Instructions For Form Sc1040 - 2011 (Page 6 of 9) in pdf

Instructions - South Carolina Form SC1040

If you have adopted a "special needs child", you may subtract

Line 8 - TAX ON ACTIVE TRADE

$2,000 per year per child as long as the adopted child

OR BUSINESS INCOME

qualifies as a dependent on your federal return.

Enter the amount from I-335, line 7.

Attach a copy of the letter you received at the time of

Line 9 - TAX ON EXCESS WITHDRAWALS FROM

adoption from the SC Department of Social Services

CATASTROPHE SAVINGS ACCOUNTS

which certified the person as a "special needs child."

Withdrawals from a Catastrophe Savings Account are taxed at

A "special needs child" means a person under the age of 18

2.5% unless:

at the time of adoption, who is a dependent of a public or

(1) the taxpayer no longer owns a qualified legal residence in

private non-profit adoption agency, is legally free for adoption

South Carolina;

and has been determined by the agency to have specific

(2) the amount contributed was within the allowable limits, and

conditions.

the withdrawal occurred after the taxpayer reached age 70; or

(3) the withdrawal followed the death of the individual who set up

Include amounts contributed to a Catastrophe Savings

the Account or the surviving spouse.

Account and interest income earned by the account.

If your legal residence is insured against hurricane, rising

floodwaters, or other catastrophic windstorm event damage,

CREDITS

you are allowed to contribute: (1) $2,000 if the qualified

deductible is $1,000 or less; (2) twice the qualified deductible if

Line 11 - CHILD AND DEPENDENT CARE

it is between $1,000 and $7,500; or (3) $15,000 if the qualified

deductible is more than $7,500.

The South Carolina Credit for Child and Dependent Care

If your legal residence is not insured against hurricane, rising

expense is 7% of the federal expense for a full year resident. A

floodwaters, or other catastrophic wind event damage, the limit

part year/nonresident is allowed 7% of their prorated federal

is $250,000 or the value of your legal residence, whichever is

expenses. See examples below. Married filing separately

cannot claim this credit. The maximum credit allowed for one

less.

child is $210. The maximum credit for two or more children is

Depending upon how a particular item was reported or

$420.

deducted, the following items may be an addition or

Example A: Full Year Resident (In this example, the allowable

subtraction.

credit is $140.)

A change in accounting method to conform in the same

Federal Child Care Expense from Form 2441, is

manner and same amount as federal. At the end of the federal

$2,000

adjustment, any balance will continue until fully adjusted. This

may be an addition or subtraction.

$2,000 x .07 = $140

The installment method of reporting is to be adjusted if the

Example B: Part Year/Nonresident (In this example, the

entire sale has been reported for state purposes or to continue

allowable credit is $42.)

on an installment basis if the entire sale has been reported for

federal purposes. This may be an addition or subtraction.

Federal Child Care Expense from Form 2441, is

$2,000 and your proration percent from line 44

Adjust the federal gain or loss to reflect any difference in the

of SC Schedule NR is 30%. Your computation

South Carolina basis and federal basis. This may be an

should be:

addition or subtraction.

$2,000 x .30 = $600 x .07 = $42

Line 4 - TOTAL SUBTRACTIONS

You may not claim this credit if you are a resident of a state

Add lines f through u and enter the total. These are your total

which does not offer a credit for child and dependent care

subtractions.

expenses to a South Carolina resident

SOUTH CAROLINA TAX

Line 12 - TWO WAGE EARNER CREDIT

(MARRIED COUPLE)

This credit can only be claimed by a married couple filing

Line 6 - TAX

jointly when both spouses have earned income taxed to South

Carolina. This credit is not allowed on returns with a filing status

If your "income subject to tax" on line 5 is less than $100,000,

of single, married filing separately or head of household. Do not

use the SC1040 tax tables to determine your South Carolina tax

include gambling or bingo winnings reported on federal form

and enter the amount of tax on line 6.

W-2G.

If your "income subject to tax" on line 5 is $100,000 or more, use

Example - You earned a salary taxed to South Carolina of

the tax rate schedule provided in the SC1040 tax tables to

$20,000. Your spouse earned $17,000 taxed to South Carolina

compute your tax and enter the amount of tax on line 6.

and had an IRA deduction taxed to South Carolina of $1,000.

Line 7 - TAX ON LUMP SUM DISTRIBUTION

Your SC qualified earned income is $20,000 and your spouse's is

$16,000 ($17,000 minus $1,000).

Because your spouse's

South Carolina provisions for lump sum distributions are the

qualified earned income is less than yours, the credit is based on

same as the federal provisions. If you used federal Form 4972 for

your spouse's income. Therefore, the credit is $112 ($16,000 x

a lump sum distribution, you must use the South Carolina

.007).

SC4972 to compute the South Carolina tax.

NOTE: Do not enter the federal 10% penalty on line 7.

Instructions For Form Sc1040 - 2011 Page 6

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