It’s tax time again. And while all the talk has been about the new tax laws, don’t forget that we have one more year of filing under the old laws.
Before you file your 2017 returns, it is important that you make sure you know about all the available tax credits and deductions, particularly the ones for South Carolina. You should also check to see if you qualify for the Federal Qualified Energy Efficiency Credit, which is still available in 2017. The requirements are very specific, but if you needed a new roof or windows after the hurricane or replaced a heat pump or water heater during 2017, be sure to check out the instructions for IRS Form 5695 to see if any of your expenses qualify.
The following is a summary of some of the more interesting South Carolina credits and deductions, and 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 check the South Carolina forms to be sure you’re getting all the credits you’re entitled to!
- 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 South 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 for the 2018 tax year is the new “Motor Fuel Income Tax Credit.” Though we won’t be able to claim this credit until next year, you need to start collecting your gas receipts and receipts for any repairs and maintenance to your personal vehicles now. The credit will be the lesser of any resident taxpayer’s increase in motor fuel payments (which will average 3 cents per gallon) or actual expenses for preventative maintenance on up to two private motor vehicles and will be claimed on SC Form I-385.
New South Carolina residents should also be aware of the fact that South 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 in 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 South Carolina for more than one year.
As always, “be sure to consult your tax professional for more information or if you have any questions!”