(A) Married individuals are allowed a two wage earner credit against South Carolina income tax if both spouses have South Carolina earned income and a joint return is filed under the provisions of Section 12-6-5000.

(B) The credit is limited to seven-tenths of one percent multiplied by the lesser of:

(1) fifty thousand dollars; or

(2) the South Carolina qualified earned income of the spouse with the lower South Carolina qualified earned income for the taxable year.

(C)(1) South Carolina qualified earned income is computed as follows:

(a) South Carolina earned income of the spouse for the taxable year as defined in subsection (C)(2); less

(b) the sum of the deductions described in Internal Revenue Code Section 62 (a) paragraphs (1) (Trade and Business Deductions), (2) (Certain Trade and Business Deductions of Employees), (6) (Pension, Profit-Sharing and Annuity Plans of Self-Employed Individuals), (7) (Retirement Savings), and (12)(Certain Required Repayments of Supplemental Unemployment Compensation Benefits) to the extent the deductions are properly allocable to or chargeable against South Carolina earned income.

(2) The term "South Carolina earned income" means income that is earned income within the meaning of Internal Revenue Code Section 911( d)(2) or 401(c)(2) and is taxable in this State, except that:

(a) it does not include an amount:

(i) received from a retirement plan or an annuity;

(ii) paid or distributed from an individual retirement plan as defined in Internal Revenue Code Section 7701(a)(37);

(iii) received as deferred compensation; or

(iv) received for services performed by an individual employed by his spouse within the meaning of Internal Revenue Code Section 3121(b)(3)(B); and

(b) Internal Revenue Code Section 911(d)(2)(B) must be applied without regard to the phrase "not in excess of thirty percent of his share of net profits of such trade or business".

(D) No credit is allowed under this section for a taxable year if either spouse claims the benefits of Internal Revenue Code Sections 911 (Citizens or Residents of the United States Living Abroad) or 931 (Income for Sources within Guam, America Samoa, or the Northern Mariana Islands) for the taxable year.

HISTORY: 1995 Act No. 76, Section 1; 2001 Act No. 89, Section 9, eff July 20, 2001, applicable to taxable years beginning after December 31, 2000; 2017 Act No. 40 (H.3516), Section 17.A, eff May 10, 2017.

Editor's Note

2017 Act No. 40, Sections 17.B, 17.C, provide as follows:

"B. Notwithstanding the increased multiplier of fifty thousand dollars in Section 12-6-3330(B)(1) as amended in this SECTION, the increase must be phased-in in six equal installments of three thousand three hundred thirty-three dollars each tax year until it is fully phased-in in tax year 2023, with the first increase occurring in tax year 2018.

"C. This SECTION takes effect upon approval by the Governor and applies to tax years beginning after 2017."

Effect of Amendment

2017 Act No. 40, Section 17.A, in (B)(1), substituted "fifty thousand dollars" for "thirty thousand dollars".