Income Tax Return Instructions - State Of South Carolina (Page 7 of 14) in pdf

Lines 40 through 53 are adjustments which should be

IF YOU ARE 65 YEARS OF AGE OR OLDER AND ARE

subtracted from your federal taxable income to determine

RECEIVING A QUALIFIED RETIREMENT INCOME, you

your South Carolina taxable income. Line 54 is the total of

may claim a retirement deduction of no more than $10,000

these subtractions.

of your retirement income taxed on your federal return.

Line 40 INTEREST FROM US OBLIGATIONS

"QUALIFIED RETIREMENT INCOME" includes those

If you included your interest income from U.S. obligations

plans defined in I.R.C. sections 401, 403, 408, 457 and all

(such as U.S. savings bonds, treasury notes and bills, etc.)

public employee retirement plans of the federal, state, and

as income on your federal income tax return for 1999,

local

governments,

including

individual

retirement

enter this amount on line 40. Interest income from a mutual

accounts, Keogh plans, and military retirement.

fund is excludable by the percentage the fund's assets

Social Security and disability income due to permanent

consist of South Carolina and/or federal obligations.

and total disability at retirement do NOT qualify for the

retirement deduction as these items are not taxed by South

Interest income from the following obligations are taxable

Carolina.

for state purposes:

Federal Home Loan Mortgage Association (Freddie Mac)

"NON-QUALIFYING DEDUCTION": Early withdrawals of a

Federal National Mortgage Association (Fannie Mae)

qualified retirement plan normally results in a federal

Government National Mortgage Association (Ginnie Mae)

penalty for premature distribution equal to 10% of the

amount withdrawn. Amounts of qualified retirement

Line 41 NATIONAL GUARD and RESERVE ANNUAL

received by the taxpayer or the taxpayer's surviving

TRAINING and DRILL PAY

spouse that are subject to the federal premature

The amount of income received for weekend drills and

withdrawal penalty do not qualify for a retirement

customary training periods when serving in the military

deduction. Amounts received that are not subject to the

reserves or National Guard should be subtracted.

premature withdrawal penalty do qualify for a retirement

Generally, the customary training period is one weekend a

deduction.

month and two weeks of active duty. Enter the amount on

line 41. Income for active duty or full-time reserves is

Line 44a is to be completed by the taxpayer, whose name

not tax exempt.

appears first on the return. If you are a surviving spouse,

please check box.

Do not include Military Reserve and National Guard pay

which is included in retirement income on this line. See

Line 44b is to be completed by the spouse. The spouse's

line 53 for other subtractions.

name appears second on the return. If you are a surviving

spouse, please check box.

Line

PERMANENT

DISABILITY

RETIREMENT

INCOME INCLUDED ON FEDERAL RETURN

IF YOU ARE A SURVIVING SPOUSE: The deduction

If disability retirement income was taxed on your federal

extends to the taxpayer's surviving spouse. If a surviving

income tax return for 1999 and you qualify as being

spouse also has his or her own retirement income, a

permanently and totally disabled, you may be able to

separate deduction is allowed.

exclude this income for South Carolina purposes. In order

to qualify as totally and permanently disabled, you must be

When figuring a deduction based on retirement income

unable to be gainfully employed. Qualifying for disability

you receive as a surviving spouse, the deduction is based

from one job while still being able to perform another job

on the age the deceased spouse would have been had he

would not qualify you as totally and permanently disabled.

or she lived.

Line

SOCIAL

SECURITY

AND/OR

RAILROAD

To claim a surviving spouse deduction, a surviving spouse

RETIREMENT AMOUNT IF TAXED BY FEDERAL

must receive the decedent's qualified retirement income as

If you are taxed on any Social Security benefits under Title

a surviving spouse.

2 of the Social Security Act or Tier I and Tier II railroad

retirement income on your federal return for 1999, enter

LIMITATIONS: The retirement income deduction is limited

the amount taxed on line 43.

to not more than a $3,000 deduction under age 65 and not

more than $10,000 deduction for taxpayers age 65 and

Line 44 RETIREMENT DEDUCTION

older.

Taxpayers no longer have to make an election for the

Husband and wife must each have their own qualified

retirement income deduction.

retirement income in order to claim their separate

retirement deduction.

IF YOU ARE UNDER 65 YEARS OF AGE AND ARE

RECEIVING A QUALIFIED RETIREMENT INCOME, you

Social Security and disability income due to total and

may claim a retirement deduction of no more than $3,000

permanent disability at retirement that is taxed on your

of your retirement income taxed on your federal return.

federal tax return is fully deductible on lines 42 and 43 of

Income Tax Return Instructions - State Of South Carolina Page 7

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