Is TurboTax correctly calculating taxable income for the State of South Carolina with respect to charitable contributions made under the CARES Act and SC Bill 4017?

[johnlmills]

According to the IRS (see IR-2021-190, September 17, 2021), under the CARES Act, individuals or those married and filing jointly electing to take the standard deduction can still claim a deduction of up to $300/$600 for cash contributions made to qualifying charities during 2021. This would reduce the Taxable Income for these filers by up to $300/$600.

According to South Carolina Department of Revenue INFORMATION LETTER #20-34 and SC Bill 4017, Internal Revenue Code (IRC) Section 62(a)(22) relating to the $300 charitable deduction allowed in 2020 for persons who claim the standard deduction is specifically NOT adopted by the State of South Carolina. Any federal charitable contribution deduction allowed for federal income tax purposes by an individual who claims the standard deduction is disallowed for South Carolina income tax purposes and must be treated as an addition to South Carolina taxable income.

TurboTax, however, seems to use the same Taxable Income value for the State of South Carolina and Federal returns. Is there a way for a filer to manually indicate additional Taxable Income at the state level but not the federal, or is this an error on the part of TurboTax?

[Cynthiad66]

Yes.  Additions to federal taxable income: use Line e: Other additions to income This is where you would add back the charitable contribution,  See page 14 of instructions for a list of add backs to federal income.  Use the link below for additional information.

SC1040 Instructions

[johnlmills]

Hi Cynthia,

Thanks for your response. I agree with what you said - that's what TurboTax should have done, however in reviewing the returns that were generated by TurboTax, line 3 of my South Carolina return is blank, and the taxable income reported to the State is equal to the taxable income reported to the US IRS - even through a $600 deduction was taken at the federal level.

All of which takes us back to my original question - is TurboTax calculating taxable income correctly for the state of the South Carolina given the provisions laid out in SC Bill 4017? As far as I can tell - the answer is "No".

Edit: I wanted to add that no matter how I went back through my State return, even deleting the whole thing several times, I could never determine how to "manually" add additional income for line e of SC1040.

[AnnetteB6 · Accepted solution]

You can manually add back the charitable contribution allowed on your Federal return for taxpayers claiming the standard deduction.  

When going back through your SC return, click Edit beside the Income section on the page titled, 'Your 2021 SC taxes are ready for us to check'.

On the Income page, scroll to the bottom and click Start beside Other Additions.  This will allow you to enter a description and an amount for the charitable contribution that will be added to your SC income and reported on Line e as 'other additions to income'.  This will nullify the deduction with respect to your SC return.

@johnlmills

[johnlmills]

Thank you Annette! This was the information that I was missing. It's a shame that TurboTax isn't doing this automatically, but at least there's a manual way to do it. Thank you again!