2020 LEGISLATIVE UPDATE
– A list of significant changes in tax and regulatory laws and regulations enacted during the 2020 legislative session is available from the SCDOR Policy Division. Review Information Letters 20-19
CONFORMITY – As of the 2021 Legislative Session, South Carolina conforms to the Internal Revenue Code as of December 31, 2020, except as otherwise provided. If Internal Revenue Code sections adopted by South Carolina which expired on December 31, 2020 are extended, but otherwise not amended, by congressional enactment during 2021, these sections are also extended for South Carolina Income Tax purposes in the same manner that they are extended for federal Income Tax purposes.
UNEMPLOYMENT COMPENSATION – For tax year 2020, South Carolina adopted the federal provisions excluding up to $10,200 of unemployment compensation from taxable income. You must have less than $150,000 in federal adjusted gross income for 2020 to be eligible for this tax relief.
If you already filed your federal and South Carolina Individual Income Tax returns, you will need to amend your South Carolina return:
If you filed a federal return that included unemployment compensation, the
IRS plans to adjust your return and notify you of the corrections. If you have not received a notice from the IRS and want to go ahead and file, simply subtract the amount of your unemployment compensation, up to $10,200, from your federal taxable income. Include this adjusted amount on your South Carolina amended return.
If you filed a federal return that excluded unemployment compensation and you added that amount back to your original South Carolina return, you will need to remove any unemployment compensation, up to $10,200, on your South Carolina amended return.
For faster processing, file your amended SC1040 electronically. Check with your tax preparer or software provider to see if you can file your amended return electronically.
If you need to file by paper, file a new 2020 SC1040, and check the Amended Return box. Complete the return as it should have been filed, including all schedules and attachments, plus an Amended Return Schedule (Sch. AMD).
Do not use the SC1040X to amend the 2020 South Carolina Individual Income Tax return.
If your filing status is married filing jointly and both spouses received unemployment benefits, both can exclude up to $10,200.
You may need to adjust any income-based nonrefundable tax credits you previously filed, especially the Earned Income Tax Credit, to reflect your lower income.
Allow a minimum of 12 weeks for your amended South Carolina return to be processed.
If you filed an extension and have not yet filed your federal and South Carolina Individual Income Tax returns:
- You must file your federal tax return first, excluding up to $10,200 of unemployment compensation. No adjustments are needed to your South Carolina Individual Income Tax return.
- File your returns, including all schedules and attachments, by the extension due date of October 15, 2021.
Remember to file online if available and choose direct deposit to receive your refund for safe, accurate, and fast processing.
For more information about the federal tax exclusion of unemployment benefits under the American Rescue Plan, visit IRS.gov.
INCREASE IN SOUTH CAROLINA DEPENDENT EXEMPTION (line w of the SC1040) – The South Carolina dependent exemption amount for 2020 is $4,260 and is allowed for each eligible dependent, including both qualifying children and qualifying relatives.
INCREASE IN MOTOR FUEL INCOME TAX CREDIT – The refundable Income Tax credit increased from 3 cents per gallon to 7 cents per gallon in 2020. Full or part-year resident taxpayers may claim the refundable credit for the lesser of the increase in South Carolina Motor Fuel User Fee they paid during 2020 or the preventative maintenance costs they incurred in South Carolina during the tax year. The credit is limited to two private passenger motor vehicles or motorcycles. To claim the credit, attach a completed I-385 to your return.
INCREASE IN EARNED INCOME TAX CREDIT – Full‐year residents may claim the South Carolina Earned Income Tax Credit. For 2020, the non‐refundable credit is equal to 62.50% of the Federal Earned Income Tax Credit allowed the taxpayer.
INCREASE IN TWO WAGE EARNER CREDIT – The maximum credit available for the Two Wage Earner Credit (claimed by a married couple filing jointly when both taxpayers have earned income taxed to South Carolina) has increased. For 2020, the credit is 0.7% of the lesser of $40,000 or the South Carolina qualified earned income of the taxpayer with the lower qualified income for the taxable year.
SC DEPARTMENT OF ARCHIVES AND HISTORY CONTRIBUTION FOR CHECK-OFF
– Contributions to the SC Department of Archives and History are used to purchase or preserve collections with significant historical value to the State. For more information visit the SC Department of Archives and History at
PRECEPTOR CREDIT AND DEDUCTION
– For tax years 2020 through 2025, a nonrefundable Individual Income Tax credit is available for eligible physicians, advanced practice registered nurses, or physician assistants who serve as preceptors for qualifying clinical rotations required by a medical school, physician assistant program, or advanced practice nursing program. Credit amounts are phased in over a five-year period. If a taxpayer serves additional rotations that exceed the credit limit for the tax year, they may be eligible for a deduction on line v of the SC1040. Use the
to determine if you are eligible for the credit and to calculate the credit and the deduction. For more information, refer to SC
Revenue Ruling 20-2
.SOUTH CAROLINA HOUSING TAX CREDIT
– The South Carolina Housing Tax Credit is a nonrefundable tax credit available to eligible owners of residential low-income rental buildings who are certified by the South Carolina Housing and Finance Development Authority. Use the
to claim the credit. For more information, refer to
Revenue Ruling 21-5