost it when my grades went down. May I claim the tuition tax credit now?

Yes, if you meet all the qualification requirements for the tuition tax credit, you may claim the credit on your tax return. You may claim the credit for the number of years left in the allowable four-year credit period. The credit may not be claimed for more than five tax years.

I am a Palmetto Fellow. May I claim the tax credit?

No, the credit is not available to Palmetto Fellowship recipients.

I received another scholarship and a federal grant. May I claim the tax credit?

Yes, you may claim the tax credit, but only for any tuition you had to pay after deducting the amount received for your scholarship and grant. If you attend a private college, you must subtract the amount of any scholarships or grants you receive from the average tuition which is used to calculate the credit. Scholarships and grants must be deducted before calculating the credit, but student loans, work study programs or education assistant programs are not deducted before calculating the credit. Grants which do not reduce tuition and are not used to pay tuition, such as a grant for room and board, are not deducted from tuition before calculating the credit.

What must I do in college to remain eligible for the credit?

You must complete 15 credit hours each semester you are enrolled and you must remain in good standing with the college. If your college is on a trimester system, you must earn the equivalent of 15 hours per semester, as determined by the Commission on Higher Education.

Must I maintain a certain grade in college to take the tax credit?

No, there are no minimum academic standards to maintain while in college, but you must remain in good standing with the school, which generally means a passing grade is required.

What if I take only 12 course hours during the semester and then take 3 hours during summer school? Will I be eligible for the credit?

No. You must earn 15 hours in each regular semester you are enrolled, or the equivalent as determined by the Commission on Higher Education. Summer school hours are not counted in the 15-hour requirement.

When may I first take the tax credit?

The credit is available for tuition paid beginning with the semester beginning after January 1, 1998, for students who graduated in May 1997 or later. Students who have graduated since that date may begin taking the credit with the first semester they pay tuition. You won=t actually claim the credit, however, until you file your 1998 individual income tax return. These are mailed to taxpayers in early January 1999 after the end of the tax year and must be filed no later than April 15, 1999.

I have to prepay my tuition at least a month before the semester starts. When do I claim the credit?

The credit must be claimed for the tax year in which the tuition was paid. For example, you are enrolled in the Spring 1999 semester and pay your tuition in December 1998. You will claim a credit for the tuition on your 1998 tax return. But remember, the credit may not exceed $850 per year for four-year schools or $350 a year for two-year schools, even if you paid more during the year.

I don=t owe South Carolina income taxes. Should I file an income tax return to claim the credit?

Absolutely. The credit is refundable. That means even if you don=t owe any taxes, you will still receive a refund for the amount of your tax credit.

What information will be needed with my tax return when I claim the credit?

You must file a Form SC1040 or SC1040NR to claim the credit. The short form, SC1040A, cannot be used to claim the credit. When preparing your South Carolina income tax return, you will need to complete Form I-319, which will be included with all state individual income tax booklets for 1998, and attach a copy of your federal income tax return. Form I-319 is a simple form on which you provide the name of the high school from which the student graduated and the graduation date; names of the colleges in which the student has been enrolled and the dates of attendance; the amount of tuition paid; the amount of all scholarships and grants which reduce tuition received by the student for the year; the total course hours attended for each semester; and other basic identifying information, such as name and address.

If you are claiming the credit for more than one student enrolled in college, you must complete a Form I-319 for each student.

Example 1:

Student: Joe College

College Attended: South Carolina Public College

Dates Attended: Semester 1 - Spring 1998 - 15 hours

Semester 2 - Fall 1998 - 15 hours

 

Tuition paid                                    $3,500

Scholarships received                    $1,000

Grant received                                    $    500

Total scholarships/grants received  ($1,500)

Qualifying tuition                            $2,000

25% of tuition paid                            $    500

Amount of credit                              $   500

 

 

Example 2:

Student: Ann Student

College Attended: South Carolina Private College

Dates Attended: Semester 1 - Spring 1998 - 15 hours

Semester 2 - Fall 1998 - 15 hours

 

Tuition paid                                      $8,000

Average tuition amount allowed              $3,454

Grant received                                      $2,000

Total scholarships/grants received    ($2,000)

Qualifying tuition                              $1,454

25% of tuition paid                              $    364

Amount of credit                               $    364

 

 

 

Qualifying Four-Year Colleges

$850 maximum credit

 

Allen University

Anderson College

Benedict College

Bob Jones University

Charleston Southern University

The Citadel

Claflin College

Clemson University

Coastal Carolina University

Coker College

College of Charleston

Columbia International University

Columbia College

Converse College

Erskine College

Francis Marion University

Furman University

Johnson and Wales

Lander University

Limestone College

Medical University of South Carolina

Morris College

Newberry College

North Greenville College

Presbyterian College

South Carolina State University

Southern Wesleyan College

University of South Carolina

University of South Carolina at Aiken

University of South Carolina at Spartanburg

Voorhees College

Winthrop University

Wofford College

 

 

 

Qualifying Two-Year Colleges

$350 maximum credit

 

Aiken Technical College

Central Carolina Technical College

Chesterfield-Marlboro Technical College

Denmark Technical College

Florence Darlington Technical College

Greenville Technical College

Horry-Georgetown Technical College

Midlands Technical College

Orangeburg Calhoun Technical College

Piedmont Technical College

Spartanburg Methodist College

Spartanburg Technical College

Technical College of the Lowcountry

Tri-County Technical College

Trident Technical College

University of South Carolina at Beaufort

University of South Carolina at Lancaster

University of South Carolina at Salkehatchie

University of South Carolina at Sumter

University of South Carolina at Union

Williamsburg Technical College

York Technical College

For more information

A Revenue Ruling has been prepared to explain the tax credit in detail. For a copy of this ruling, call (803) 898-5419. Additional tax information may be found on the Department of Revenue=s website at www.sctax.org or call our Income Tax Section at (803) 898-5709. Forms and instructions to claim the credit will be available in all income tax forms packages which are mailed in early January. Helpful information also may be available at your college financial aid office. For additional copies of this brochure, call (803) 898-5419.

Federal tax credits also are available for college costs. Information on the Lifetime Learning Credit and the Hope Scholarship Credit is available on the Internet at www.irs.ustreas.gov or in IRS Publication #970. For a copy of this publication or other information, call the Internal Revenue Service at 1-800-829-1040.

November 1998