What you need to know:
For 2022, the state
Earned Income Tax Credit (EITC) is equal to 104.17% of the federal Earned Income Tax Credit allowed to the taxpayer.
The Two Wage Earner Credit has increased. For 2022, the credit is 0.7% of the lesser of $46,667 or the South Carolina qualified earned income of the taxpayer with the lower qualified income for the taxable year.
The South Carolina Dependent Exemption has increased from $4,300 to $4,430 for each eligible dependent.
Last year, more than 1 million state Individual Income Tax returns claimed state tax breaks available for South Carolina families. With tax season now open, the South Carolina Department of Revenue (SCDOR) reminds families to review deductions and credits they may be able to claim on their state tax returns.
Here are some common state tax credits and deductions available for families:
Child and Dependent Care Credit: For a full-year resident, the credit is calculated at 7% of the federal child and dependent care expense. The maximum credit allowed is $210 for one child or $420 for two or more children. The federal credit offers a maximum of $2,100 in 2022 instead of $8,000 in 2021.
- More than 128,000 returns claimed over $27 million in Child and Dependent Care Credits for tax year 2021.
- Part-year residents or nonresidents are not eligible for this credit unless they are a resident of a state that offers a credit for child and dependent care expense to nonresidents of that state.
- You cannot claim this credit if your filing status is Married Filing Separately.
Two Wage Earner Credit: This credit is available to married couples filing jointly when both spouses have earned income taxed to South Carolina. For tax year 2022, the credit is 0.7% of the lesser of $46,667 or the South Carolina qualified earned income of the taxpayer with the lower qualified income for the taxable year.
- More than 383,000 returns claimed over $71 million in Two Wage Earner Credits for tax year 2021.
- This credit cannot be claimed if your filing status is Single, Married Filing Separately, Qualifying Widow/Widower, or Head of Household.
Child deductions: South Carolina has increased its dependent exemption from $4,300 to $4,430 for each eligible dependent, including both qualifying children and qualifying relatives.
- More than 718,000 returns claimed dependent deductions for tax year 2021, including more than 240,000 returns that claimed exemptions for children under age 6.
Future college payment deductions: Contributions to the SC College Investment Program, (known as Future Scholar) or the SC Tuition Prepayment Program are deductible. You may deduct 100% of any contributions to the SC College Investment Program made between January 1, 2022 and April 18, 2023 and 100% of any contributions to the SC Tuition Prepayment Program made between January 1, 2022 and December 31, 2022.
- More than 33,000 returns claimed more than $389 million in future college payment deductions for tax year 2021.
SC Earned Income Tax Credit: South Carolina's Earned Income Tax Credit (EITC) increases in 2022, to 104.17% of the federal Earned Income Tax Credit. You should first claim the EITC on your federal Income Tax return. If you are not eligible for the federal credit, you cannot claim the state credit. This credit is open to full-year South Carolina residents.
- More than 149,000 returns claimed more than $140 million in SC Earned Income Tax Credits for tax year 2021.
- Use the
IRS's EITC Assistant to check your eligibility for the federal EITC.
- The EITC helps low- to moderate-income working individuals or couples, particularly those who have children.
- South Carolina's version of the federal EITC was adopted in 2018 and is being phased in over six years.
- The IRS's annual
EITC Awareness Day is today, January 27, 2023. Almost 25% of eligible taxpayers
claim the EITC, so we encourage taxpayers to spread the word about this important credit.
Learn more about tax credits and how to claim them at dor.sc.gov/taxcredits.
More tips and filing information are available at dor.sc.gov/iit. To learn more about preparing for your federal return, visit IRS.gov.
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