SC1040 Long Form Instructions

1. SC1040INSTRUCTIONS2008(Rev.8/15/08)
If you are married and filing a joint return, fill in your spouse's name and your spouse's Social Security number.
Printortypeyourname,address,SocialSecuritynumberandthecodeofthecountyinwhichyoulive.Foralistof
county codes see page 29.
ITIN-INDIVIDUALTAXPAYERIDENTIFICATIONNUMBER
IfyouareanonresidentorresidentalienandcannotgetaSocialSecuritynumber,youmaycontacttheInternal
RevenueServicetoapplyforandobtainanIndividualTaxpayerIdentificationNumber(ITIN)forthepurposeoffiling
incometaxreturns.SouthCarolinawillacceptthisnumberinplaceofaSocialSecuritynumberforthepurposesof
processingyourindividualincometaxreturns.ForinformationonobtaininganITIN,pleasecontacttheInternal
Revenue Service at 1-800-829-1040 or go to www.IRS.gov
It is important to
mark your filing
status and
exemptions to
avoid delays in
processing your
return!
Ifyouaremarriedandfilingseparatereturns,donotincludeyourspouse'snameorSocialSecuritynumberin
this section. Fill in your spouse's Social Security number next to box # 3 in the filing status section.
If the taxpayer or spouse died during the taxable year, check the box by the decedent's name.
Tip
Make sure your
mailing address
is complete and
correct.
NAME, ADDRESS AND SOCIAL SECURITY NUMBER
IfyouwererequiredtousefederalschedulesC,D,Eand/orFwithyourfederalreturnorfiledaScheduleNR,
SC1040TC,I-319and/orI-335withyourSouthCarolinareturn,attachacopyofyourcompletedfederalreturnand
schedule(s) to your South Carolina return.
Nonresidentsfortheentireyearandpartyearresidentselectingtofileasanonresidentshouldcheckthisboxand
attachScheduleNRtothecompletedSC1040.DonotsubmittheScheduleNRseparately.
If you filed a federal or state extension, check the box.
IfyouarefilingacompositereturnforapartnershiporScorporation,checkthebox.Usethecompanynameandthe
company'sfederalidentificationnumber.Youneednotuse"Compositereturnfor"or"Shareholdersof"inthename
section.
IncompliancewiththeFederalPrivacyActof1974,PublicLaw93-579,thedisclosureoftheindividual'sSocial
Securitynumberonthisformismandatory.42U.S.C.405(c)(2)(C)(I)allowsaState(orapoliticalsubdivisionhereof)
toutilizeanindividual'sSocialSecuritynumberinconnectionwiththeadministrationofanytaxandSCregulation
117-201providesthatanypersonrequiredtomakeareturn,statementordocumenttotheDepartmentofRevenue
mustincludeidentifyingnumbersonsuchreturn,statementordocumentiftheDepartmentrequestssuchinformation.
SocialSecuritynumbersareprimarilyusedforthepurposesofidentifyingtaxpayersandmonitoringtaxcompliance
and/or fraud.
CHECK BOXES
Fortaxyear2008,unlessyouhaveavalidextension,theduedateisApril15,2009andthedeadlinetoclaimarefund
is April 15, 2012.
COMPLETEYOURFEDERALRETURNBEFOREYOUBEGINYOURSOUTHCAROLINATAXRETURN.YOUR
COMPLETED FEDERALRETURNWILLCONTAININFORMATIONWHICHYOUMUSTENTERONTHESOUTH
CAROLINA RETURN.
Tip
Complete your
federal return
first!
NOTE:IfyouarefilingacompositereturnforapartnershiporSCorporation,marksinglefilingstatusandone
exemption.
Ifyouareclaimingadeductionforchildrenundersix,youmustenterinthespaceprovidedthenumberofchildren
under six. Also, be sure to complete the information required on line 52.
Enter the number of taxpayers who are age 65 or older.
EXEMPTIONS
Youmustenterthesamenumberofexemptionsclaimedonyourfederalreturn.AttachfederalForm8332ifyouare
required to file this form with your federal return.
Tip
FILING STATUS
Checkthesamefilingstatusyoucheckedonyourfederalreturn.Checkonlyonebox.
10

2. Instructions - South Carolina Form SC1040
Line8TAXONACTIVETRADEORBUSINESSINCOME
Enter the amount from I-335, line 7.
Tip
DoNotenterthe
federal 10%
penalty on line 7.
Tip
The two wage
earnercredit
cannotbe
claimed on
returns with a
filing status of
single, married
filing separately
or head of
household.
Line7TAXONLUMPSUMDISTRIBUTION
SouthCarolinaprovisionsforlumpsumdistributionsarethesameasthefederalprovisions.IfyouusedfederalForm
4972 for a lump sum distribution, you must use the South Carolina SC4972 to compute the South Carolina tax.
Nonresident/Part Year filers complete Schedule NR and go to line 5. See Schedule NR instructions.
Ifyour"incomesubjecttotax"online5is$100,000ormore,usetaxratescheduleonpage33tocomputeyourtax
and enter the amount of tax on line 6.
Line12TWOWAGEEARNERCREDIT(MARRIEDCOUPLE)
Thiscreditcanonlybeclaimedbyamarriedcouplefilingjointlywhenbothspouseshaveearnedincometaxedto
SouthCarolina.Thiscreditisnotallowedonreturnswithafilingstatusofsingle,marriedfilingseparatelyorheadof
household. Do not include gambling or bingo winnings reported on federal form W-2G.
Example-YouearnedasalarytaxedtoSouthCarolinaof$20,000.Yourspouseearned$17,000taxedtoSouth
CarolinaandhadanIRAdeductiontaxedtoSouthCarolinaof$1,000.YourSCqualifiedearnedincomeis$20,000
andyourspouse'sis$16,000($17,000minus$1,000).Becauseyourspouse'squalifiedearnedincomeislessthan
yours, the credit is based on your spouse's income. Therefore, the credit is $112 ($16,000 x .007).
