Who Qualifies for the South Carolina Dependent Exemption?

The South Carolina dependent exemption is a tax provision that allows taxpayers to reduce their taxable income for each person who relies on them for financial support. This deduction directly lowers the amount of state income that is subject to tax, which in turn can decrease a taxpayer’s overall tax liability.

Determining Who Qualifies as a Dependent in South Carolina

South Carolina’s criteria for determining who qualifies as a dependent align with the definitions established by the Internal Revenue Service (IRS). This means that if an individual qualifies as your dependent on your federal tax return, they will also qualify on your South Carolina return. To be claimed as a dependent, an individual must meet the requirements of either the Qualifying Child test or the Qualifying Relative test.

The Qualifying Child Test

To claim an individual as a qualifying child, five distinct tests must be satisfied: the relationship, age, residency, support, and joint return tests. The relationship test requires the child to be your son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, or a descendant of any of them, such as a grandchild. The age test stipulates that the child must be under age 19 at the end of the tax year, a full-time student under age 24, or permanently and totally disabled, regardless of age.

The residency test mandates that the child must have lived with you for more than half of the year, although temporary absences for reasons like education, illness, or military service are permitted. The support test requires that the child did not provide more than half of their own financial support during the year. Finally, the joint return test specifies that the child cannot file a joint tax return with a spouse for the year, unless it is filed only to claim a refund of withheld taxes.

In situations involving divorced or separated parents, the custodial parent—the parent with whom the child lived for the greater number of nights during the year—is the one entitled to claim the child as a dependent. However, the custodial parent can release this claim to the noncustodial parent by signing IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.

The Qualifying Relative Test

If an individual does not meet the criteria to be a qualifying child, they may still be claimed as a dependent under the qualifying relative test. This test has three main components: the not a qualifying child test, the gross income test, and the support test. The first component is straightforward: the person cannot be your qualifying child or the qualifying child of any other taxpayer.

The gross income test requires that the individual’s gross income for the tax year must be less than a specific amount, which for tax year 2024 is $5,050. The support test for a qualifying relative requires you to have provided more than half of the person’s total support for the entire year. This includes all expenses such as food, lodging, clothing, education, and medical care.

Value of the Dependent Exemption

The South Carolina dependent exemption provides a reduction to a taxpayer’s state taxable income. For the 2024 tax year, the exemption amount is $4,790 for each eligible dependent. This amount is a flat rate per dependent, meaning the total deduction is calculated by multiplying the number of dependents by this figure.

To illustrate, a taxpayer with one qualifying dependent would reduce their South Carolina taxable income by $4,790. If a taxpayer has three eligible dependents, they can reduce their taxable income by a total of $14,370 ($4,790 x 3). The total exemption amount is subtracted from your adjusted gross income as part of the process of arriving at your final taxable income figure.

Claiming the Exemption on Your South Carolina Tax Return

To claim the dependent exemption, you must complete the relevant sections of the South Carolina Individual Income Tax return, Form SC1040. The process begins by listing each dependent on the front of the form. You are required to provide each dependent’s full name, Social Security Number (SSN), and their relationship to you.

After listing all dependents, you will enter the total number of eligible dependents in the designated box on the SC1040. This number is then used to calculate your total deduction for dependent exemptions. This calculation is typically done on a worksheet included in the SC1040 instructions or automatically within tax preparation software. The resulting total exemption amount is entered on the specified line for deductions on the SC1040. If you are a noncustodial parent claiming a child with a signed Form 8332, you must attach a copy of this form to your South Carolina return, just as you would with your federal return.