Category: South Carolina
South Carolina Additions to Income
Out of State Losses
If you have reported losses from out-of-state rental property, a business located outside South Carolina, or losses from real property located out of state, enter the amount shown on your federal return here. You must also include any related expenses, such as investment interest. Enter the total of these losses and related expenses on this line. Personal service income (W-2 or business wages) is taxable to South Carolina no matter where it is earned.
National Guard and Military Reserve Expenses
Because inactive duty military reserve income is taxed for federal purposes but deductible on your South Carolina return, you must add back the amount of the federal deduction for expenses related to this income.
Other State and Political Interest Income on Obligations
Interest income on obligations of states and political subdivisions other than South Carolina must be added. In the case of a mutual fund, add back the percentage of exempt interest income attributable to out-of-state non federal obligations.
Other Additions to South Carolina Income
* Taxpayers that claim bonus depreciation under federal law must add back the difference between the bonus depreciation taken and the depreciation which would have been allowed without bonus depreciation.
* Taxpayers that claim a child care program credit for donations to a nonprofit corporation (Sch. TC-9) are not allowed a deduction for those donations. The disallowed deductions are an addition to federal taxable income.
* Taxpayers that claim credits such as the Community Development Credit (Sch. TC-14), the Industry Partnership Fund Credit (Sch. TC-36), and the Hydrogen Infrastructure Development Credit (Sch. TC-47), may not claim a deduction for the same qualified contribution which results in the credit.
* Federal net operating loss when claiming a larger amount than for state purposes is an addition.
* Expenses deducted on the federal return related to any income exempt or not taxed by South Carolina is an addition. Some examples are investment interest to out-of-state partnerships and interest paid to purchase United States obligations.
* Foreign areas allowances, cost of living allowances and/or income from possessions of the U.S. are additions to federal taxable income.
* Effective for qualifying investments made after June 30, 1998, taxpayers must reduce the basis of the qualifying property to the extent the Economic Impact Zone Investment Tax Credit is claimed. An addition to federal taxable income must be made for the resulting reduction in depreciation.
* A deduction for domestic production activities under IRC Section 199 must be added back.
* A charitable contribution deduction under IRC Section 170 for a gift of land must be added back unless the contribution also meets the requirements of S.C. Code Section 12-6-5590.
* Include any withdrawals during the tax year from a Catastrophe Savings Account that were:
A. necessary because contributions were more than the allowable limits; or
B. more than the amount needed to cover qualified catastrophe expense. Do not include any withdrawals made by a spouse surviving the spouse who set up the Account.
* As of January 1, 2009, a business must add back any amount paid for services performed by an unauthorized alien if the amount is $600 or more a year.
For additional information regarding additions to South Carolina income, please click here.