Form I-335 - Active Trade Or Business Income Reduced Rate Computation

Form I-335 - Active Trade Or Business Income Reduced Rate Computation - 2015 Page 8

I-335 - RULES FOR USING SAFE HARBOR:

If you qualify and choose to use the Safe Harbor, it allows you to claim 50% of your qualifying income as being not

reasonably related to personal services instead of identifying the actual amount related to personal services. A decision to

use the Safe Harbor applies to both spouses filing a joint return. See SC Revenue Ruling #08-2 or superseding advisory

opinion for more information and examples on how to calculate the Safe Harbor method.

Step 1 – Determine if the Safe Harbor is available.

To claim the Safe Harbor, your total South Carolina taxable income from pass-through entities for which you perform

personal services must be $100,000 or less, excluding capital gains and losses. Eligibility for married couples filing a joint

return is determined on the basis of their combined income.

Step 2 – Computation of personal service income and Safe Harbor.

Once you determine that the Safe Harbor is available in Step 1, then you can determine the amount of the Safe Harbor

before deciding whether or not to use it. Do not include Schedules C or F or SCK-1s with losses, or SCK-1s from interests

where no personal services are performed. Do not include personal service income from an entity in any amount greater

than the amount of pass-through taxable income from that entity.

Social Security Privacy Act Disclosure

It is mandatory that you provide your social security number on this tax form. 42 U.S.C 405(c)(2)(C)(i) permits a state to

use an individual's social security number as means of identification in administration of any tax. SC Regulation 117-201

mandates that any person required to make a return to the SC Department of Revenue shall provide identifying numbers,

as prescribed, for securing proper identification. Your social security number is used for identification purposes.

The Family Privacy Protection Act

Under the Family Privacy Protection Act, the collection of personal information from citizens by the Department of

Revenue is limited to the information necessary for the Department to fulfill its statutory duties. In most instances, once

this information is collected by the Department, it is protected by law from public disclosure. In those situations where

public disclosure is not prohibited, the Family Privacy Protection Act prevents such information from being used by third

parties for commercial solicitation purposes.

Form I-335 - Active Trade Or Business Income Reduced Rate Computation - 2015 Page 8