Active Trade or Business Income: Pass-through income from sole proprietorships, partnerships, S-corporations, or limited liability companies not taxed as C-corporations. Does not include passive investment income or expenses related to it, capital gains or losses, guaranteed payments for personal services, or amounts reasonably related to personal services.
Capital Gain: Profit from the sale or trade of an investment property such as stock or real estate. Can be long-term (held for more than one year) or short-term (held for less than one year).
Composite Return: A single return filed by a partnership, S-corporation, or limited liability company (LLC) taxed as a partnership or S-corporation on behalf of two or more nonresident individuals, trusts or estates who are partners, shareholders of the S-corporation or members of the LLC. A composite return allows S-corporations or partnerships to compute and report the South Carolina income and tax attributable to electing nonresident shareholders or partners on a single tax return. Filed using Form SC1040.
Dependent: A qualifying child or qualifying relative for whom you can claim an exemption.
Direct Deposit: One of the three options for South Carolina taxpayers to receive their refund. The refund is deposited directly to the taxpayer's bank account. The taxpayer must have an established checking or savings account to use this option. This fast, simple, safe, secure method is the option recommended by the SCDOR. (Related: Paper Check, Prepaid Debit Card, Refund)
Exemption: A type of deduction claimed for yourself, your spouse (if filing jointly) and each of your dependents.
Extension: A later filing due date allowed to taxpayers who need more time to file their South Carolina tax return. An extension can be requested online at dor.sc.gov/MyDORWAY or by filing paper form SC4868 by the original due date of the return. Taxpayers must pay at least 90% of the anticipated balance due with the extension request, or they will be subject to an underpayment penalty.
File a Return: To mail or otherwise submit a taxpayer's income and tax liability information, in the specified format, to the SCDOR or IRS. This can be done by paper or online. The SCDOR's preferred filing method is filing online.
Filing Status: Determines the rate at which income is taxed. The five filing statuses are: single, married filing a joint return, married filing a separate return, head of household, and qualifying widow(er) with dependent child. Learn more.
Gross Income: Money, goods, services, and property a person receives that must be reported on a tax return. Includes unemployment compensation and certain scholarships. It does not include welfare benefits and nontaxable Social Security benefits.
Interest Income: The income a person receives from certain bank accounts or from lending money to someone else.
Income Taxes: Taxes on income, both earned (salaries, wages, tips, commissions) and unearned (interest, dividends). Income taxes can be levied on both individuals (personal or individual income taxes) and businesses (business and corporate income taxes).
Limited Liability Corporation (LLC): A limited liability company (LLC) is an unincorporated business association that provides its owners (members) limited liability and flexible management and financial alternatives. If an LLC is a corporation for federal income tax purposes, it is a corporation for South Carolina income tax purposes. Likewise, if an LLC is a partnership for federal income tax purposes, it is a partnership for South Carolina income tax purposes.
Lump-sum Distribution: The payment within one year of the full amount of your interest in a pension or profit-sharing plan.
Net Capital Gain: The excess of the net long term capital gain from the sale or exchange of a capital asset held for more than one year, over the net short term capital loss of capital assets held for one year or less.
Nonrefundable Credit: A type of tax credit which can reduce tax liability to zero and cannot produce a refund larger than the tax owed. Can be claimed on the SC1040TC. (Related: Refundable Credit, Tax Credit)
Nonresident: For tax filing purposes, you are a nonresident of South Carolina if your permanent home is outside South Carolina all year and none of the resident qualifications apply to you. (Related: Part-Year Resident, Resident)
Nontaxable Income: Types of income on which taxes are not owed. Examples of income that are usually not taxable: child support payments, gifts, bequests and inheritances, welfare benefits, damage awards for physical injury or sickness, cash rebates from a dealer or manufacturer for an item you buy, and reimbursements for qualified adoption expenses. Some income is not taxable except under certain conditions. (Related: Taxable Income)
Paper Check: One of the three options for South Carolina taxpayers to receive their refund. Checks are mailed to the taxpayer. (Related: Direct Deposit, Prepaid Debit Card, Refund)
Partnership: A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business. A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.
Part-Year Resident: Individuals who are South Carolina residents for only a portion of the tax year may choose to file either as a resident or a nonresident. If you file as a resident, you should report all income on SC1040 as if you were a resident for the full year. You will be allowed a tax credit on taxes paid on income to South Carolina and another state. If you file as a nonresident, you will be taxed only on income earned while a resident in South Carolina, and your deductions and exemptions will be prorated. (Related: Nonresident, Resident)
Prepaid Debit Card: One of the three options for South Carolina taxpayers to receive their refund. These cards are issued by Bank of America and mailed to the taxpayer. (Related: Direct Deposit, Paper Check, Refund)
Refund: Money owed to taxpayers when their total tax payments are greater than their total tax liability. South Carolina refunds can be received via direct deposit, prepaid debit card or paper check. You can check your refund status by visiting
dor.sc.gov/refund or calling 803-898-5300.
Refundable Credit: A tax credit which reduces the income tax owed or provides a refund to the taxpayer if the credit is larger than the tax otherwise owed. Reported on lines 21 and 22 of SC1040. (Related: Nonrefundable Credit, Tax Credit)
Resident: For tax filing purposes, you are a South Carolina resident (even if you live outside South Carolina) when: Your intention is to maintain South Carolina as your permanent home; AND South Carolina is the center of your financial, social and family life; AND when you are away, South Carolina is the place to which you intend to return. (Related: Nonresident, Part-Year Resident)
SC1040: Form used to file your South Carolina Individual Income Tax Return for both residents and nonresidents. Nonresidents and part-year residents must also submit the Schedule NR.
S-Corporation: S-corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S-corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their Individual Income Tax rates.
Tax Credit: A tax credit is an amount of money that can be offset against a tax liability. Most of South Carolina's income tax credits may be earned by C-corporations, S-corporations, partnerships, sole proprietors, and limited liability companies (regardless of how they are taxed). (Related: Nonrefundable Credit, Refundable Credit)
Taxable Income: Taxable income is the gross income of an individual or corporation, less any allowable tax deductions. Your taxable income is the amount of your income that is subject to income tax. (Related: Nontaxable Income)
Use Tax: The purchase of tangible goods for use in South Carolina, on which no South Carolina sales and use tax has been paid, are subject to the use tax. Examples include: catalog purchases, goods bought online, or furniture purchased out of state and delivered to South Carolina on which no (or insufficient) South Carolina tax was paid.
Withholding: Money that employers withhold from employees' paychecks. This money is deposited for the government. (It will be credited against the employee's tax liability when they file their returns.) Employers withhold money for federal income taxes, Social Security taxes and state and local income taxes in some states and localities.