Category: South Carolina
South Carolina Subtractions from Income
Certain Nontaxable National Guard or Reserve Pay
Income received from National Guard or Reserve members for customary annual training, weekend drills and other inactive duty training is generally exempt from South Carolina income tax.
Members of the National Guard or Reserves may:
- Deduct all inactive duty pay from the United States or any state for weekend drills and other inactive duty training actually attended.
- Deduct up to 15 days of customary annual training pay, also referred to as "active duty training" or "ADT".
- Inactive duty Reserve members may also deduct up to 14 days of customary annual training pay, also referred to as "active duty training" or "ADT" plus up to 2 days of travel time listed on official orders.
- Full time Active Guard and Reserve (AGR) employees may deduct up to 15 days of annual training actually attended and up to 24 days of weekend drills (a maximum of 39 days) at the daily rate of pay.
Total and Permanent Disability Retirement Income
If disability retirement income was taxed on your federal income tax return and you are totally and permanently disabled, you may be able to deduct this income from your South Carolina taxable income.
You must be totally and permanently disabled, unable to be gainfully employed in any capacity, receiving income from a disability retirement plan, and eligible for the homestead exemption under Section 12-37-250 to qualify. You do not qualify if you are receiving disability income from one job while able to perform another job. You must attach a copy of the physician's statement establishing that you are permanently and totally disabled.
Note: The deduction is limited to payments received from retirement plans. Payments from disability plans which are not retirement plans are not eligible for the deduction. Third party sick pay reported on a W-2 does not qualify for the total and permanent disability retirement deduction.
A surviving spouse may take a disability retirement deduction for amounts received in the year the disabled spouse died. For subsequent years, a surviving spouse is only eligible for the retirement deduction on line p and not the disability deduction.
Social Security and/or Railroad Retirement Benefits
If you are taxed on any Social Security under Title 2 of the Social Security Act or railroad retirement income on your federal return, enter the amount that was taxed on your federal return.
Out-of-State Rental/Business or Real Estate Income Not Taxable to South Carolina
If you have income from out-of-state rental property; a business located outside South Carolina; or gain from real property located out of state, as reported on your federal return, enter this amount on this line and check the appropriate box. However, personal service income (W-2 or business wages) is taxable to South Carolina no matter where it is earned.
Net Capital Gain Deduction
Net capital gains which have been held for a period of more than one year and have been included in the SC taxable income are reduced by 44% for SC income tax purposes.
The term "net capital gain" means the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year. Income received from installment sales as well as capital gain distribution qualifies for this deduction provided the more than one year holding period has been met. (SC Capital Gains holding period is the same as the federal.) Multiply the net gain which meets the above guidelines by 44% (.44) and enter the results here.
Police and all commissioned law enforcement officers paid by South Carolina municipal, county, state governments or the federal government, full-time fire fighters, and full-time emergency medical service personnel are entitled to subsistence allowances of $8.00 per regular workday. Your employer should provide you with the number of work days.
Volunteer fire fighters, rescue squad workers, volunteer hazardous material HAZMAT team members, reserve police officers, Department of Natural Resource (DNR) deputy enforcement officers, and members of the State Guard are allowed to deduct $3,000.
Volunteer fire fighters, rescue squad workers and HAZMAT members qualify only if their employer provides them with a form stating that they have earned the minimum number of points established by the State Fire Marshal during the year. Reserve police officers, DNR deputy enforcement officer, and the State Guard members qualify only if the appropriate authority provides them with an I-332 certification form certifying their eligibility for this deduction. An individual is limited to one deduction of $3,000. If a taxpayer and spouse both qualify, enter $6,000.
An individual who is under age 65 may claim a retirement deduction up to $3,000 of qualified retirement income from his or her own plan. An individual who is age 65 or older during the tax year may claim a retirement deduction up to $10,000 of qualified retirement income from his or her own plan.
"QUALIFIED RETIREMENT INCOME" is income from plans defined in I.R.C. 401, 403, 408 and 457, and all public employee retirement plans of the federal, state and local governments, including individual retirement plans, Keogh plans, and military retirement.
Note: Social Security income, railroad retirement income, and disability retirement income due to permanent and total disability do NOT qualify because these items are not taxed by South Carolina.
Any portion of qualified retirement income received this tax year that resulted in a federal premature withdrawal penalty does NOT qualify for a retirement deduction.
A surviving spouse receiving qualified retirement income attributable to the deceased spouse may deduct up to $3,000 or $10,000 of the qualified retirement income, based on the age the deceased spouse would have been had he or she lived. To claim the deduction on line p-3 and p-4 (if needed), a surviving spouse must receive the decedent's qualified retirement income as a surviving spouse. The surviving spouse retirement deduction is in addition to the individual retirement deduction from his or her own plan.
Contributions to the SC College Investment Program or to the SC Tuition Prepayment Program
You may deduct 100% of any contributions to the SC College Investment Program ("Future Scholar") made between January 1, 2013 and through April 15, 2014. You may deduct 100% of any contribution to the SC Tuition Prepayment Program made between January 1, 2015 and December 31, 2015.
Active Trade or Business Income Deduction
Enter the amount from I-335, line 5.
Consumer Protection Services
An individual may deduct the costs incurred by him or her in the tax year to purchase a monthly or annual contract or subscription for identity theft protection and identity theft resolution services. The deduction is only for individuals who filed a return with the SC Department of Revenue for a tax year between 1998 and 2012 or
when another’s personal identifiable information was included on the return. The deduction may not be claimed for an individual who either deducted the same actual costs as a business expense or is enrolled in the identity theft protection and resolution services offered free of charge by the State. The deduction is limited to $300 for an individual taxpayer, and to $1,000 on a joint return or a return claiming dependents.