South Carolina FAQ - Does South Carolina have any tax credits that may reduce my tax liability?

Use Form SCTC40

Credit for Taxes Paid to Another State
The credit is available to a South Carolina resident or a part-year resident if state income taxes are paid to South Carolina and another state on the same income. The credit is computed only on income that is required to be taxed in both states. You may claim the credit on your South Carolina return only if you actually filed a return with the other state and had a tax liability to the other state. Tax liability does not refer to the tax withheld from your pay, but rather to the tax computed on the other state's return (the amount the other state did not refund to you).

Carry-Over of Unused Qualified Credits
Enter the carry-over of unused nonrefundable credits from prior years. Refer to the particular form applicable to your tax credit for the maximum credit and period of time to carry-over. Attach a break down of the credit by type and year started.

Nursing Home Credit
A credit is allowed for expenses paid by an individual for his own support or the support of another to an institution, in any state, providing nursing facility level of care or to a provider for in-home or community care. A physician must certify that nursing care is needed. No credit is allowed for expenses paid from public source funds (such as Medicaid or Veterans Administration). The credit is computed by multiplying the paid expenses by 20% not to exceed a maximum credit of $300.00. No carry-over is permitted if credit exceeds tax due.

Scenic River Tax Credit
A credit is available to taxpayers who donate certain lands adjacent to designated rivers or sections of a river. Enter the amount from the appropriate line of TC-5 on SC1040TC, line 4.

Drip/Trickle Irrigation Systems Credit
A taxpayer may claim a tax credit for the purchase and installation of the
following:

Conservation tillage equipment;

Drip/trickle irrigation system; or

Dual purpose combination truck and crane equipment.
Enter the amount from the appropriate line of TC-1 to SC1040TC, line 5.

Minority Contractor Business Credit
An income tax credit is allowed to a contractor who awards a subcontract to a South Carolina-based minority business certified by the Small and Minority Business Assistance Office. Enter the final amount from the appropriate line of TC-2 to SC1040TC, line 6.

Water Resources Credit
A tax credit is allowed to encourage the private sector of our economy to invest in the construction of water storage and control structures for soil and water conservation, wildlife management, agriculture and aquaculture purpose. Enter the amount from the appropriate line of TC-3 to SC1040TC, line 7.

New Jobs Credit
The new jobs credit is available to taxpayers who operate manufacturing, tourism, processing, warehousing, distribution, research and development, corporate office, and qualifying service related facilities. Employers which create the required number of new full-time jobs qualify for the tax credit. It is first claimed in the year after the required number of jobs have been created. See TC-4 for computation of the allowable credit.

Palmetto Seed Capital Credit
A tax credit isallowed for taxpayers who invest in the Palmetto Seed Capital Corporation. The Palmetto Seed Capital Corporation was established to increase the rate of capital formation, to stimulate new growth-oriented business formations, to create new jobs, and to supplement conventional business financing. Enter the amount from the appropriate line of TC-7 to SC1040TC, line 9.

Employer Child Care Creidt
A tax credit is allowed to an employer who establishes a child care program for the benefit of his/her employees. A credit is also allowed for donations to a non-profit corporation that provides child care services to his/her employees. Enter the amount from the appropriate line of TC-9 on SC1040TC, line 10.

Base Closure Credit
An income tax credit is allowed to employers who hire employees terminated from employment as a result of the closing or realignment of a federal military installation. Enter the amount from the appropriate line of TC-10 to SC1040TC, line 11.

Econmic Zone Impact Credit
An income tax investment credit is allowed for qualifying property placed in service in a taxable year in an economic impact zone. For detailed legislative changes, see instructions to TC-11. Enter the amount from the appropriate line of TC-11 to SC1040TC, line 12.

Family Independence Payments Credit
An income tax credit is allowed to employers who paid qualified wages to qualifying recipients of Family Independence Payments. Enter the amount from the appropriate line of TC-12 to SC1040TC, line 13.

Additional Family Independence Payments Credit
Employers are allowed an additional income tax credit for hiring qualified Family Independence Payment recipients in a least developed county. Enter the amount from the appropriate line of TC-12A to SC1040TC, line 14.