Computeyourearnedincomeseparatelyforyourselfandyourspouse.SouthCarolinaearnedincomeisgenerally
incomeyoureceiveforservicesyouprovide.Itincludeswages,salaries,tips,commissionsandsub-pay.Italso
includesincomeearnedfromself-employment,businessincomeorloss,partnershipincomeorloss,farmincomeor
lossandanyotherearnedincometaxedtoSouthCarolina.Earnedincomedoesnotincludegamblingorbingo
winnings,interest,dividends,SocialSecuritybenefits,IRAdistribution,unemploymentcompensation,deferred
compensationornon-taxableincome.Italsodoesnotincludeanyamountyourspousepaidyou.
1.Wages,salaries,tips,etc.,taxedtoSouthCarolinafromSouth
CarolinaScheduleNR,ColumnB,line1;federalForm1040,line7;
1040A,line7or1040EZ,line1.(Donotincludepensionsorannuities.)
2.Netprofitor(loss)fromself-employment(fromScheduleCandon
ScheduleK-1ofForm1065)andanyotherearnedincometaxedto
SouthCarolina.
continued on next page
Nonresident/Part Year filers complete Schedule NR and go to line 5. See Schedule NR instructions.
ExampleA:FullYearResident(Inthisexample,theallowablecreditis$140.)
FederalChildCareExpensefromForm2441,line6or1040A,Schedule2,line6is$2,000
$2000x.07=$140
ExampleB:PartYear/Nonresident(Inthisexample,theallowablecreditis$42.)
FederalChildCareExpensefromForm2441,line6or1040A,Schedule2,line6is$2,000and
yourprorationpercentfromline44ofSCScheduleNRis30%.Yourcomputationshouldbe:
$2000x.30=$600x.07=$42
Youmaynotclaimthiscreditifyouarearesidentofastatewhichdoesnotofferacreditforchildand
dependent care expenses to a South Carolina resident.
Line9TAXONEXCESSWITHDRAWALS FROMCATASTROPHE SAVINGSACCOUNTS
Withdrawals from a Catastrophe Savings Account are taxed at 2.5% unless:
(1) the taxpayer no longer owns a qualified legal residence in South Carolina;
(2) the amount contributed was within the allowable limits, and the withdrawal occurred after the taxpayer reached age
70; or
(3) the withdrawal followed the death of the individual who set up the Account or the surviving spouse.
Line11CHILDANDDEPENDENTCARE
TheSouthCarolinaCreditforChildandDependentCareexpenseis7%ofthefederalexpenseforafullyearresident.
Apartyear/nonresidentisallowed7%oftheirproratedfederalexpenses.Seeexamplesbelow.Marriedfiling
separatelycannotclaimthiscredit.Themaximumcreditallowedforonechildis$210.Themaximumcreditfortwo
or more children is $420.
CREDITS
(a)You (b)YourSpouse
ROUND-OFF ALL AMOUNTS TO THE NEAREST WHOLE DOLLAR.
STOP!
Line1EnteryourFederalTaxableIncomefromyourfederalForm1040,line43;1040A,line27;or1040EZ,line6.If
yourFederalTaxableIncomeiszeroorless,enterzerohereandenteryournegativeamountonline50.
Line4Residentfilerscompletelines38-54andenterfigurefromline54.
Line2Residentfilerscompletelines32-37andenterfigurefromline37.
SOUTH CAROLINA TAX
Tip
Lines 1 and 5
should not be
blank. Refer to
instructions for
these lines.
Line6TAX
Ifyour"incomesubjecttotax"online5islessthan$100,000,usethetaxtablesonpages30through33todetermine
your South Carolina tax and enter the amount of tax on line 6.
11

3. Instructions - South Carolina Form SC1040
continued on next page
3. Add lines 1 and 2. This is your total earned income taxed to SC.
Line13OTHERNON-REFUNDABLE CREDITS
SeeSC1040TCinstructionsforanexplanationoftheothernon-refundablecredits.Theappropriateschedulesmust
be attached to your return.
5.Subtractline4fromline3.Thisisyourqualifiedearnedincometaxedto
SouthCarolina.Iftheamountincolumn(a)or(b)iszero(-0-)orless,
stophere.Youmaynottakethiscredit.
Compute the credit.
6.Enterthesmallerof5(a)or5(b).Donotentermorethan$30,000.
7.Multiplytheamountonline6by.007.Donotentermorethan$210.
EntertheamounthereandonSC1040,line12.
(b) Your Spouse(a) You
4.AddamountsenteredonfederalForm1040lines27through29and32.
IffilingSouthCarolinaScheduleNR,enteramountsfromlines21,22,
23,26andanyrepaymentofsupplementalunemploymentbenefits
(sub-pay)allocabletoSouthCarolinaincome.
Line16SCINCOMETAXWITHHELDFROMWAGES
EnterthetotalSCtaxwithheldfromyourwagesasshownonyourW-2sunder"StateIncomeTax."Enteronly
amountswithheldtoSouthCarolina.WithholdingpaidtoanyotherstatecannotbeclaimedonyourSouthCarolina
return. Also include amounts withheld on SC41s.
Line18PAYMENTSONEXTENSION
Ifyourequestedanextensionformoretimetofileyourreturn,entertheamountyoupaidwiththeextension,ifany.
Check the appropriate box on the front of the return below the address portion.
Line172008ESTIMATEDTAXPAYMENTS
EnterthetotalestimatedtaxpaymentsyoumadebeforefilingthisSouthCarolinataxreturnplusanyamount
transferred from your 2007 tax return.
If you have South Carolina withholding from any federal Form 1099, include that amount on line 20.
NOTE:AmountsreportedonaSouthCarolinasubstitute1099G/INTarenotSouthCarolinawithholding.
