NC resident (consultant) provided services to SC based company (mostly remotely). Need to file SC tax?

[CHL]

Hi,

My wife and I are NC residents.  She is self-employed and did some part-time consulting work for a SC company and received a 1099-NEC from the SC company.  Do we need to file a State form for SC?  This is in response to the 'Other Ste income' prompt in TurboTax desktop.

Details:

• Most of her consulting work (HR, admin compliance stuff) was via phone calls (90% of time) from home to the SC company with an occasional drive down to SC to meet /w the client (~10% of time)
• 1099-NEC details from the SC company:
  • Box1 (non emp compensation): $46K
  • Box 4 (Fed tax witheld): $0
  • Box 5 (State tax witheld): $0
  • Box 7 (State income): $0

I'm hoping to not have to pay for an extra Turbotax State and the extra fee for filing another state's tax electronically.

Thanks for any help provided

[TomD8 · Accepted solution]

SC won't tax the income she earned remotely working from an NC location.  But it WILL tax the portion she earned from work she performed within SC.  Here is SC's filing rule:

"A nonresident individual receiving South Carolina income from wages, rental property, businesses, or other investments in South Carolina, must file an SC1040 South Carolina Individual Income Tax Return and Schedule NR Nonresident Schedule."

https://dor.sc.gov/tax/individual-income/faq

The income she earned working in SC is "South Carolina income".

She'll be able to claim a credit on her NC return for the tax paid to SC, so in effect she won't be double-taxed.

[CHL]

Thank you very much for your reply!  It was most helpful, especially the link you provided which then provided a link to the specific SC tax code.  I read the the law (and bolded the relevant parts) which I believe confirms the same as you mentioned.

- Best regards!

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SECTION 12-6-1720. Taxable income of nonresident individual, trust, estate, or beneficiary; modifications, adjustments, and allocations.

A nonresident individual, a nonresident trust, a nonresident estate, and a nonresident beneficiary shall report and compute South Carolina taxable income as a resident taxpayer of this State subject to the following modifications:

(1) South Carolina taxable income, gains, losses, or deductions include only amounts attributable to:
(a)......
(b) a business, trade, profession, or occupation carried on in this State or compensation for services performed in this State. If a business, trade, profession, or occupation is carried on or compensation is for services performed partly within and partly without this State, the amount allocable or apportionable to this State under Article 17 of this chapter must be included in South Carolina income;