SC Tuition Tax Credit: How to Qualify and Claim It

South Carolina offers a tuition tax credit to ease the financial burden of higher education for residents. This program can reduce state income tax liability, making college more affordable for families. Understanding eligibility and the claims process is key to maximizing savings.

Qualified Educational Institutions

To qualify for the South Carolina Tuition Tax Credit, tuition must be paid to accredited institutions recognized by the U.S. Department of Education and accredited by a regional or national agency. Both public and private colleges and universities in South Carolina, such as the University of South Carolina, Clemson University, Furman University, and Wofford College, are eligible, provided they meet accreditation requirements. Out-of-state institutions also qualify if they meet these standards. Taxpayers should confirm an institution’s accreditation status to ensure eligibility.

Eligible Tuition Costs

Eligible tuition costs include expenses required for enrollment or attendance at a qualifying institution. Costs like room and board, books, or supplies are excluded. Taxpayers should review tuition statements to determine which charges are eligible and consult South Carolina Department of Revenue guidelines or a tax professional for clarification.

The credit is based on total tuition costs incurred during the tax year, regardless of payment schedules or deferments. Maintaining accurate records of all payments ensures claims can be properly substantiated.

Claiming and Filing Steps

Claiming the South Carolina Tuition Tax Credit requires documentation such as tuition statements and proof of payment from qualifying institutions. These materials serve as evidence of tuition expenses incurred.

Taxpayers need to complete South Carolina Form SC1040 and attach the Tuition Tax Credit Form, TC-57A, which includes details such as the institution’s name and the total tuition paid. Reviewing the latest South Carolina Department of Revenue guidelines helps ensure compliance with any updates to the filing process.

Coordination With Scholarships

Only out-of-pocket tuition expenses qualify for the South Carolina Tuition Tax Credit. Tuition covered by scholarships must be excluded from the credit calculation. For instance, if a $10,000 tuition bill is partially covered by a $5,000 scholarship, only the remaining $5,000 is eligible. Taxpayers should categorize scholarships accurately to report correct amounts and avoid errors or penalties.

Recordkeeping Requirements

Proper recordkeeping is critical for claiming the tuition tax credit. Taxpayers should retain official tuition statements, such as Form 1098-T, and proof of payment, including canceled checks, bank statements, or credit card receipts. These records must match the amounts reported on the Tuition Tax Credit Form (TC-57A).

Documentation of billing adjustments, scholarships, or financial aid—such as changes applied after initial tuition payments—is also necessary for accurate credit calculations. Taxpayers should keep these records for at least three years, the standard statute of limitations for tax returns.