Sold SC house while resident of VA. Paid tax with settlement on the sale to SC.

[pgbw88]

My husband and I sold a secondary home in SC. We made a profit and upon settlement on the sale were charged a non-resident 7% withholding for SC. I assume that we have to file a SC state tax form for this gain? It looks like we also pay not only Federal tax on it, which we knew, but also the VA return. Where would we show the SC tax withholding. I feel like we are getting taxed for the profit on the house on both the VA and SC form. Although, when I completed the SC form, I did not see a place to put the tax we paid on the sale of the house. Can we take off the gain on the VA tax form? 

[HelenC12]

Enter the 7% withholding for SC as an estimated tax payment to get credit on your SC nonresident income tax return.  

• You'll prepare the SC nonresident return first.
• Regarding, "Can we take off the gain on the VA tax form?" Yes. On your VA resident return, you'll be able to allocate the sale to your SC nonresident return. 

To enter your 2022 estimated tax payments:

1. Log onto TurboTax.
2. Click on the blue Pick up where I left off button.
3. On the left navigation bar, click on Federal.
4. Click on the Deductions & Credits tab. 
5. You may need to click on All tax breaks.
6. Scroll down to Estimates and Other Taxes Paid, click on Show more.
7. At Estimated Tax Payments, click Start.
8. Scroll down to enter your State estimated taxes for 2022.
9. Continue with the onscreen interview until complete.

[pgbw88]

I didn't realize that so I completed my federal and my VA state first, since that I was a resident of VA in 2022, and then tried the SC non-resident. How do I correct this? Do I have to re-do my federal and then file the non-resident, by deleting what I have done so far? 

[Vanessa A]

Did you actually submit your returns?  You do not need to make any actual changes to your federal return.  The change is on your state return, but the area to enter estimated taxes paid is in the federal section.  

If you already submitted your VA return, then you may need to amend it to make the adjustments.  If you did not already submit your return, then all you need to do is follow the instructions above by @HelenC12 and then go back through your SC return first, then go through your VA return.  If you did already submit your state return and need to amend, you will still go through the SC return and then the VA return. 

[pgbw88]

I had not filed any of my taxes yet. I did what @HelenC12 instructed me to do but I am not sure if this is correct. The only income we received from SC was for the sale of a home there. When I went into the federal return I went under Personal Info and went into Other State Income and under Other State Income I put that we had income in SC.  I found the Deductions & Credits tab and under Estimates and other Taxes Paid I clicked on the Estimates tab. Under the State tab I chose SC and put the estimated tax we paid during settlement in. I continued with the onscreen interview and completed SC. My VA tax reduced, but the SC tax shows a refund of the entire estimated tax paid. This doesn't seem correct to me. What am I missing? 

Initially I did not prepare the SC return first, but I went through the steps again and did the SC before the VA. 

[PattiF]

Here are the instructions from South Carolina for this form. 

How do I claim credit for the amount withheld? 

When you file your Income Tax return, report the capital gain from the sale as income. Take credit for the Nonresident Real Estate Withholding on the appropriate line in the payments/withholding section of your Income Tax return

Line instructions:

 Line 1: Enter the amount of gain or amount realized from the sale. Subtract the selling expenses from the selling price to compute the amount realized. Use the definition of amount realized found in IRC Section 1001(b). Subtract the basis of the property from the amount realized to compute the gain or loss. If the seller provides the buyer with an I-295, Seller's Affidavit Nonresident Seller Withholding, available at dor.sc.gov/forms, stating the amount of gain they are required to recognize on the sale, enter the amount of gain. 

If the transaction reported is an installment sale, enter on line 1 only the portion of gain (if the seller provided an affidavit of gain) or the portion of the amount realized (if the seller does not provide an affidavit of gain) the withholding payment is based upon. If the seller makes the election on line 7 and provides an I-295, Seller's Affidavit Nonresident Seller Withholding, include the entire gain on line 1. 

Line 2: Check the appropriate box and multiply by the amount on line 1.

@pgbw88 

[pgbw88]

I did what you told me to do, however, now the SC tax return is showing a return of $6,510, which is exactly what I paid in withholding taxes during the sale of the SC house during settlement. Can this be correct? Does it make a difference that we are both over 65?  I have completed Schedule NR as we were non-residents when we sold the house.  It looks like it is giving us a Age 65 deduction of $15,000 each. We were a resident beginning 11/28/2022. Is this correct?

[AmyC]

1. Maybe. Depending on the amount of gain in comparison to the allowed deductions, you may get up to a full refund.

2. You are both over 65 so you are able to claim extra exemptions.

3. Maybe. SC begins with the federal income and then adjusts to get to the SC income. Line 3i is especially important as it subtracts 44% of your long term net gains from your income.

SC instructions: 

Part year resident, page 3

Line 3i, page 16

Line 3o, Social Security deduction

Line 3p, Retirement deduction

Line 3q, 65 and older deduction

Take a look at your SC form and see what is happening. To see your forms:

• In desktop, switch to Forms Mode. 
• For online, see How do I preview my TurboTax Online return before filing?