Taxes and Benefits
There are a lot of benefits available to retirees. In South Carolina, if you are 65 and older and lived in your house for at least one year, you are entitled to the Homestead Tax Exemption. This program exempts the first $50,000 of the value of your home from all property taxes. This also applies to property held in revocable trust, and is extended to a surviving spouse 50 years or older. In addition other benefits available include: choice to serve or not to serve on city, county or state jury duty; discounted admission fees to state park facilities; free hunting and fishing licenses (at least one year residency requirement); free tuition at state supported education institutions (subject to space); income tax credit….
General Tax Guide for New Residents by SC Department of Revenue:
Homestead Tax Exemption: http://taxweb.charlestoncounty.org/Docs/Tax/Auditor/faqs.html
Individual Income Taxes: http://www.sctax.org/default.htm
Example of Charleston’s County Property Tax: http://www.charlestoncounty.org/index2.asp?p=/departments/Auditor/PropertyTaxCalculationSample.htm
Social Security Retirement Planner: http://www.ssa.gov/retire2/near.htm
The following information came directly from South Carolina Department of Revenue’s website. I strongly encourage you to to visit their website for up-to-date information as laws are constantly changing: http://www.sctax.org/Tax+Information/Individual+Income+Tax/IIT_FAQs.htm#Retirees
INFORMATION FOR RETIREES AND SENIORS FROM THE SOUTH CAROLINA DEPARTMENT OF REVENUE–FREQUENTLY ASKED QUESTIONS:
Do some taxpayers age 65 and older not have to file an SC income tax return?
Yes, certain taxpayers age 65 and older may not have to file a SC income tax return. An individual is not required to file a South Carolina income tax return who has (1) a single, surviving spouse, head of household federal filing status, or a married, filing separately filing status when the spouse does not itemize deductions and (2) gross income less that the sum of the federal exemption amount, the applicable standard deduction amount, and any age 65 and older deduction for which the taxpayer qualifies.
Further, a individual is not required to file a South Carolina income tax return who has (1) a federal joint filing status and (2) combined gross income of less than the sum of (a) twice the federal exemption amount, (b) the standard deduction if the individual and spouse had the same household at the close of the tax year, and (c) any age 65 and older deduction for which the taxpayer qualifies.See Code Section 12-6-4910.(Last revised 12/31/03) (Reviewed 12/4/07)
Is social security taxed by the federal government also taxed in South Carolina?
No. Social Security benefits and railroad retirement taxed for federal purposes are not subject to tax in South Carolina.See Code Section 12-6-1120(4).
Is retirement income received from employment outside of SC taxable?
Retirement income received by a resident individual is taxable in South Carolina. The residency of a taxpayer when the taxpayer receives the retirement income, not the place of employment where the retirement income was earned, determines the taxability of retirement income. South Carolina does not tax the retirement income of nonresident individuals.See Code Section 12-6-1130. Also, see Code Section 12-6-3500 that provides for a credit over the qualifying taxpayer’s lifetime for other state income taxes paid on the employee’s contributions.
Is there a deduction for retirement income subject to tax in South Carolina?
Yes. A taxpayer receiving retirement income may deduct up to $3,000 of qualifying retirement income annually until reaching age 65, and deduct up to $10,000 of such retirement income annually at age 65 and thereafter. For this purpose, "retirement income" means the total of all otherwise taxable income not subject to a penalty for premature distribution from qualified retirement plans (which includes those plans defined in Internal Revenue Code Sections 401, 403, 408, 457) and public employee retirement plans of the federal, state, and local governments, including military retirement.
Further, if both spouses receive retirement income, each spouse is entitled to a retirement income deduction. In addition, a surviving spouse is allowed a deduction for income received from his or her retirement plan, if any, and a second, separate deduction for retirement income that is attributable to the deceased spouse, if any. The deduction for retirement income received as a surviving spouse is based on the age the deceased spouse would have been had he or she lived. See Code Section 12-6-1170(A).
What is the income tax deduction available to all taxpayers age 65 and older?
An income tax deduction of up to $15,000 is allowed against any South Carolina taxable income of a resident individual who is 65 or older by the end of the tax year. The following requirements apply to this deduction:
a. Amounts deducted as retirement income (see above discussion) reduce this $15,000 deduction.
b. Amounts deducted as a surviving spouse (see above discussion) do not reduce this $15,000 deduction.
c. Taxpayer’s filing a joint return are allowed a deduction of up to $15,000 when only one spouse is 65 or older and up to $30,000 when both spouses are 65 or older by the end of the tax year. See Code Section 12-6-1170(B).
I am considering moving to South Carolina. Is pension income taxable?
Pension income received while a resident of South Carolina is taxable to South Carolina. However, South Carolina allows a retirement deduction and an age 65 and over deduction.Code Section 12-6-1170
Is all military retirement pay taxable to South Carolina?
