Solved: Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes
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Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

They are asking us to pay South Carolina taxes since it is our new duty station for two years. We own a home in Virginia, paying Virginia State income taxes and have to children in college paying in state tuition. Do we still have to pay South Carolina state income taxes even though we don't own a home here. We are just working here for the federal government on official orders. 

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Level 10

Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

Based on what you have provided, I believe you have a situation that needs assistance beyond what we are able to provide in this forum.  The reason for this, is there are a number of follow-up questions that need to be asked and addressed before you can truly decide what you should be filing.

You need to determine your state of domicile.  This can be tricky and states do not follow consistent rules in this determination. 

The determination of a taxpayer’s residence is a crucial factor in delimiting the extent of a taxpayer’s personal income tax liability. Although the various state statutes vary in their definition of “resident,” most of the states rely on one or more of the following factors, either individually or in combination with one another, in determining whether a taxpayer is a resident of the state: (1) domicile in the state; (2) presence in the state for other than a temporary or transitory purpose; (3) presence in the state for a specified period; and (4) maintenance of a permanent place of abode in the state.

The definition of “resident” includes “domicile” in most states. Domicile” is generally defined as “a person’s true, fixed, principal, and permanent home, to which that person intends to return and remain even though currently residing elsewhere.” A person may have more than one residence but can have only one domicile.

Once you are able to determine your state of domicile, then you will know which state you need to file as a resident and which state to file as a nonresident.  Even though you may end up paying South Carolina tax, if your facts support that you are a Virginia resident (domicile) and pay tax on this same income, Virginia has a credit for taxes paid to other states.  So effectively you are not paying double tax.

I would recommend you seek professional assistance so you can be confident in what you are filing.  Doing this incorrectly will cause nothing but frustration in dealing with the two states in question and you could incur significantly more time than if you do this correctly from the beginning.

Additionally, you have the added complexity of children that are hoping to continue to pay in state tuition.  This in itself is a big deal and another reason to seek professional assistance to get this right.

*A reminder that posts in a forum such as this do not constitute tax advice.*

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New Member

Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

We are planing on returning to Virginia to live in our home in 2019. This job is a two year assignment.
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New Member

Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

Virginia is where our domicile is.
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Level 10

Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

These are good additional facts.  States are aggressive in this area and many use the 183 day rule as a factor of domicile.  Because you have kids paying in-state tuition, I will just reiterate that you get some professional guidance as the penalty for getting this wrong can be very expensive.
*A reminder that posts in a forum such as this do not constitute tax advice.*
Highlighted
Level 10

Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

Based on what you have provided, I believe you have a situation that needs assistance beyond what we are able to provide in this forum.  The reason for this, is there are a number of follow-up questions that need to be asked and addressed before you can truly decide what you should be filing.

You need to determine your state of domicile.  This can be tricky and states do not follow consistent rules in this determination. 

The determination of a taxpayer’s residence is a crucial factor in delimiting the extent of a taxpayer’s personal income tax liability. Although the various state statutes vary in their definition of “resident,” most of the states rely on one or more of the following factors, either individually or in combination with one another, in determining whether a taxpayer is a resident of the state: (1) domicile in the state; (2) presence in the state for other than a temporary or transitory purpose; (3) presence in the state for a specified period; and (4) maintenance of a permanent place of abode in the state.

The definition of “resident” includes “domicile” in most states. Domicile” is generally defined as “a person’s true, fixed, principal, and permanent home, to which that person intends to return and remain even though currently residing elsewhere.” A person may have more than one residence but can have only one domicile.

Once you are able to determine your state of domicile, then you will know which state you need to file as a resident and which state to file as a nonresident.  Even though you may end up paying South Carolina tax, if your facts support that you are a Virginia resident (domicile) and pay tax on this same income, Virginia has a credit for taxes paid to other states.  So effectively you are not paying double tax.

I would recommend you seek professional assistance so you can be confident in what you are filing.  Doing this incorrectly will cause nothing but frustration in dealing with the two states in question and you could incur significantly more time than if you do this correctly from the beginning.

Additionally, you have the added complexity of children that are hoping to continue to pay in state tuition.  This in itself is a big deal and another reason to seek professional assistance to get this right.

*A reminder that posts in a forum such as this do not constitute tax advice.*

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Level 15

Virginia resident, federal employee. Officially transferred to South Carolina for two years. Currently paying Virginia state taxes. Do we have to pay South Carolina taxes

https://www.esmarttax.com/tax-forms/south-carolina-form-sc1040-instructions/

File SC1040 with Schedule NR. You will be taxed only on income earned in South Carolina and will prorate your deductions and exemptions. All personal service income (wages, consulting, etc.) earned in South Carolina must be reported to this state.

AM I A RESIDENT OR A NONRESIDENT?

The following definitions will help you decide: You are a South Carolina resident, even if you live outside South Carolina, when:

  1. Your intention is to maintain South Carolina as your permanent home, AND
  2. South Carolina is the center of your financial, social and family life; AND
  3. When you are away, South Carolina is the place to which you intend to return.

You are a nonresident if your permanent home is outside South Carolina all year and none of the above applies.

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