SC Tax Form 1040 TurboTax Out-of-State Income or Gain

[Themushj]

In Turbotax, Under Out-of-State Income or Gain, it asks to enter the amount. Check the income categories.

Is the amount to be entered for Rental Income the same amount from Federal Form Schedule E line 3, "Rents Received" or the amount on line 24 "Income"?

Basically is it the gross amount as in line 3 or the after expenses amount as in line 24 on the Federal form?

[AmyC]

No, line 3 is gross income and you want net. No for line 24 since it is a total for all properties and before loss.

If you only have one property, use line 26. Otherwise, you will need to take line 21 and subtract line 22 for the correct net income on one property.

[Themushj]

Thank you. Was there some resource you used to verify it is NET and not Gross? The SC1040 booklet is not clear.

Turbotax needs to either clarify that information in that field, or have it carryover from the Federal form.

[AnnetteB6 · Accepted solution]

Since the SC tax return starts with the Federal taxable income reported on your Form 1040, the adjustments made on the SC return need to be the same numbers that went into determining the Federal taxable income.  

To determine the portion of Federal taxable income due to rental income and expenses, you would take the gross rental income and subtract expenses, giving you the net income from the rental property.  This is the amount used in the calculation of your Federal taxable income, so this is the amount that would be subtracted from the SC return to determine the SC taxable income.  

The SC Form 1040 instructions do not make it completely clear which amount to use (gross or net) other than to say you enter the amount as reported on your Federal return.  Ultimately, it is the net rental income that impacts the Federal taxable income, not the gross rental income.

@Themushj 

[Themushj]

Great explanation. Thank you.

Why does TurboTax not automatically carryover this dollar amount from the Federal return?  It should logically do that as well as the Other additions which are also on the Federal return as expenses.

[AnnetteB6]

Logically it would make sense.  But realistically, it is just not something that has been programmed into TurboTax to handle automatically.  Perhaps it will be a future enhancement.  

@Themushj