SCDOR | Tax On Wheels, LLC | Tax Preparation

What you need to know:

You should file as a South Carolina resident if you intend to maintain the state as your permanent home, keep South Carolina as the center of your financial, social and family life, and when you’re away, intend to return back to the state.
You must file as a nonresident if you have a permanent home outside of South Carolina and none of the other resident criteria apply.
Those in the military who entered the service with South Carolina as their home should file a state return as a South Carolina resident, even if absent from the state on military orders.

More than 346,000 taxpayers filed South Carolina Individual Income Tax returns in tax year 2022 as nonresidents. Another 3,220 filed returns from outside the country.

Some of those nonresidents may have just moved to the state. Others work in South Carolina but live in a neighboring state. Some are in the military and are stationed in South Carolina but consider another state home. If you fall into one of those categories and are unsure how to determine if you are a South Carolina resident for tax purposes, the South Carolina Department of Revenue (SCDOR) has some tips to help:

You are considered a South Carolina resident if all three of the following are true:

Your intention is to maintain South Carolina as your permanent home.
South Carolina is the center of your financial, social, and family life.
When you are away, South Carolina is the place to which you intend to return.

You are considered a nonresident of South Carolina if the following is true:

Your permanent home is located outside of South Carolina all year.
None of the requirements listed above are true.

But the SCDOR knows that, for many folks, determining your residency isn’t quite that easy. Here are some tips on what to do in certain special circumstances:

Military members who left South Carolina on military orders to be stationed elsewhere– If you enter the military as a South Carolina resident, you do not lose your residency, even if you are absent from the state on military orders. You should file a South Carolina return as a South Carolina resident.
Married couples where one spouse is a resident while the other is not – Couples in this situation should file a South Carolina return with the accompanying Schedule NR. On the Schedule NR, Column A is the income from your federal return, and Column B includes only the income earned while a resident of South Carolina or income earned from South Carolina sources.
SC residents who work in another state – As a resident of South Carolina, you are taxed on all your income regardless of where it is earned. In order to avoid double taxation, South Carolina allows a tax credit for taxes you paid to another state on wages earned in that state.
Those who are part-year residents of SC– These folks should choose the filing method below that is most beneficial:
- You can compute South Carolina tax as a South Carolina resident for the entire year. File an SC return including all federal taxable income and use the SC1040TC to claim a credit for Income Tax paid to another state.
- Or, you can compute South Carolina tax using the Schedule NR. Include in Column B of the Schedule NR only the amounts that are taxable to South Carolina. Amounts taxable to South Carolina include all items of income, gain, loss, or deductions earned from South Carolina sources or while you are a South Carolina resident. File an SC return and attach the completed Schedule NR.

For more Individual Income Tax information, visit the SCDOR’s Individual Income Tax FAQ page. For more information on residency and domicile, refer to the SCDOR’s Determining a Taxpayer’s Domicile for Income Tax Purposes guide.

WASHINGTON – The Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022.

The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.

During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.

In addition, many people in Georgia, Massachusetts, South Carolina and Virginia also will not include state payments in income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit.

The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation.

The IRS is aware of questions involving special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022. A variety of state programs distributed these payments in 2022 and the rules surrounding their treatment for federal income tax purposes are complex. While in general payments made by states are includable in income for federal tax purposes, there are exceptions that would apply to many of the payments made by states in 2022.

To assist taxpayers who have received these payments file their returns in a timely fashion, the IRS is providing the additional information below.

If the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit (for example, because the $10,000 tax deduction limit applied) the payment is not included in income for federal tax purposes.

Payments from the following states in 2022 fall in this category and will be excluded from income for federal tax purposes unless the recipient received a tax benefit in the year the taxes were deducted.

If a payment is made for the promotion of the general welfare or as a disaster relief payment, for example related to the outgoing pandemic, it may be excludable from income for federal tax purposes under the General Welfare Doctrine or as a Qualified Disaster Relief Payment. Determining whether payments qualify for these exceptions is a complex fact intensive inquiry that depends on a number of considerations.

The IRS has reviewed the types of payments made by various states in 2022 that may fall in these categories and given the complicated fact-specific nature of determining the treatment of these payments for federal tax purposes balanced against the need to provide certainty and clarity for individuals who are now attempting to file their federal income tax returns, the IRS has determined that in the best interest of sound tax administration and given the fact that the pandemic emergency declaration is ending in May, 2023 making this an issue only for the 2022 tax year, if a taxpayer does not include the amount of one of these payments in its 2022 income for federal income tax purposes, the IRS will not challenge the treatment of the 2022 payment as excludable for income on an original or amended return.

Payments from the following states fall in this category and the IRS will not challenge the treatment of these payments as excludable for federal income tax purposes in 2022.

For a list of the specific payments to which this applies, please see this chart.

Other payments that may have been made by states are generally includable in income for federal income tax purposes. This includes the annual payment of Alaska’s Permanent Fund Dividend and any payments from states provided as compensation to workers.

Despite the ongoing government shutdown, tax season is essentially upon us. If not resolved, the shutdown could delay the official start of tax season, as defined by the date the IRS begins accepting and processing tax returns.

But even though the government may allow themselves to ignore their responsibilities, that privilege does not apply to me and you my friends. So in the interest of helping you make sure you timely fulfill your tax filing obligations I call your attention to this list of items to bring to your tax appointment. It’s an oldie but a goody.

Otherwise there is not much more you can do right now. However, you need to be aware that the TCJA (Tax Cuts and Jobs Act) has imposed substantial changes on the tax system. Everything from the look of the tax forms to the way claiming your dependents impacts your refund has changed. Almost everything will be different. So if you are one of those people that just kind of copies everything from last years return onto the current years return, that won’t work this year.

We are here to help. If you have any questions please do not hesitate to contact Tax On Wheels, LLC at 803 732-4288. We will be glad to answer your questions free of charge.

The South Carolina Department of Revenue has published on its website a basic tutorial on South Carolina taxation. For the do it your selfer or those new to South Carolina taxation, this could be a very useful tool to help you complete your tax return.

Of course, for those who prefer to have someone else prepare their tax return, Tax On Wheels, LLC is available year round to assist you. We can be reached at 803 732-4288.

South Carolina taxpayers impacted by the October 2015 floods were offered an extension for returns and payments due between October 1, 2015 and February 16, 2016. The February 16 deadline is approaching.

Please feel free to contact Tax On Wheels, LLC at 803 732-4288 if you need assistance.

The South Carolina Department of Revenue has issued notice that it will provide relief to taxpayers affected by the recent flood disaster event. The state promises to essentially mirror the relief provided by the federal government.

Please feel free to contact Tax On Wheels, LLC at 803 732-4288 if we can be of assistance to you in any matters regarding the South Carolina Department of Revenue.