Line20SCINCOMETAXWITHHELD-FORM1099
EnterthetotalSCtaxwithheldfromeachForm1099andattachacopyofeachForm1099tothefrontofyourreturn.
Form W-2 withholding should be entered on line 16.
NOTE:AmountsreportedonaSouthCarolinasubstitute1099G/INTarenotSouthCarolinawithholding.
TAX PAYMENTS/CREDITS
AttachREADABLEcopiesofyourW-2stothefrontofyourreturn,rightsideup,attheplaceprovided.Copiesof
yourW-2sareavailableonlyfromyouremployer.IfyoudonothaveaW-2form,completeSC4852andprovide
proof of any tax withheld. You are responsible for submitting information to verify the withholding amount claimed.
Line21TUITIONTAXCREDIT
RefertoI-319toseeifyouqualifytoclaimthiscredit.Ifyouqualify,completeallinformationonI-319andattachitto
yourreturn.Ifyouhavemorethanonequalifyingstudent,completeaseparateI-319foreachstudent.Formore
information, visit our website: www.sctax.org
Line19NONRESIDENT SALEOFREALESTATE
AnonresidentofSouthCarolinawhosellsrealpropertylocatedinthisstateissubjecttowithholdingofSouthCarolina
incometaxes.SuchsalemustbereportedtoSouthCarolinaonanindividualincometaxreturn.Ifstateincometaxes
werewithheldatthetimeofsale,claimtheamountwithheldonthislineandattachacopyoftheI-290toyourreturn.
See closing attorney for a copy of I-290.
Tip
Attach all W-2s,
1099s and/or
SC41s!
Credit for
withholding can
beallowedonly
ifallsupporting
documents are
provided. You
can only claim
withholding from
the state of
South Carolina.
(a)You (b)YourSpouse
Line22OTHERREFUNDABLE CREDITS
Enter amounts from I-333 refundable credit for anhydrous ammonia additive and I-334 refundable credit for production
and sale of milk. Attach I-333 and/or I-334.
This credit can only be claimed on SC1040. Attach a copy of your federal return.
SouthCarolinaqualifiedearnedincome.Thisistheamountonwhichthecreditisbased.Computeitby
subtracting certain adjustments from South Carolina earned income. The adjustments are:
Onehalfofself-employmenttax(Form1040,line27)
Self-employed SEP, simple, and qualified plans (Form 1040, line 28)
Self-employed health insurance deduction (Form 1040, line 29)
IRA deduction (Form 1040, line 32 or 1040A, line 17)
Repaymentofsub-pay
12

4. Instructions - South Carolina Form SC1040
Line26SOUTHCAROLINAUSETAX
Ifyourusetaxhasnotbeenremittedduringtheyear,seeSouthCarolinaUseTaxWorksheetUT-3Wforinstructions.
AddtheamountsfromLine5ofUT-3Wworksheet.Purchasessubjecttousetaxaretaxedatyourcounty'sstateand
local sales and use tax rate.
Line30REFUND
Ifline29islargerthanline24,gotoline31.Otherwise,subtractline29fromline24andenterthe"Amounttobe
Refunded to You" on line 30. The SC Department of Revenue will not refund amounts less than $1.00.
Youmayoweapenaltyforunderpaymentifyoudidnotpayinfourequalamountsbytherequiredduedatesatleast
the smaller of: 90% of your tax liability for 2008; or 100% of your tax liability for 2007.
However,ifyouradjustedgrossincomeis$150,000ormore,the100%ruleismodifiedtobe110%ofthetaxshown
onyour2007incometaxreturn.UseSC2210todetermineanypenaltythatmaybedue.Ifyouareduearefund,
subtractthepenaltyamountfromthedifferenceofline24andline29andentertheresultonline30.Ifyouowetax,
add the penalty amount to the sum of the amount due on line 25 and line 29 and enter the result on line 31.
Ifyouhavecalculatedfailuretofile/paypenaltiesandinterest,addtoanycalculatedunderestimationpenaltyand
enter the total in the penalty box on line 31.
Line31NETDUE-AMOUNTYOUOWE
Ifyouhaveanamountonline29,addlines25and29andenterthe"AmountYouOwe"online31;otherwise,enter
theamountfromline25.WriteyourSocialSecurityNumberand"2008SC1040"onyourcheckormoneyorder,and
STAPLEtoyourreturn.Makecheckormoneyorderpayabletothe"SCDepartmentofRevenue."NotetheSC2210
penalty instructions below.
REFUND OR AMOUNT YOU OWE
Tip
See "Common
Errors" on page
2 for reasons
your refund may
be delayed.
Tip
Your state tax
addback cannot
be less than
zero.
Enterallnumbersonlines32through36aspositivenumberseveniftheyarenegativenumbersonthefederal
return.Lines32through36areadjustmentswhichmustbeaddedtoyourfederaltaxableincometodetermineyour
South Carolina taxable income. Line 37 is the total of these additions.
WorksheetAStateTaxAdjustment
3.Subtractline2fromline1.(Enterzeroifline2isgreaterthanline1.) 3.
1.Itemizeddeductionsfrom2008federalForm1040,line40. 1.
ADDITIONS TO FEDERAL TAXABLE INCOME
2.Enterallowablefederalstandarddeductionyouwouldhavebeen
allowedifyouhadnotitemized.(Enterzeroifmarriedfiling
separate[MFS]returns--Seefederalinstructions) 2.
Line32STATETAXADDBACK,IFITEMIZINGONFEDERALRETURN
Ifyoudeductedstateandlocalincometaxesorgeneralsalestaxeswhileitemizingonyour2008federalincometax
return,youarerequiredtoaddallorpartofthisamounttofederaltaxableincometoarriveatyourSouthCarolina
taxable income. Use the worksheet below to figure the adjustment. (Keep this worksheet for your records.)
