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AndrewH1
Returning Member

State Unemployment Tax

I filed in February both Federal and State (SC).  Are there changes to SC unemployment being taxable, and if so, do I need to pursue or will that automatically be re-calculated?

1 Best answer

Accepted Solutions
ronaldg11
Employee Tax Expert

State Unemployment Tax

Hi AndrewH1,

 

Guidance on South Carolina and the unemployment exclusion can be found at 

https://dor.sc.gov/resources-site/media-site/Pages/SCDOR-issues-guidance-on-how-to-amend-your-tax-re...

The South Carolina Department of Revenue (SCDOR) offers filing guidance for those who received unemployment benefits last year.

If you already filed your federal and South Carolina Individual Income Tax returns, you will need to amend your South Carolina return:

  • If you filed a federal return that included unemployment compensation, the IRS plans to adjust your return and notify you of the corrections. If you have not received a notice from the IRS and want to go ahead and file, simply subtract the amount of your unemployment compensation, up to $10,200, from your federal taxable income. Include this adjusted amount on your South Carolina amended return.
  • If you filed a federal return that excluded unemployment compensation and you added that amount back to your original South Carolina return, you will need to remove any unemployment compensation, up to $10,200, on your South Carolina amended return.
  • For faster processing, file your amended SC1040 electronically. Check with your tax preparer or software provider to see if you can file your amended return electronically.
  • If you need to file by paper, file a new 2020 SC1040, and check the Amended Return box. Complete the return as it should have been filed, including all schedules and attachments, plus an Amended Return Schedule (Sch. AMD).
  • Do not use the SC1040X to amend the 2020 South Carolina Individual Income Tax return.
  • If your filing status is married filing jointly and both spouses received unemployment benefits, both can exclude up to $10,200.
  • You may need to adjust any income-based nonrefundable tax credits you previously filed, especially the Earned Income Tax Credit, to reflect your lower income.
  • Allow a minimum of 12 weeks for your amended South Carolina return to be processed.
Hope that helps,
 
Ron G, TurboTax Live Tax Expert, CPA
 
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3 Replies
ronaldg11
Employee Tax Expert

State Unemployment Tax

Hi AndrewH1,

 

Guidance on South Carolina and the unemployment exclusion can be found at 

https://dor.sc.gov/resources-site/media-site/Pages/SCDOR-issues-guidance-on-how-to-amend-your-tax-re...

The South Carolina Department of Revenue (SCDOR) offers filing guidance for those who received unemployment benefits last year.

If you already filed your federal and South Carolina Individual Income Tax returns, you will need to amend your South Carolina return:

  • If you filed a federal return that included unemployment compensation, the IRS plans to adjust your return and notify you of the corrections. If you have not received a notice from the IRS and want to go ahead and file, simply subtract the amount of your unemployment compensation, up to $10,200, from your federal taxable income. Include this adjusted amount on your South Carolina amended return.
  • If you filed a federal return that excluded unemployment compensation and you added that amount back to your original South Carolina return, you will need to remove any unemployment compensation, up to $10,200, on your South Carolina amended return.
  • For faster processing, file your amended SC1040 electronically. Check with your tax preparer or software provider to see if you can file your amended return electronically.
  • If you need to file by paper, file a new 2020 SC1040, and check the Amended Return box. Complete the return as it should have been filed, including all schedules and attachments, plus an Amended Return Schedule (Sch. AMD).
  • Do not use the SC1040X to amend the 2020 South Carolina Individual Income Tax return.
  • If your filing status is married filing jointly and both spouses received unemployment benefits, both can exclude up to $10,200.
  • You may need to adjust any income-based nonrefundable tax credits you previously filed, especially the Earned Income Tax Credit, to reflect your lower income.
  • Allow a minimum of 12 weeks for your amended South Carolina return to be processed.
Hope that helps,
 
Ron G, TurboTax Live Tax Expert, CPA
 
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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AndrewH1
Returning Member

State Unemployment Tax

Can I re-file electronically?

 

WendyS
Employee Tax Expert

State Unemployment Tax

Thank you for reaching out to us today.

 

The American Rescue Plan Act passed into law that the first $10,200 of unemployment compensation was exempt from federal taxes for individuals with household incomes of less than $150,000 for the tax year 2020.  The American Rescue Plan Act unemployment benefit exclusion was only for the 2020 tax year.

The American Rescue Plan Act was passed on March 11, 2021. You stated you filed both your federal and state returns in February.  Your federal return should be automatically adjusted and any additional refund due to unemployment compensation exclusion should be adjusted by the IRS and sent to you.

 

I understand you are asking specifically about South Carolina taxable income.  On May 18, 2021, the South Carolina Governor signed into law a bill that conformed with the federal exclusion of unemployment compensation. Since you filed both tax returns in February that included all of your unemployment compensation as taxable income, you will need to file a South Carolina amended tax return.

 

For your convenience, I am including a link to the South Carolina Department of Revenue guidance on how to amend your tax return to exclude unemployment benefits news release.

 

https://dor.sc.gov/resources-site/media-site/Pages/SCDOR-issues-guidance-on-how-to-amend-your-tax-re... 

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