According to the South Carolina filing instructions:
If you are a resident of South Carolina, all of your income is taxable to South Carolina no matter where it was earned or the source of the income.
If you are a nonresident of South Carolina stationed in South Carolina, your active duty military pay is not taxable to South Carolina.
South Carolina should not be listed as the state on the military W-2. If it is, ask your employer for a corrected W-2 showing your correct Home of Record.
If one spouse is a resident and the other is not, and you filed a joint federal return, you must file a joint nonresident South Carolina return.
Is my military retirement taxable?
According to the South Carolina filing instructions, individuals may deduct all military retirement income included in their South Carolina taxable income.
If you are eligible for this retirement credit, please go to:
- State
- Edit (three dots)
- Subtractions from Income
- Social Security and Retirement Deductions
- Enter qualified amount of military retirement income as reported on Federal Form 1040, Line 5b.
Is my reserve income taxable?
Inactive Duty Military pay is taxable on the federal return but not on the South Carolina return. If any deductions were taken on the federal return that are due to the reserve income, you must add the deductions back onto the state return.
To add the deductions taken on the federal return back to the state return, follow these steps in the program:
- State
- Edit (three dots)
- Additions to Income
- National Guard and Military Expenses
To take the subtraction for the National Guard and Reserve members inactive duty training, follow these steps in the program:
- State
- Edit (three dots)
- Subtractions from Income
- National Guard/Reserve Annual Training and Drill Pay