South Carolina – Status of Federal Changes for Tax Year 2017 Tax Returns

The South Carolina Department of Revenue (SCDOR) is providing an update to individuals, tax preparers, and tax software companies regarding the federal tax provisions recently renewed for tax year 2017.

South Carolina has not yet adopted the federal tax provisions that were retroactively renewed for tax year 2017 in the Bipartisan Budget Act of 2018 (enacted February 9, 2018). Legislative action is needed before these provisions can be claimed on 2017 South Carolina income tax returns.

Federal tax provisions available for 2017 federal tax returns that have not been enacted by South Carolina include:

  1. Exclusion from gross income of discharge of qualified principal residence indebtedness (often, foreclosure-related debt forgiveness), claimed on Form 982.
  2. Mortgage insurance premiums treated as qualified residence interest, claimed on Schedule A.
  3. Deduction for qualified tuition and related expenses, claimed on Form 8917.
  4. Deduction for out-of-pocket medical expenses that exceed 7.5% of adjusted gross income (rather than 10%).

Taxpayers in the process of completing 2017 South Carolina income tax returns have several options while awaiting legislative action:

  1. Postpone filing your tax return until closer to the filing deadline. This may avoid the possibility of needing to file an amended return later. The 2017 South Carolina Individual Income Tax returns are due April 17, 2018. Taxpayers filing electronically have until May 1 to file and pay the balance due without penalty.
  2. File your South Carolina tax return now based on current South Carolina law and make adjustments on your South Carolina return for the federal provisions that South Carolina has not yet adopted. You can amend your South Carolina tax return later to claim one of the renewed tax benefits if South Carolina adopts the provision during the legislative session.
  3. Extend your South Carolina tax return and wait until the end of the South Carolina legislative session to file. This may avoid the possibility of needing to file an amended return later. Extended 2017 South Carolina Individual Income Tax returns are due by October 15, 2018.

Visit the SCDOR’s website for updates on South Carolina’s income tax conformity legislation.

The South Carolina legislative session is scheduled to end in mid-May.

 

FOR MORE INFORMATION:
SCDOR Public Affairs Office
803-898-5201