Charleston Chapter – MOAA
Charleston Chapter – MOAA Charleston Chapter – MOAA
                             
Charleston Chapter – MOAA

Charleston Chapter – MOAA




Charleston Chapter – MOAA
Translating Your Military Resume for a Corporate Audience

2018-01-31
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Legislative Info  
Status of SC Income Tax Exemption for Military Retired Pay

 

INCOME TAXES, BANK TAXES, WITHHOLDING, and CORPORATE LICENSE FEES

 

House Bill 3147, Section I (Act No. 272)

 

Military Individual - Earned Income and Retirement Income - New Deduction - General Retirement and Age 65 and Older Deduction - Amended

 

Code Section 12-6-1 170 provides an income tax deduction for an indi idual with retirement income and an income tax deduction for persons 65 and older. Code Section 12-6-1171 has been added to provide an income tax deduction for (a) an individual under age 65 with South Carolina earned income and military retirement income or (b) an individual age 65 and older with military retirement income. With the addition of Code Section 12-6-1171. Code Section 12-6-1170 has been amended to provide for a reduction in the deduction allowed by an amount claimed under Code Section 12-6-1171. A summary of new Code Section 12-6-1 171 and the related amendment to Code Section 12-6-1170 is provided below.

 

1.    Summary of New Code Section 12-6-1171.

 

Individual undcr Aue 65 with South Carolina Earned Income and Military Retirement

 

incomc Code Section 12-6-1171(A)( 1) provides that an individual who has military retirement income ma deduct an amount of his "South Carolina earned income" from South Carolina taxable income equal to the amount of military retirement income that is included in South Carolina taxable income. For purposes of this item. South Carolina earned income has the same meaning as provided in Code Section 12-6-3330. The deduction amount is phased in as follows:

 

 

 

Tax Year Beginning In

Deduction Amount Not to Exceed

2016

$ 5.900

2017

S 8,800

201S

SI 1.700

2019

SI 4.600

2020 and thereafter

SI 7.500

 

In the case of married taxpayers who tile a joint federal income tax return, the deduction is calculated separately as though they had not filed a joint return, so that each individual's deduction is based on the same individual's retirement income and earned income.

 

B.   Individual Age 65 and Older with Military Retirement Income. Code Section 12-6-1171(A)(2) provides that beginning in the year in which an individual reaches age 65, an individual who has military retirement income may deduct his military retirement income that is included in South Carolina taxable income. The deduction amount is phased in as follows:

 

 

 

Tax Year Beginning In

Deduction Amount Not to Exceed

2016

$18,000

2017

$21,000

2018

$24,000

2019

S27.000

2020 and thereafter

S30.000

 

A surviving spouse receiving military retirement income that is attributable to the deceased spouse appies this deduction in the same manner that the deduction applied to the deceased spouse.   If the surviving spouse also has other retirement income, an additional retirement deduction is allow

 

C.   Definitions of Retirement Income.  For purposes of Code Section 12-6-1171. the term "retirement income" means the total of all otherwise taxable income not subject to a penally for premature distribution received by the taxpayer or the taxpayer's surviving spouse in a taxable year from a qualified military retirement plan. For purpose of a surviving spouse, "retirement income" also includes a retirement benefit plan and dependent indemnity compensation related to the deceased spouse's military service.

 

II. Summary of Code Section 12-6-1170 and New Code Section 12-6-1170(C) for Military Individuals.

 

A.   Code Section 12-6-1170(A)- General Retirement Income Deduction. Code Section 12-
6-1170(A) continues to provide an annual income tax deduction from South Carolina
taxable income for retirement income to the owner of a qualified retirement account.
The qualifying taxpayer receiving retirement income may deduct up to $3,000 of such
retirement income annually until reaching age 65, and deduct up to $10,000 of such
retirement income annually at age 65 and thereafter. In addition, a surviving spouse is
allowed a deduction for income received from his or her retirement plan, if any, and a
separate deduction for retirement income that is attributable to the deceased spouse, if
any.

 

B.   Code Section 12-6-1170(B) - Deduction for Age 65 and Older. Code Section 12-6-
1170(B) continues to provide an income tax deduction of up to $15,000 against any
South Carolina taxable income of a resident individual who is 65 or older by the end of
the tax year. Taxpayers filing a joint return arc allowed a deduction of up to $15,000
when only one spouse is 65 or older, and up to $30,000 when both spouses arc 65 or
older, by the end of the tax year. Amounts deducted as retirement income under Code
Section 12-6-1170(A) reduce the $15,000 deduction. Amounts deducted as a surviving
spouse under Code Section 12-6-1170(A) do not reduce this $15,000 deduction.C.             

 

New Code Section 12-6-1170(C) - Military Individuals Claiming a Deduction Under
Code Section 12-6-1171.
Code Section 12-6-1170(C) has been added to provide
modifications to the amounts allowed under the general provisions of Code Section 12-6-
1170(A) and (B). It provides:I f a taxpayer claims a deduction under Code Section 12-6-1171, then the deduction allowed under Code Section 12-6-1170 must be reduced by the amount the taxpayer deducts under Code Section 12-6-1171. This reduction does not apply if the deduction claimed under Code Section 12-6-1171 is claimed by a surviving spouse.In the case of married taxpayers who file a joint federal income tax return, this reduction applies to each individual separately, so that the reduction only applies to the amount the individual claiming the deduction pursuant to Code Section 12-6-1171 otherwise could have claimed under Code Section 12-6-1170 if the individual had not filed a joint return.Effective Date:  Applies to tax years beginning after 2015.

 

 

 

Charleston Chapter – MOAA
Legislative Info
Charleston Chapter – MOAA
Charleston Chapter – MOAA
Charleston Chapter – MOAA

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