5.Thelesserofline3orline4.EnterthisamountonSC1040line32. 5.
4.Entertheamountofstateandlocalincometaxesfromline5aorgeneral
salestaxesfromline5boffederalScheduleA.
Ifyourfederalitemizeddeductionswerelimitedduetoyouradjustedgross
incomebeingmorethan$159,950($79,975marriedfilingseparate),go
toWorksheetB. 4.
UNDERPAYMENT OF ESTIMATED TAX - SC2210
Line28CONTRIBUTIONFORCHECK-OFFS
SeeI-330forspecificinformationaboutthevariousfundstowhichyoumaycontribute.EnterthetotalfromSchedule
I-330. Attach I-330 to your return. Your contribution cannot be made unless you attach I-330.
Line27ESTIMATEDTAX
If you want to apply any or all of your overpayment toward next year's tax, enter the amount on this line.
13

5. Instructions - South Carolina Form SC1040
WorksheetBStateTaxAdjustment.Completewhenfederaladjustedgrossincomeismorethan
$159,950 ($79,975 married filing separate) and federal itemized deductions are limited:
1.
1.Stateandlocalincometaxesfromline5aorgeneralsalestaxes
fromline5boffederalScheduleA.
Line36OTHERADDITIONSTOINCOME
Attachanexplanationofyourentryforthisline.Someexamplesofitemswhichyoumustenteronthislineare:
Line35INTERESTINCOME
InterestincomeonobligationsofstatesandpoliticalsubdivisionsotherthanSouthCarolinamustbeadded.Inthe
caseofamutualfund,addbackthepercentageofexemptinterestincomeattributabletoout-of-statenonfederal
obligations. Enter the amount of taxable interest income on this line.
Line34EXPENSESRELATEDTORESERVEINCOME
BecauseinactivedutymilitaryreserveincomeistaxedforfederalpurposesbutdeductibleonyourSouthCarolina
return,youmustaddbacktheamountofthefederaldeductionforexpensesrelatedtothisincome.Entertheamount
of these expenses on this line.
Line33OUT-OF-STATELOSSES
Ifyouhavereportedlossesfromout-of-staterentalproperty,abusinesslocatedoutsideSouthCarolina,orlossesfrom
realpropertylocatedoutofstate,entertheamountshownonyourfederalreturnonline33.Youmustalsoincludeany
relatedexpenses,suchasinvestmentinterest.Enterthetotaloftheselossesandrelatedexpensesonthisline.
Personalserviceincome(W-2orbusinesswages)istaxabletoSouthCarolinanomatterwhereitisearned.
4.Entertheamountfromline11oftheitemizeddeductionsworksheet
intheinstructionbookletforfederalForm1040.
5.Multiplyline3byline4,andentertheresulthere.
3.Divideline1byline2,andentertheresulthere.
Taxpayersthatclaimachildcareprogramcreditfordonationstoanonprofitcorporation(Sch.TC-9)arenot
allowedadeductionforthosedonations.Thedisalloweddeductionsareanadditiontofederaltaxableincome.
Taxpayersthatclaimacreditforwagespaidtoemployeesterminatedduetoabaseclosure(Sch.TC-10)must
reducethedeductionforwagespaidbytheamountofthecredit.Theamountofthiscreditisanadditiontofederal
taxableincome.
Federalnetoperatinglosswhenclaimingalargeramountthanforstatepurposesisanaddition.
Taxpayersthatclaimbonusdepreciationunderfederallawmustaddbackthedifferencebetweenthebonus
depreciationtakenandthedepreciationwhichwouldhavebeenallowedwithoutbonusdepreciation.
ExpensesdeductedonthefederalreturnrelatedtoanyincomeexemptornottaxedbySouthCarolinaisan
addition.Someexamplesareinvestmentinteresttoout-of-statepartnershipsandinterestpaidtopurchase
UnitedStatesobligations.
Foreignareasallowances,costoflivingallowancesand/orincomefrompossessionsoftheUnitedStatesare
additionstofederaltaxableincome.
EffectiveforqualifyinginvestmentsmadeafterJune30,1998,taxpayersmustreducethebasisofthequalifying
propertytotheextenttheEconomicImpactZoneInvestmentTaxCreditisclaimed.Anadditiontofederaltaxable
incomemustbemadefortheresultingreductionindepreciation.
Tip
For further
information
about additions
to federal
taxable income
visit our website:
www.sctax.org
AdeductionfordomesticproductionactivitiesunderIRCSection199mustbeaddedback.
AcharitablecontributiondeductionunderIRCSection170foragiftoflandmustbeaddedbackunlessthe
contributionalsomeetstherequirementsofS.C.CodeSection12-6-5590.
2.Entertheamountfromline3oftheitemizeddeductionsworksheet
intheinstructionbookletforfederalForm1040.
6.Subtractline5fromline1.Enterthisamountonline4ofWorksheetA.
2.
3.
4.
5.
6.
14
AsofJanuary1,2009,abusinessmustaddbackanyamountpaidforservicesperformedbyanunauthorizedalien
iftheamountis$600ormoreayear.An“unauthorizedalien”isapersonwhoisnotadmittedforpermanent
residenceandnotauthorizedtobeemployedeitherunderfederallaworbytheU.S.AttorneyGeneral.An
add-backisnotrequiredif:(1)thebusinessisaS.C.businessexemptfromcompliancewithfederalemployment
verification procedures under federal law; or (2) the person being paid is not directly paid or employed by the
Include any withdrawals during the tax year from a Catastrophe Savings Account that were:
(1) necessary because contributions were more than the allowable limits; or
(2) more than the amount needed to cover qualified catastrophe expenses. (Qualified catastrophe expenses
are expenses paid or incurred because of a major disaster as declared by the Governor.)
Do not include any withdrawals made by a spouse surviving the spouse who set up the Account.

