Here are 8 tips to keep in mind when filing your SC income taxes in 2022
Less than a month remains before the April 18 deadline South Carolinians have to file their income tax returns, or a request for an extension.
Several deductions and credits are available to S.C. tax filers.
Here are seven tips to lessen your tax bill, or increase your refund and get your money faster.
Motor fuel tax credit
Fewer than 3% of filers took advantage of the motor fuel tax credit last year when South Carolina residents sent in their state income taxes, according to the state Department of Revenue.
Fewer than 68,000 of the state’s 2.5 million tax returns claimed about $4.3 million in motor fuel tax credits, leaving more than $80 million on the table.
South Carolina’s motor fuel tax started in 2017 when the Legislature passed the roads bill to address the state’s crumbling infrastructure. The law increased the state’s gas tax by 12 cents. The final increase kicks in July 1 when the tax increases to 28 cents from 26 cents per gallon. That credit will go away in 2023.
To claim the credit, filers have to keep track of how many gallons of motor fuel they bought in 2021, and how much they spent in car maintenance or repairs.
You can fill out the motor fuel tax credit form I-385 to receive the tax credit, which is available on the Department of Revenue’s website, dor.sc.gov.
Future college payments are deductible
If a filer is prepaying college tuition for a student through the state’s Tuition Prepayment Program, or contributing to a Future Scholar program account, 100% of those contributions are deductible on a state tax return.
More than 31,000 tax returns claimed $346 million in future college tuition payments last year, the revenue department said.
To qualify for the deductions, contributions to the Future Scholar program need to be made between Jan. 1, 2021, and April 15, 2022. Contributions to the tuition prepayment program need to be made during the 2021 calendar year.
Child deduction
Every child claimed as a dependent on a tax tax returns qualifies for a $4,300 deduction.
That is a $40 increase from last year’s tax season. If the child is age 6 or younger, the deduction is nearly doubled.
More than 727,000 filers claimed dependents last year, and more than 246,000 claimed deductions for children younger than 6.
Caring for those children
Full-time South Carolina residents can deduct part of the cost of child care expenses they paid during the year.
In South Carolina, filers can claim up to 7% of child care expenses they claimed on their federal returns. The cap of the credit on the state return is $210 for one child, and $420 for two or more children.
Married people filing separately are not eligible for the credit.
College students
Students in college who earn money also have to file tax returns.
If a state resident is attending school in another state, the student still must file a South Carolina return that includes all of their 2021 income. However, if a student paid income taxes in another state, they can claim a credit on their South Carolina form.
For out-of-state residents attending college in South Carolina, they also have to report income earned in the Palmetto State, but they could be eligible for a credit in their home state for taxes paid in South Carolina.
Name, image and likeness
College athletes can now earn money through endorsements. But that money has to be reported on income tax filings.
The Department of Revenue said athletes who are paid for their name, image and likeness should get a 1099 form from each business that paid them.
“Even if you do not receive a 1099, you should report all income you earned on your return,” the department said.
Income earned in the state must be reported on a South Carolina income tax return, no matter the filer’s state of residency.
It’s also not just money that has to reported. Any gifts, including athletic gear or services given as a form of compensation, counts as income.
Charitable contributions
On a federal return, single people can deduct up to $300 in charitable cash contributions, even if they don’t itemize their deductions. The cap is $600 for couples.
This is a benefit put in place earlier in the COVID-19 pandemic.
However, deductions for people who don’t itemize isn’t slated to continue in next year’s tax season. The federal government put the deduction in place as part of its first COVID-19 relief package.
The same deduction isn’t available on a filer’s state tax return.
South Carolina has not yet conformed to that change in the state’s tax code and requires residents to add the amount of the charitable deductions back to their taxable income on their state returns.
Get direct deposit
If you’re entitled to a tax refund, the South Carolina Department of Revenue recommends people use direct deposit instead of waiting for a paper check.
The money would go directly into the filers’ bank accounts, and filers wouldn’t have to wait for a paper checks in the mail or wait to activate a debit card.
To get direct deposit, filers have to provide a bank account on their income tax form.
This story was originally published March 23, 2022 at 5:00 AM.
