It’s tax time again. Amazing how fast it comes around!
Before you file your 2016 returns, it is important that you make sure you know about all the available tax credits and deductions, particularly since there are new ones for South Carolina this year. But before we get to those, don’t forget about the Federal Qualified Energy Efficiency Credit, which is still available in 2016. The requirements are very specific, but if you needed a new roof or windows after Hurricane Matthew or replaced a heat pump or water heater during 2016, be sure to check out the instructions for IRS Form 5695 to see if any of your expenses qualify.
Here are a few of the South Carolina credits and deductions that perhaps you weren’t aware of, and first, a word of caution if you are new to South Carolina or still use an out-of-state preparer: with most tax preparation software, the following credits and/or deductions won’t flow through automatically from your federal returns, so make sure you pass on this information!
- Excess Insurance Premium Credit. This can be a big one. If your total Homeowners Insurance costs (including Wind and Hail, Flood and Earthquake) exceed 5% of your Adjusted Gross Income, there is a dollar for dollar credit of up to $1,250 for the amount in excess of the 5%.
- Nursing Home Credit. A credit of up to $300 for nursing home expenses or physician certified in-home care you paid for anyone, including yourself.
- Classroom Teacher Expenses Credit. A credit of up to $275 available to teachers in public or private schools for non-reimbursed classroom supplies or materials (Note teachers, this is a credit and therefore much more valuable than the $250 deduction on your Federal return.)
- Contributions to SC College Investment Program (529 Plan)or SC Tuition Prepayment Program. This is a deduction, but can be a big one as you can pay in up to $14,000 per year (or $70,000 over 5 years) per recipient without incurring Gift Taxes and it may all be deductible from your S. Carolina tax liability.
Be sure to check out the instructions for form SC1040TC for the complete list, as you may be eligible for some unlikely credits or deductions. (The Plug-In Hybrid Vehicle Credit may be relevant to some Seabrookers, but how about the Pre-Marriage Preparation Course Credit or the Venison for Charity Credit?)
New S. Carolina residents should also be aware of the fact that S. Carolina doesn’t have a “Part Year Resident” return. You are allowed to choose whether you file as a resident or a non resident, so be sure to run the numbers both ways. It can result very different total amounts of State Tax. You should also know that there is a significant “Homestead Exemption” on Property Taxes paid on your Primary Residence, which is available to residents over the age of 65, who have lived in S. Carolina for more than one year.
As always, “be sure to consult your tax professional for more information or if you have any questions!”