6. Instructions - South Carolina Form SC1040
Theinstallmentmethodofreportingistobeadjustediftheentiresalehasbeenreportedforstatepurposesorto
continueonaninstallmentbasisiftheentiresalehasbeenreportedforfederalpurposes.Thismaybeanaddition
orasubtraction.
Depending upon how a particular item was reported or deducted, the following items may be an addition or a
subtraction:
Line38STATETAXREFUND
If your state tax refund was included on line 10 of your federal Form 1040, that amount should be entered on this line.
15
Line40OUT-OF-STATERENTAL/BUSINESS ORREALESTATEINCOMENOTTAXABLETOSOUTH
CAROLINA
Ifyouhaveincomefromout-of-staterentalproperty;abusinesslocatedoutsideSouthCarolina;orgainfromreal
propertylocatedoutofstate,asreportedonyourfederalreturn,enterthisamountonthisline.However,personal
service income (W-2 or business wages) is taxable to South Carolina no matter where it is earned.
Tip
Third party sick
pay reported on
W-2 cannot be
treated as
permanent
disability
retirement
income.
Line41NETCAPITALGAINDEDUCTION
NetcapitalgainswhichhavebeenheldforaperiodofmorethanoneyearandhavebeenincludedintheSCtaxable
income are reduced by 44% for SC income tax purposes.
Lines38through53areadjustmentswhichshouldbesubtractedfromyourfederaltaxableincometodetermineyour
South Carolina taxable income. Line 54 is the total of these subtractions.
Enter all numbers on lines 38 through 53 as positive numbers even if they are negative numbers on the federal return.
AdjustthefederalgainorlosstoreflectanydifferenceintheSouthCarolinabasisandfederalbasis.Thismaybe
anadditionorasubtraction.
SUBTRACTIONS FROM FEDERAL TAXABLE INCOME
Theterm"netcapitalgain"meanstheexcessofthenetlong-termcapitalgainforthetaxableyearoverthenet
short-termcapitallossforsuchyear.Incomereceivedfrominstallmentsalesaswellascapitalgaindistribution
qualifiesforthisdeductionprovidedthemorethanoneyearholdingperiodhasbeenmet.Multiplythenetgain
which meets the above guidelines by 44% (.44) and enter the results on this line.
Example:Taxpayer'sgainonstock(heldsince1980)is$10,000.Alsoreportedisashortterm(ST)
lossonstockheldforsixmonthsof$5,000andalongterm(LT)lossonstockheldsince1985which
amounts to $3,000.
SCNetLTCapitalGain(morethanoneyear) $7,000(10,000gain-3,000loss)
-SCNetSTCapitalLoss -5,000(oneyearorless)
SCNetCapitalGain $2,000
XNetLTCapitalGainDeduction X44%
Amounttobededucted $880.00
Tip
Do not enter
wages earned in
another state on
SC1040 line 40.
See SC1040TC.
Tip
South Carolina
Capital Gains
holding period is
the same as the
federal holding
period (generally
more than one
year) .
Line39TOTALANDPERMANENT DISABILITYRETIREMENTINCOMETAXEDONYOURFEDERALRETURN
Ifdisabilityretirementincomewastaxedonyourfederalincometaxreturnandyouaretotallyandpermanently
disabled,youmaybeabletodeductthisincomefromyourSouthCarolinataxableincome.
Youmustbetotallyandpermanentlydisabled,unabletobegainfullyemployedinanycapacity,receivingincomefrom
adisabilityretirementplan,andeligibleforthehomesteadexemptionunderSection12-37-250toqualify.Youdonot
qualifyifyouarereceivingdisabilityincomefromonejobwhileabletoperformanotherjob.Youmustattachacopyof
the physician's statement establishing that you are permanently and totally disabled.
NOTE:Thedeductionislimitedtopaymentsreceivedfromretirementplans.Paymentsfromdisabilityplans
whicharenotretirementplansarenoteligibleforthededuction.ThirdpartysickpayreportedonaW-2does
notqualifyforthetotalandpermanentdisabilityretirementdeduction.
Asurvivingspousemaytakeadisabilityretirementdeductionforamountsreceivedintheyearthedisabledspouse
died.Forsubsequentyears,asurvivingspouseisonlyeligiblefortheretirementdeductiononline48andnotthe
disability deduction.
Achangeintheaccountingmethodtoconforminthesamemannerandthesameamounttothefederal.Thismay
beanadditionorasubtraction.Attheendofthefederaladjustment,anybalancewillcontinueuntilfully
adjusted.
business;or(3)theemploymentstatusofthepersonisverifiedusingtheprocedurescontainedinthenewlaw;or(4)
thepersonwashiredbythetaxpayerbeforeJanuary1,2009;or(5)thebusinessmadeareasonableinvestigationof
the person and did not know or should not have known that the person was an unauthorized alien.

7. Instructions - South Carolina Form SC1040
Line48RETIREMENTDEDUCTION
Anindividualwhoisunderage65mayclaimaretirementdeductionupto$3,000ofqualifiedretirementincomefrom
his or her own plan.
Anindividualwhoisage65orolderduringthetaxyearmayclaimaretirementdeductionupto$10,000ofqualified
retirement income from his or her own plan.
Online48a,includeonlyqualifiedwithdrawalsfromthetaxpayer’sownqualifiedretirementplan.Online48b,include
only qualified withdrawals from the spouse’s own qualified retirement plan.
"QUALIFIEDRETIREMENTINCOME"isincomefromplansdefinedinI.R.C.401,403,408and457,andallpublic
employeeretirementplansofthefederal,stateandlocalgovernments,includingindividualretirementplans,Keogh
plans, and military retirement.
SocialSecurityincome,railroadretirementincome,anddisabilityretirementincomeduetopermanentand
totaldisabilitydoNOTqualifybecausetheseitemsarenottaxedbySouthCarolina.Seelines39and47.