Motion Pictures Credits Before July 1, 2004
Before July 1, 2004, an income tax credit of 33%, but not more than $15,000, is allowed for investment in a qualified South Carolina motion picture project or in a motion picture production or post-production facility in South Carolina. Enter the amount from the appropriate line of TC-13 on SC1040TC, line 15.

Qualified Retirement Plan Contribution Credit
A credit in an amount equal to taxes paid on qualified retirement plan contributions made by a taxpayer while residing in another state which did not exempt such contributions from its state income tax is allowed. The credit must be spread over the life expectancy of the taxpayer. Contact the Department of Revenue for more information concerning the computation of this credit.

Community Development Credit
A credit exists against income for amounts invested in a community developmentncorporation or financial institution. The credit is not allowed if the amount invested is claimed as an IRC Section 170 deduction. The credit may not exceed five million dollars for all taxpayers. A taxpayer must first obtain a certificate from the SC Department of Commerce attesting that the entity invested in qualifies for the credit and that the credit remains available. The credit is limited to 33% of the amount invested. The credit may be carried forward to any tax year beginning before ten years from the date of stock acquisition. If the entity invested in redeems the stock or other equity interest within five years, the credit is disallowed retroactively. The credit is effective for tax years after 2000 and expires on June 1, 2005. Enter the amount from the appropriate line of TC-14 on SC1040TC, line 17.

Qualfied Conservation Contribution Credit
A credit is allowed for a gift of land for conservation or for a qualified conservation contribution on any qualified real property interest. The gift or contribution has to be made after May 31, 2001. The taxpayer must qualify for and claim a federal charitable deduction for the gift or contribution. The credit is limited to 25% of the allowable federal deduction, to $250 per acre of property, and to a total of $52,500. The credit may be carried forward and is transferable upon written notification to and approval by the SC Department of Revenue. Enter the smaller amount from the appropriate line of TC-19 on SC1040TC, line 18.

Certified Historic Structure Credit
A credit is allowed for a project that meets the requirements of IRC Section 47. The credit is equal to 10% of qualifying costs incurred after 2002, for property placed in service after June 30, 2003. The credit must be taken in five equal installment, beginning in the year the property was placed in service. Any unused credit may be carried forward for five years. Enter the amount from the appropriate line of TC-21 to SC1040TC, line 19.

Certified Historic Residential Structure Credit
A credit is allowed for a project that does not qualify under IRC Section 47 and that is pre-approved by the State Historic Preservation Officer. Upon completion of the project, the taxpayer must obtain certification from the State Historic Preservation Officer. The credit is equal to 25% of qualifying costs incurred after 2002, for property placed in service after June 30, 2003. The credit must be taken in five equal installments beginning in the year the property was placed in service. Any unused credit may be carried forward for five years. Enter the amount from the appropriate line of TC-22 to SC1040TC, line 20.

Textiles Rehabilitation Credit
A credit against property tax or income tax is allowed for rehabilitation of a textile manufacturing facility. The taxpayer must elect the type of tax and receive approval from the SC Department of Commerce before the property is placed in service. A taxpayer who fails to obtain approval will receive only the income tax credit. The credit is equal to 25% of the taxpayer's rehabilitation expenses for property placed in service after June 30, 2004. The credit must be taken in five equal installments beginning in the year the property is placed in service. Any unused credit may be carried forward for five years. Enter the amount from the appropriate line of TC-23 on SC1040TC, line 21.

Commercials Credit
After June 30, 2004, an income tax credit is allowed to a production company that produces one or more commercials with a total base investment of $500,000 in a state-certified production during a calendar year. The credit equals 10% of the taxpayer's actual amount invested in South Carolina. Any unused credit may be carried forward for 10 years. Enter the amount from the appropriate line of TC-24 on SC1040TC, line 22.

Motion Pictures Credits After July 30, 2004
After June 30, 2004, an income tax credit of 20%, but not more than $100,000, is allowed for investment in a qualified South Carolina motion picture project or in a motion picture production or post-production facility in South Carolina. Enter the amount from the appropriate line of TC-25 on SC1040TC, line 23.

These tax credits apply only against your tax liability. The amount of credit cannot exceed the tax you owe.

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