STATE TAX ADD BACK, IF ITEMIZING ON FEDERAL RETURN
If you deducted state and local income taxes or general sales taxes while itemizing on your 2016 federal income tax return, you are required to add all or part of this amount to federal taxable income to arrive at your South Carolina taxable income. Use the worksheet below to figure the adjustment.
If you have reported losses from out-of-state rental property, a business located outside South Carolina, or losses from real property located out of state, enter the amount shown on your federal return on line b. You must also include any related expenses, such as investment interest. Enter the total of these losses and related expenses on this line. Personal service income (W-2 or business wages) is taxable to South Carolina no matter where it is earned.
Expenses related to Reserve income
Because inactive duty military reserve income is taxed for federal purposes but deductible on your South Carolina return, you must add back the amount of the federal deduction for expenses related to this income. Enter the amount of these expenses here.
Interest Income-Interest income on obligations of states and political subdivisions other than South Carolina must be added. In the case of a mutual fund, add back the percentage of exempt interest income attributable to out-of-state non federal obligations. Enter the amount of taxable interest income on this line.
Other Additions to Income-Attach an explanation of your entry for this line. Some examples of items which you must enter on this line are:
Taxpayers that claim bonus depreciation under federal law must add back the difference between the bonus depreciation taken
and the depreciation which would have been allowed without bonus depreciation.
- Taxpayers who claim a nonrefundable credit for contributions to Exceptional SC are not allowed a deduction for these contributions. I a taxpayer deducts the amount of the contributions on his or her federal return, the taxpaye must ad back the amount of the deduction for SC purposes.
Taxpayers that claim a child care program credit for donations to a nonprofit corporation (Sch. TC-9) are not allowed a deduction
for those donations. The disallowed deductions are an addition to federal taxable income.
Taxpayers that claim credits such as the Community Development Credit (Sch. TC-14), the Industry Partnership Fund Credit (Sch. TC-36), and the Credit for Child Care Program (Sch TC-9) may not claim a deduction for the same qualified contribution which results in the credit.
Federal net operating loss when claiming a larger amount than for state purposes is an addition.
Expenses deducted on the federal return related to any income exempt or not taxed by South Carolina is an addition. Some examples are investment interest to out-of-state partnerships and interest paid to purchase United States obligations.
Foreign areas allowances, cost of living allowances and/or income from possessions of the United States are additions to federal taxable income.
Effective for qualifying investments made after June 30, 1998, taxpayers must reduce the basis of the qualifying property to the extent the Capital Investment Tax Credit is claimed. An addition to federal taxable income must be made for the resulting reduction in depreciation.
The qualified business income deduction under IRC Section 199 must be added back.
A charitable contribution deduction under IRC Section 170 for a gift of land must be added back unless the contribution also meets the requirements of S.C. Code Section 12-6-5590.
Include any withdrawals during the tax year from a Catastrophe Savings Account that were:
(1) necessary because contributions were more than the allowable limits; or
(2) more than the amount needed to cover qualified catastrophe expenses. (Qualified catastrophe expenses are expenses paid or incurred because of a major disaster as declared by the Governor.) Do not include any withdrawals made by a spouse surviving the spouse who set up the Account.
- As of January 1, 2009, a business must add back any amount paid for services performed by an unauthorized alien if the amount
is $600 or more a year.