AnyamountofqualifiedretirementincomesubjecttoafederalprematurewithdrawalpenaltydoesNOTqualifyfora
retirement deduction.
Asurvivingspousereceivingqualifiedretirementincomeattributabletothedeceasedspousemaydeductupto
$3,000or$10,000ofthequalifiedretirementincome,basedontheagethedeceasedspousewouldhavebeenhad
heorshelived.Toclaimthedeductiononline48c,asurvivingspousemustreceivethedecedent'squalified
retirementincomeasasurvivingspouse.Thesurvivingspouseretirementdeductionisinadditiontotheindividual
retirement deduction.
Youmaydeduct100%ofanycontributionsmadetotheSCTuitionPrepaymentProgramin2008.Youmaydeduct
100%ofanycontributionmadetotheSCCollegeInvestment("FutureScholar")Programmadein2008andthrough
April 15, 2009.
Line43CONTRIBUTIONS TOTHESCTUITIONPREPAYMENT PROGRAMORTHESCCOLLEGE
INVESTMENTPROGRAM
Interestincomefromthefollowingobligationsaretaxableforstatepurposes:
Federal Home Loan Mortgage Corporation (Freddie Mac)
Federal National Mortgage Association (Fannie Mae)
Government National Mortgage Association (Ginnie Mae)
Line46NATIONALGUARDandRESERVEANNUALTRAININGandDRILLPAY
Theamountofincomereceivedforweekenddrillsandcustomarytrainingperiodswhenservinginthemilitary
reservesorNationalGuardshouldbesubtracted.Generally,thecustomarytrainingperiodisoneweekendamonth
andtwoweeksperyearofactiveduty.Entertheamountonthisline.Incomeforactivedutyorfull-timereservesis
not tax exempt and should not be included on this line.
DonotincludeMilitaryReserveandNationalGuardpaywhichisincludedinretirementincomeonthisline.Seeline
53 instructions for other subtractions, page 18.
Tip
Provide birth
dates for
taxpayers
claiming the
retirement
deduction.
Line45INTERESTFROMU.S.OBLIGATIONS
IfyouincludedyourinterestincomefromU.S.obligations(suchasU.S.savingsbonds,treasurynotesandbills,etc.)
asincomeonyourfederalincometaxreturn,entertheamountonthisline.DeducttheinterestincomefromSouth
Carolina and/or federal obligations.
Line47SOCIALSECURITYAND/ORRAILROADRETIREMENTAMOUNTIFTAXEDBYFEDERAL
IfyouaretaxedonanySocialSecurityunderTitle2oftheSocialSecurityActorrailroadretirementincomeonyour
federal return, enter the amount that was taxed on your federal return.
Line44ACTIVETRADEORBUSINESSINCOMEDEDUCTION
Enter the amount from I-335, line 5.
16
Volunteerfirefighters,rescuesquadworkers,volunteerhazardousmaterialHAZMATteammembers,reservepolice
officers,DepartmentofNaturalResource(DNR)deputyenforcementofficers,andmembersoftheStateGuardare
allowedtodeduct$3,000.Volunteerfirefighters,rescuesquadworkersandHAZMATmembersqualifyonlyiftheir
employerprovidesthemwithaformstatingthattheyhaveearnedtheminimumnumberofpointsestablishedbythe
StateFireMarshalduringtheyear.Reservepoliceofficers,DNRdeputyenforcementofficer,andtheStateGuard
membersqualifyonlyiftheappropriateauthorityprovidesthemwithanI-332certificationformcertifyingtheireligibility
forthisdeduction.Anindividualislimitedtoonedeductionof$3,000.Ifataxpayerandspousebothqualify,enter
$6,000.
Line42VOLUNTEERFIREFIGHTER/RESCUE SQUADWORKER/VOLUNTEER HAZMATTEAMMEMBER/
RESERVE POLICE OFFICER/DNR DEPUTY ENFORCEMENT OFFICER/STATE GUARD MEMBER DEDUCTION

8. Instructions - South Carolina Form SC1040
Line50NEGATIVEAMOUNTOFFEDERALTAXABLEINCOME
Ifthedeductionsandpersonalexemptionsfromyourfederalreturnexceedtheincomeorifthereisabusinessloss
that exceeds the other income on the return, a negative federal taxable income would result.
FortheSC1040form,itisimportantthatanegativenumbernotbeenteredonline1.BecausetheSouthCarolina
returnbeginswithfederaltaxableincome,itisimportantthatyougetthebenefitofthenegativeamountfromthe
federaltaxableincomelineofthefederalreturn.OntheSC1040form,startwithzeroonline1andputthenegative
amount from the federal taxable income line of the federal return on this line of the SC1040.
Worksheet for Spouse line 49b:
1.Maximumdeductionallowedforspouse $15,000.00
2.Amountclaimedonline48bforthetaxpayerwhoisage
65orolder
3.Subtractline2fromline1.Enterthisamountonline49b.
Donotenteranamountlessthanzero.
1.
1.
2.
3.
2.
3.
2.
Worksheet for Taxpayer line 49a:
1.Maximumdeductionallowedfortaxpayer $15,000.00
2.Amountclaimedonline48aforthetaxpayerwhoisage
65orolder
3.Subtractline2fromline1.Enterthisamountonline49a.
Donotenteranamountlessthanzero.
Worksheet for Spouse line 48b:
1.Maximumdeductionallowedforspousebasedonage
($3,000or$10,000)
2.Spouse'sindividualqualifiedretirementincomeincludedin
federalForm1040,lines15band16b,or1040A,lines11band12b
3.Amountonline1or2,whicheverissmaller.
Enteronline48b.
Worksheet for Surviving Spouse line 48c:
NOTE: Calculate separately for each deceased spouse and include total on line 48c.
