You may have another source, but based on looking at the instructions for the SC1040 2023 Individual Income Tax Return, I did not find information that stated that your spouse is not entitled to claim the $3000 retirement deduction unless there is taxable SC income attributed to her. If she had taken a distribution from a qualified retirement plan other than the disability retirement, then she could claim that deduction based on there being a joint return filed with taxable SC income.
If her only retirement income is associated with the disability retirement income, then you can 'add back' the deduction to nullify it on the SC return. Use these steps:
- Look for a screen titled Here's the income that South Carolina handles differently.
- Then, scroll to the bottom of the screen under the Misc section.
- Click Start or Update beside Other Additions.
- Then, enter a description such as 'retirement subtraction correction' and the amount of $3000 on the next screen.
This will nullify the automatic deduction that was included for your wife.
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