Summary:
South Carolina taxable income of a partnership is the same as federal partnership taxable income with certain South Carolina modifications. Multi-state partnerships must directly allocate certain items and apply an apportionment ratio to the remaining income (loss) of the partnership. Taxable income (loss) of a partnership flows through and is taxable to the partners in the same manner as for federal partnership income.
South Carolina income taxable to nonresident partners is subject to withholding by the partnership at a 5% rate. Nonresident partners providing affidavits of their intention to file or who are included in a composite return filed by the partnership on behalf of all of its nonresident partners are exempt from the withholding requirement.
New for 2021 Tax Year
A qualifying partnership, including an LLC taxed as a partnership, can elect to have its active trade or business income taxed at the entity level instead of the partner level. A qualifying partnership is one whose owners are all:
- individuals
- estates
- trusts
- entities not included in SC Code Sections 12-6-530 through 12-6-540
- entities not included in SC Code Section 12-6-550
- other entities not exempt from South Carolina Income Tax, or
- partnerships owned, directly or through other partnerships, by qualified owners listed above
This election is made annually at the partnership level on the
SC1065 on behalf of all partners. Mark the box on page 1 of the SC1065 to make your Active Trade or Business election.
Electing qualified partnerships must use the
I-435, Active Trade or Business Income For Electing Partnerships and S Corporations, to identify active trade or business income and calculate the tax due. Partnerships will use the
SC1065 K-1, Partner's Share of South Carolina Income, Deductions, Credits, Etc., to report to each partner their share of the active trade or business income taxed at the partnership level.
For more information, refer to SC Revenue Ruling
21-15.
New for 2022 tax year
Partnerships must file a Declaration of Estimated Tax if:
- they choose to pay their Active Trade or Business Income Tax at the entity level, and
- they expect to owe an Active Trade or Business Income Tax liability of $100 or more with the filing of their SC1065, Partnership Tax Return.
This expected total tax does not include Nonresident Withholding Tax paid on behalf of nonresident partners.
Use the SC1065ES, Partnership Declaration of Estimated Income Tax, to make quarterly Estimated Tax payments for your Partnership. Pay online using our free online tax portal, MyDORWAY, at
dor.sc.gov/pay. Select Business Income Tax Payment to get started. Do not submit the
SC1065ES if you pay online. If filing by paper, be sure to include the name of the Partnership and FEIN in the memo line of the check or money order. Mail payment with the SC1065ES to the address on the form. Partnerships are not subject to underpayment penalties.
How to File:
Partnership taxpayers whose South Carolina tax liability is $15,000 or more per filing period
must file and pay electronically.
Due Dates:
Payment of withholding tax is due along with the filing of the return by the 15 day of the third month after year end. An extension to file is not an extension to remit the withholding tax due.
Mailing Address:
|
Payment Included |
No Payment |
Extension (SC8736) | Correspondence
|
|---|
|
Payment Included:
South Carolina Department of Revenue
Taxable Partnership
PO Box 125
Columbia, SC 29214-0036 |
No Payment:
South Carolina Department of Revenue
Nontaxable Partnership
PO Box 125
Columbia, SC 29214-0037 |
Tentative:
South Carolina Department of Revenue
Taxable Extension
PO Box 125
Columbia, SC 29214-0036 | South Carolina Department of Revenue
Partnerships
PO Box 125
Columbia, SC 29214-0400 |