1.Maximumdeductionallowedforsurvivingspouse
basedonageofdeceasedspousehadhe/shelived
($3,000or$10,000perdeceasedspouse)
2.Qualifiedretirementincomereceivedassurviving
spouseincludedinfederalForm1040,lines15band16b,
or1040A,lines11band12b
3.Amountonline1or2,whicheverissmaller.
Enteronline48c.
Line49AGE-65-AND-OLDER DEDUCTION
Beginninginthetaxyearinwhicharesidentreachesagesixty-five,heorsheisentitledtoadeductionof$15,000
againstanySCincome.Line49aappliestothetaxpayerwhosenameappearsfirstonthereturn.Line49bappliesto
thespousewhosenameappearssecondonthereturn.Theamountofthedeductionon49aisreducedbyany
individualretirementdeductionclaimedonline48a.Theamountofthedeductionon49bisreducedbyanyindividual
retirementdeductionclaimedonline48b.Theage-65-and-overdeductionisnotreducedbyanysurvivingspouse
retirement deduction claimed on line 48c.
Tip
Provide birth
dates for
taxpayers age
65 and older.
3.
1.
2.
1.
Line51SUBSISTENCEALLOWANCE
PoliceandallcommissionedlawenforcementofficerspaidbySouthCarolinamunicipal,county,stategovernmentsor
thefederalgovernment,full-timefirefighters,andfull-timeemergencymedicalservicepersonnelareentitledto
subsistenceallowancesof$8.00perregularworkday.Youremployershouldprovideyouwiththenumberofwork
days.
3.
Worksheet for Taxpayer line 48a:
2.
1.
1.Maximumdeductionallowedfortaxpayerbasedonage
($3,000or$10,000)
2.Taxpayer'sindividualqualifiedretirementincomeincludedin
federalForm1040,lines15band16b,or1040A,lines11band12b
3.Amountonline1or2,whicheverissmaller.
Enteronline48a.
17
3.

9. Instructions - South Carolina Form SC1040
X
theageofsixyearsbyDecember31ofthetaxyear.Birthdate(s)andSocialSecuritynumber(s)arerequired.Usethe
following worksheet to compute the deduction:
Tip
Effectivefortaxyearsbeginningafter1984,SouthCarolinahasadoptedfederaldepreciationandSection179
expensingforSouthCarolinaincometaxpurposes.Fortaxableyear2003,SouthCarolinarecognizedlimitsfor
Section179thatwerelowerthanthefederalamounts.Eitherthefederalandstatedifferencespriorto1985orthe
differentlimitsin2003mayresultinanadd-backinthelineforotheradditions.Inthatcase,theSouthCarolina
adjustedbasiswillbegreaterthanthefederaladjustedbasis,andthetaxpayermayclaimanadditionalSouth
Carolinadepreciationdeductionattheendofthefederaldepreciationperiod.Atthattime,thebalanceofpersonal
propertybasisisdepreciableatarateof50%peryear.Thebalanceofrealpropertybasisisdepreciableatarateof
20%peryear.
SouthCarolinadoesnotrecognizebonusdepreciationinIRCSection168(k).Withorwithoutbonusdepreciation,
thedepreciablelifeofthepropertyisthesameforfederalandstatepurposes.Forthetaxyearinwhichtheproperty
isplacedinservice,ataxpayermustaddbackthedifference,inthelineforotheradditions,betweenthe
depreciationdeductionallowedforfederalpurposesandthedeductionthatwouldhavebeenallowedwithoutbonus
depreciation.Therefore,theSouthCarolinaadjustedbasisisgreaterthanthefederaladjustedbasis.Forallother
yearsofthedepreciablelifeoftheproperty,anadditionaldepreciationdeductionisavailableforSouthCarolina
purposes.
Adeductionisallowedtoanindividualforthepurchaseofeconomicimpactzonestock.Thedeductionisequalto
twentypercentofthetotalamountpaidincashbythetaxpayerduringthetaxableyearforthepurchaseof
economicimpactzonestock.
Ifyouitemizedandclaimedafederaltaxcreditforqualifiedmortgagecreditcertificates(MCC),youmaysubtract
theamountofthetaxcreditasinterest.
SouthCarolinanetoperatinglossthatislargerthanthefederalamountisasubtraction.Innoeventisthesame
losstobedeductedmorethanonce.Attachyourownworksheetorkeepwithyourtaxrecords.Nocarryback
lossesareallowed.
Line53OTHERSUBTRACTIONS FROMINCOME
Sincethesesubtractionsapplyonlytoafewpeople,theyarenotfullyexplainedinthisbooklet.Attachan
explanationofyourentryonthisline.Someexamplesofitemswhichmaybesubtractedonthislineare:
Line52DEPENDENTS UNDERSIXYEARSOFAGE
AnadditionaldeductionisallowedforeachdependentclaimedonthefederalincometaxreturnwhohadnotreachedTip
Birthdates and
Social Security
Numbers are
required for
dependents
under age six.
Continued on page 19
Federalpersonalexemptionamount................................................................3,500
Numberofdependentsclaimedonyourfederalreturnwhohadnot
reachedagesixduringthetaxyear.......................................................
Allowablededuction,enterthisamountonline52...........................................
Determinetheexcludableamountofyourmilitaryretirementincomebymultiplyingitbythe
percentage of exclusion as follows:
South Carolina
does not allow
carrybacks of
net operating
losses.
MilitaryReserveandNationalGuardpaywhichisincludedinretirementincomeisnottaxedforSouthCarolina
purposes.
Tip
Capitalexpensesamortizedunderfederalstatuteswillbethesameforstatepurposes.Attheendofthefederal
amortization,thebalanceofcapitalexpenseamortizedwillcontinueuntilfullyamortizedforstatepurposes.The
amortizedamountisasubtractionfromyourincome.
Legislatorswithina50-mileradiusoftheStateHouseareallowedtosubtracttravelexpenses.
