South Carolina (SC) does not have a reciprocal agreement with any state. Simply put that means they want their tax dollars on any money earned in that state. Since you worked in SC after your moved to North Carolina (NC), then you must pay tax to SC on all income earned in that state.
Good News: The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income. As the resident state all worldwide income must be included during your residency period.
The credit for tax paid to another state on the same income will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
You should prepare the SC return first then calculate the portion of the tax that is actually charged on the residency period. The balance will be the amount of the credit for NC return. The way to do this is to use the NC income/total income = percentage of tax being paid to SC and NC.
- 40,000/100,000 = 40%
- 40% of total SC tax = Tax Liability that can be used as a credit for NC return.
Watch the screens as you step through the NC return to be sure you enter the necessary information.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
