Since the COVID-19 pandemic, working remotely has become a fixture of the U.S. economy.
According to a survey of businesses by the U.S. Labor Department, 27.5% had employees working remotely last year some or all of the time, down from 40.1% in 2021. University researchers conducting the monthly Working Arrangements and Attitudes survey of workers reported in June 2023 that 41.3% of employees worked remotely some or all of the time.
Both remote workers and out-of-state businesses who employ remote workers in South Carolina often have questions about how the arrangement affects their tax situation. To address those situations, the South Carolina Department of Revenue (SCDOR) offers the following tax tips for both employees and employers:
If you live in South Carolina and work from home for an out-of-state employer:
- South Carolina Income Taxes will be withheld from your paycheck, and you will need to file a South Carolina Individual Income Tax return.
- Residents in South Carolina who pay taxes both to South Carolina and another state may be eligible for a credit on their South Carolina Individual Income Tax return.
- The amount of the credit is the lesser of the amount paid in taxes to South Carolina or to the other state.
- Claim this credit electronically using your filing software or with the SC1040TC if filing by paper.
If you are an out-of-state employer with remote employees who work in South Carolina, in general:
- You are subject to South Carolina's wage withholding laws.
- You must register and pay South Carolina Withholding Tax. For full instructions, click the Can I help? button on MyDORWAY to open Dorwin, our 24/7 virtual assistant, and enter remote employee.
If you are an employer in South Carolina, and you hire employees who are not SC residents and work outside of South Carolina:
- Generally, the remote employees' wages are not taxable in South Carolina since they are located out of state.
- You may be required to withhold Income Taxes from the wages for the state the remote employee is physically located in.
Some exceptions to the South Carolina's withholding laws include:
- An employee who makes less than $1,000 in wages a year.
- An employee who has requested a waiver of withholding requirements.
- A military spouse who requests an exemption from South Carolina withholding under federal law.
- Employees who perform certain agricultural services on a farm.
- Workers who perform domestic services in a private residence.
For more information about remote working, read SC Revenue Ruling #22-3.
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