South Carolina does not tax retirement benefits received from the United States or any state for service in a state National Guard or a reserve component of the Armed Forces of the United States. South Carolina does tax military retirement pay based upon service in any other military component (such as active duty), however, South Carolina allows a deduction for up to $10,000 of taxable retirement income. See the discussion above on the retirement income deduction.
An example best illustrates how to determine the amount of military retirement pay that is excluded from South Carolina taxable income. Assume your military retirement pay is from service on active duty and also service in the National Guard. You must determine what portion of the total retirement pay is to be excluded from your South Carolina taxable income. This is a 2 step process.
Step 1: Determine the percentage of your total military service that you served in the National Guard or Reserves based on the following formula:
Reserve time + National Guard time = % Exclusion Total military time
Step 2: Determine the amount of your military retirement income that is not subject to tax:
% Exclusion x Total military retirement income = Military Retirement pay not subject to tax in SC taxed on your federal return
See Code Sections 12-6-1120(7) and 12-6-1170(A).
The State of South Carolin’s Lieutenant Governor’s Office on Aging publishes a summary document which outlines the benefits available to senior citizens in South Carolina. Below, please find the document.
Exempt from the additional 1% sales tax that went into effect with the passage of the Education Improvement Act (Code 12-36-2620). Senior citizens must ask for exemption at time of purchase and may be required to show proof of age. If there are questions, the merchant should call the Department of Revenue at 803-898-5417.
Choice to serve or not to serve on Federal court jury duty.
Apply for Social Security whether planning to retire or not (may apply 3 months prior to Social Security retirement age).
Apply for Medicare (automatically eligible if qualify for Social Security benefits).
Part A – hospital insurance – free.
Part B – other medical services, which require a monthly premium of $78 (penalty for late enrollment). Medicare pays 80% of allowable charges after deductible. Individual must pay remaining 20% and any other additional charges.
May be eligible for Supplemental Security Income (SSI) payments depending on resources and income. If you are eligible for SSI, you automatically receive Medicaid.
Income Tax Credit – South Carolina will allow a $15,000 deduction from taxable income for taxpayers 65 years of age and older. Taxpayers under age 65 may exclude from taxes $3,000 of their qualified retirement income annually (SC Code 12-6-1140). At age 65, the deduction on retirement income increases to $10,000 and retirees may claim an additional $5,000 deduction on other income. The total deduction cannot exceed $15,000.
Discounted Palmetto Passport admission to state park facilities.
Hunting and Fishing Licenses – Free, permanent hunting and fishing licenses (at least one-year residency requirement). (Code 50-9-840) Call 803-734-3833
Vehicle Discount – biennial registration fee for private passenger-carrying vehicles discounted to $20. The annual registration fee for any property carrying vehicle with a gross weight of 5000 pounds or less is $30 biennially. (Code 56-3-620)
Free eye care – call 1-800-222-EYES (3937) to receive referral to local ophthalmologist who will provide needed medical eye care at no cost to qualifying individuals. Must be US citizen. Does not cover hospital charges, drugs or eyeglasses – Weekdays 11 am to 7 pm.
Apply for Social Security if plan to retire. Apply no later than last day of month you want benefits to begin.
Special discounts may be given on eyeglasses, lenses or any accessories. (Code 40-37-240)
Free tuition at all state supported educational institutions that include state universities, colleges and technical schools (subject to space restrictions and usual entrance requirements). (Code 59-111-320)
May retire from the S. C. State Retirement System after 28 years of service. (Code 9-1-1510)
Automobile insurance credit is mandated for persons who are 55 years of age or older and have successfully completed a driver training course approved by the Dept. of Public Safety. Contact local 55 Alive program through AARP. Call 1-888-227-7669.
NO AGE RESTRICTIONS FOR THE FOLLOWING
Retirement Income - Prior to reaching age 65, taxpayers may exclude annually $3,000 of their retirement before calculating their taxable income (SC Code 12-6-1140). Once taxpayers reach age 65, they may exclude $10,000 of retirement income. You can take this deduction on income received from any qualified retirement plan, including IRAs, government pension plans, Keogh plans and private sector pensions. Retirees may also claim an additional $5,000 exemption on other income upon reaching age 65. Total deductions cannot exceed $15,000. (The $15,000 total deduction may also be claimed on any source of income, not just retirement income.)
Home Care or Nursing Home Credit – Tax credit of 20%, not to exceed $300, of expenses paid for intermediate or skilled care to an institution is allowed. (Code 12-7-1235) A credit of 20% on expenses, up to $300 annually, is allowed on state income tax for nursing home care at home or in a licensed institution. (Code 12-6-3390)
To exempt home and vehicle property taxes, you must first file an application at the county auditor’s office.
Please check the SC Department of Revenue website, http://www.sctax.org for changes in the state’s tax laws each year. All information is subject to change. You can also call the Department of Revenue main number at (803) 898-5300.
We also recommend that you contact a tax professional if you have any questions or are in doubt about a tax issue or procedure.