Do I Need to Make SC Quarterly Tax Payments?

Self-employed individuals, freelancers, and those with income outside traditional employment must often make estimated tax payments. Unlike W-2 employees, who have taxes withheld from their paychecks, these taxpayers must send payments proactively to avoid penalties or a large tax bill.

South Carolina follows federal guidelines for quarterly estimated tax payments but has its own rules and deadlines. Knowing whether you need to pay, how much to send, and when it’s due helps ensure compliance and avoids unnecessary fees.

Eligibility Criteria

You must make estimated tax payments to South Carolina if you expect to owe at least $100 in state income tax after subtracting withholding and credits. This applies to individuals, sole proprietors, partners, and S corporation shareholders with income not subject to automatic withholding, such as business earnings, rental income, or investment gains. If you make estimated payments to the IRS, you likely need to do the same for South Carolina.

If you owed no state tax last year and were a full-year South Carolina resident, you may be exempt. However, if your income increases or your withholding is insufficient, quarterly payments may be necessary to avoid penalties.

Retirees, investors, and gig workers should review their tax situation. Pension distributions, Social Security benefits, and capital gains may not have enough tax withheld, requiring estimated payments. Independent contractors receiving 1099 forms instead of W-2s must ensure their tax liability is covered throughout the year.

Figuring Out Your Payment Amount

Estimate your total taxable income from all sources, including self-employment earnings, rental income, and dividends. Subtract deductions such as retirement contributions, student loan interest, and business expenses. South Carolina’s tax rates range from 0% to 6.5% in 2024. Apply the appropriate rate to your projected income to determine your state tax liability.

Subtract any withholding or credits. If the remaining amount exceeds $100, estimated payments are likely required. The safe harbor rule helps avoid penalties if you pay at least 100% of last year’s tax liability (or 110% if your adjusted gross income exceeded $150,000).

Self-employed individuals should also factor in self-employment tax, which covers Social Security and Medicare contributions. While this is a federal requirement, including it in tax planning helps prevent financial strain. IRS Form 1040-ES can serve as a reference for estimating federal taxes, which can be adjusted for South Carolina’s rates and deductions.

Due Dates

South Carolina follows the federal quarterly schedule for estimated tax payments. The first installment is due April 15, covering income from January through March. The second payment, due June 15, accounts for April and May earnings. The third deadline is September 15, covering June through August, while the final payment, due January 15 of the following year, includes income from September through December. If a due date falls on a weekend or holiday, the deadline moves to the next business day.

South Carolina does not send reminders, so taxpayers must track these deadlines. Some set calendar alerts or automate payments through the South Carolina Department of Revenue (SCDOR) to avoid missing due dates. Seasonal business owners may benefit from the annualized income installment method, which allows for varying payment amounts based on when income is earned rather than dividing the total tax liability evenly across all four quarters.

Potential Penalties

Failing to pay estimated taxes on time or underpaying can result in penalties. South Carolina imposes an underpayment penalty based on the state’s interest rate for overdue taxes, which is adjusted quarterly. This penalty is calculated using the amount underpaid for each quarter and the number of days the payment is late.

A late payment penalty of 0.5% per month, capped at 25% of the total balance due, may also apply. If a taxpayer neglects estimated payments and owes a substantial balance at year-end, South Carolina may impose additional penalties, including tax liens or wage garnishments.

Payment Methods

South Carolina offers multiple payment options. The fastest and most secure method is electronic payment through the MyDORWAY portal, where taxpayers can make one-time payments or schedule future installments. Electronic payments are immediately recorded, reducing processing delays.

For those who prefer traditional methods, SCDOR accepts payments by mail using Form SC1040ES, which must be postmarked by the due date. Checks or money orders should be payable to the South Carolina Department of Revenue and mailed to the address on the form. Credit and debit card payments are accepted but may include processing fees.

Adjusting Future Estimates

Income fluctuations may require adjustments to estimated payments. South Carolina allows taxpayers to modify quarterly payments if their income changes significantly. Those earning more than expected may need to increase payments, while those earning less can reduce future installments.

Using updated financial records and tax projections helps refine estimates. Seasonal workers, such as those in tourism or agriculture, may benefit from recalculating payments each quarter rather than relying on an annual estimate. The state does not require a formal amendment to previously submitted payments, so adjustments can be made simply by increasing or decreasing the next installment. Keeping detailed records of income, deductions, and prior payments ensures accuracy and prevents surprises when filing the annual return.