Questions & Answers

What are some examples of other additions to income?

  • If you claim a Exceptional Needs Children Education Credit for contributions you made to a nonprofit scholarship funding organization and deducted the amount of these contributions on your federal return, you must add back that amount for South Carolina purposes.
  • If you claim a child care program credit for donations to a nonprofit corporation (Schedule TC-9), you are not allowed a deduction for those donations. The disallowed deductions are an addition to federal taxable income.
  • If you claim credits such as the Community Development Credit (Schedule TC-14), the Industry Partnership Fund Credit (Schedule TC-36), or the Credit for Child Care Program (Schedule TC-9), you may not claim a deduction for the same qualified contribution which results in credits.
  • If your federal net operating loss is larger than your state net operating loss you must add back your federal net operating loss.
  • If you deduct expenses on your federal return related to any income exempt or not taxed by South Carolina those expenses are additions. Some examples are investment interest to out-of-state partnerships and interest paid to purchase United States obligations.
  • If you have foreign areas allowances, cost of living allowances, or income from possessions of the United States they must be added back to your federal taxable income.
  • Effective for qualifying investments made after June 30, 1998, you must reduce the basis of the qualifying property to the extent the Capital Investment Tax Credit is claimed. An addition to federal taxable income must be made for the resulting reduction in depreciation.
  • The qualified business income deduction under IRC Section 199A must be added back.
  • If you can claim a charitable contribution deduction under IRC Section 170 for a gift of land it must be added back unless the contribution also meets the requirements of S.C. Code Section 12-6-5590.
  • As of January 1, 2009, a business must add back any amount paid for services performed by an unauthorized alien if the amount is $600 or more a year. An "unauthorized alien" is a person who is not admitted for permanent residence and not authorized to be employed either under federal law or by the U.S. Attorney General. An add-back is not required if one or more of the following applies:
    1. The business is a S.C. business exempt from compliance with federal employment verification procedures under federal law.
    2. The person being paid is not directly paid or employed by the business.
    3. The employment status of the person is verified using the procedures contained in the new law.
    4. The person was hired by the taxpayer before January 1, 2009.
    5. The business made a reasonable investigation of the person and didn't know or shouldn't have known that the person was an unauthorized alien.
  • If you make a change in the accounting method of your business to conform in the same manner and the same amount used on your federal return you may have an addition or a subtraction. At the end of the federal adjustment, any balance will continue until fully adjusted.
  • The installment method of reporting is to be adjusted if the entire sale has been reported for state purposes or to continue on an installment basis if the entire sale has been reported for federal purposes. This may be an addition or a subtraction.
  • You should adjust the federal gain or loss to reflect any difference in the South Carolina basis and federal basis. This may be an addition or a subtraction.

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