SC offers a tax break if your home insurance bills are too high | business

Of the thousands who relocate to homes in coastal South Carolina each year, many are often pleased by the low property taxes. But they can also get a case of sticker shock when they learn the cost of insuring those dwellings.

Long-time Palmetto State residents know that insurance costs have soared, and they just keep rising. What some residents don’t know is that South Carolina offers an income tax credit for “excessive” insurance costs.

That tax credit’s been around since 2007, but it’s easy to overlook because it’s not specifically mentioned on the state’s income tax form 1040. Instead, it falls under “other nonrefundable credits” and requires an extra tax form (the 1040TC) and the simple TC-44 worksheets.

You can find those forms at if you want to give them a look.

Here’s how the credit works: If the amount of money you paid to insure your legal residence in South Carolina is greater than 5 percent of your federal adjusted gross income, you get a state tax credit for the difference, up to $1,250.

So, that’s pretty straightforward. For example, if your federal adjusted gross income is $60,000 and you paid more than $3,000 to insure your home, you can get a tax credit for the excess.

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In some areas, particularly on the barrier islands, homeowners can have to pay enormous premiums. The first time I wrote about this tax credit, I heard from several island dwellers who were unaware of it, and who ended up filing amended returns for prior years.

As premiums continue to rise, more people could qualify for the tax credit, so I usually write about it each tax season.

Without knowing that credit exists, people can easily skip past the “other non-refundable credit” line on their tax forms and leave money on the table.

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For this credit, legal residence means the home where you live and qualify for the lower property tax assessment that applies to owner-occupied homes.

sure means traditional property insurance plus hurricane (wind and hail) policies and flood insurance, or hazard insurance if it’s a mobile home.

Like many South Carolina tax credits, the “Excess Insurance Premium Tax Credit” is what’s known as non-refundable. That means it can reduce the amount of tax owed to the state, but if it’s greater than the amount of tax owed you don’t get a check for the difference. But any amount left over can be carried forward to future tax returns, for five years.

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The non-refundability means that some homeowners with excessive insurance bills won’t be able to benefit, because they owe little or no income tax. Retirements often fall in this category because of South Carolina’s generous tax treatment of retirement income.

Instead, high-wage earners who pulled down too much to qualify for this credit while working could find in their retirement years that their insurance premiums exceed 5 percent of their federal adjusted gross income.

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reach David Slades at 843-937-5552. Follow him on Twitter @DSladeNews.

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