Example 1. Mr. R is a resident of South Carolina who works in another state. The other state's return shows wages of $20,000. No other income sources appear on the other state's return. Line 2 would be $20,000 as that gross amount (before deductions and exemptions) was included in line 1 and is being taxed by another state.

Example 2. Same as example 1 except Mr. R's other state's return also shows $10,000 in rental income from a property located in the other state. Line 2 would reflect $20,000 as the $10,000 rental income located in the other state is not taxed by South Carolina.

Remember: You are determining the gross amount of income being taxed by both South Carolina and another state.

Tax paid to other state should reflect only the portion of the tax paid to the other state which is attributable to the income which is being taxed by both states. Do not use withholding amounts shown on your W-2 forms.

Example: Mr. M's other state's return shows $5,000 in wages, $7,000 in rental income from the other state, and $8,000 from the sale of a house located in the other state. The other state's total tax liability is $546. Since only the $5,000 in wages is subject to tax in both states, line 6 would be computed as follows:

$ 5,000/$20,000 X $546 = $137

The credit is limited to the South Carolina tax or the other state's tax on the income being taxed by both states, whichever is less.

NOTE: If you are allowed this credit for taxes paid another state, and that state later refunds or credits part of the tax which generated the credit, you must repay the South Carolina Department of Revenue within 60 days from the date of receipt of the refund or notice of the credit, by filing an SC1040X (Amended Return).

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