Include the amount of excludable military retirement income as a subtraction.
%exclusionX totaltaxablemilitary=excludablemilitary
retirementincomeshown retirement
onfederalreturn income
Determinethepercentageofyourmilitaryretirementincomewhichisexcludablebydividingthe
lengthoftimeyouservedintheReservesand/orNationalGuard(notfulltime)bythelengthof
time of your total military service as follows:
InactiveReservetime+InactiveNationalGuardtime= %exclusion
TotalMilitarytime(ActiveandInactive)
Be sure to
attach the
calculations
verifying the
amount of
military
retirement
income being
excluded.
18

10. Instructions - South Carolina Form SC1040
Sign and date
your return.
Double check
your SSN(s) and
math
calculations.
Tip
Your return must be signed. Both spouses must sign a joint return.
For deceased taxpayers, returns must be signed by surviving spouse, executor or administrator.
For surviving spouse, write "filing as surviving spouse" by your signature.
ApersonalrepresentativefilingthereturnmustsigninhisorherofficialcapacityandattachSC1310.Anyrefund
check will be issued to the decedent's surviving spouse or estate.
AUTHORIZATION
A"specialneedschild"meansapersonundertheageof18atthetimeofadoption,whoisadependentofapublic
orprivatenon-profitadoptionagency,islegallyfreeforadoptionandhasbeendeterminedbytheagencytohave
specific conditions.
Dependinguponhowaparticularitemwasreportedordeducted,thefollowingitemsmaybeanadditionor
subtraction.
Achangeinaccountingmethodtoconforminthesamemannerandsameamountasfederal.Attheendofthe
federaladjustment,anybalancewillcontinueuntilfullyadjusted.Thismaybeanadditionorsubtraction.
Theinstallmentmethodofreportingistobeadjustediftheentiresalehasbeenreportedforstatepurposesorto
continueonaninstallmentbasisiftheentiresalehasbeenreportedforfederalpurposes.Thismaybeanaddition
orsubtraction.
AdjustthefederalgainorlosstoreflectanydifferenceintheSouthCarolinabasisandfederalbasis.Thismaybe
anadditionorsubtraction.
Attach a copy of
the letter
certifying the
person as a
"special needs
child".
Tip
Attachacopyoftheletteryoureceivedatthetimeofadoptionwhichcertifiedthepersonasa"special
needs child."
Ifyouhaveadopteda"specialneedschild",youmaysubtract$2,000peryearperchildaslongastheadopted
childqualifiesasadependentonyourfederalreturn.
Thesignaturesectionofthereturncontainsa"checkthebox"authorizationforreleaseofconfidentialinformation.A
checkinthe"yes"boxauthorizestheDirectoroftheDepartmentofRevenueordelegatetodiscussthereturn,its
attachments and any notices, adjustments or assessments with the preparer.
Ifapersonispaidtopreparetheincometaxreturn,his/hersignatureandfederalidentificationnumberarerequiredin
the spaces provided. Penalties are applicable for failure to comply.
www.sctax.org
803-898-5300
24hoursperday.Youwillneedacopyofyourreturn,SocialSecuritynumberthatappearsfirstonthatreturn,and
the amount of your expected refund.
SIGN AND DATE YOUR RETURN
CHECK THE STATUS OF YOUR CURRENT YEAR REFUND:
IMPORTANT INFORMATION
REVIEW YOUR RETURN:
MakesureyouhavereceivedALLofyourW-2sandothertaxdocuments.
VerifyallSocialSecuritynumber(s)onyourreturn.
Doublecheckyourname,addressandallmathcalculations.
Makeacopyofyourcompletereturnforyourrecords.
Before you electronically transmit your return...
If you are requesting direct deposit or electronic withdrawal date:
Confirmtheroutingtransmitnumber(RTN)iscorrectandcontainsninedigits.IftheRTNdoesnotbeginwith01
through12,or21through32,thedirectdepositorElectronicFundsWithdrawal(EFW)requestwillberejected.You
wouldthenneedtosubmitanotherformofpayment.
Confirmthebankaccountnumber(BAN)iscorrect.TheBANmaycontainupto17alphanumericcharacters.Iffewer
than17characters,enterthenumbersfromlefttorightandleavetheunusedboxesblank.
Makesureyouhavecheckedtheappropriateboxforthespecifictypeofaccounttobecreditedordebited(checkingor
savings).
WithdrawalDate-VerifythedatefortheEFWtooccur.Toavoidpenaltiesandinterest,thebalanceduewithdrawal
canoccurnolaterthanMay2,2005.
Before you file your paper return...
StapleallW-2sand1099sintheproperareaoftheSC1040orSC1040A.
StaplebalanceduecheckintheproperareaofformSC1040orSC1040A.
19
Include amounts contributed to a Catastrophe Savings Account and interest income earned by the account.
Ifyourlegalresidenceisinsuredagainsthurricane,risingfloodwaters,orothercatastrophicwindstormevent
damage,youareallowedtocontribute:(1)$2,000ifthequalifieddeductibleis$1,000orless;(2)twicethequalified
deductible if it is between $1,000 and $7,500; or (3) $15,000 if the qualified deductible is more than $7,500.
Ifyourlegalresidenceisnotinsuredagainsthurricane,risingfloodwaters,orothercatastrophicwindeventdamage,
the limit is $250,000 or the value of your legal residence, whichever is less.
IMPORTANT INFORMATION
Review your return:
MakesureyouhavereceivedALLofyourW-2sandothertaxdocuments.
VerifyallSocialSecuritynumber(s)onyourreturn.
Doublecheckyourname,addressandallmathcalculations.
Makeacopyofyourcompletereturnforyourrecords.
Before you file your paper return...
StapleallW-2sand1099sintheproperareaoftheSC1040orSC1040A.
StaplebalanceduecheckintheproperareaofformSC1040orSC1040A.