RE: Military Retirement Income Deduction for SC for Surviving Spouse. What is considered the "qualified" income (for a Spouse) [DOD was >65]?

Forum|Forum|1 year ago
February 4, 2025
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My Father was Army. He passed at 68. My Mother, the Surviving Spouse received his Military Pay Benefits until she passed in November of 2024. I see that SC allows you to deduct all military retirement but I'm confused if the "all" differs and is reduced when the Spouse is the receiver. Some where I'm reading it's only a $10,000 deduction when that is the case. What is correct?

SusanY1

In South Carolina, 100% of military retirement pay is excluded from income since 2022. In addition, South Carolina requires a separate $10,000 deduction for non-military retirement income ((for the recipient or the surviving spouse) for taxpayers who are age 65 or older.

This separate deduction for non-military retirement pay may be the source of confusion. It could also be older information out there before the 100% exclusion applied.

You can see a bit more about the military retirement exclusions, as well as other tax benefits for seniors, in South Carolina HERE.

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SCGirlFromGAAuthor

@SusanY1
You are entirely right (the confusion) about the separate deduction for non-military retirement pay. I guess regardless of the amount of the "non-military pay", it just applies the $10,000 additional deduction.

Also, when it asks, "Did you receive eligible military retirement income in 2024?". I would think the answer would be yes but it's not clear what "eligible" is. Being the Surviving Spouse she was eligible for the military retirement pay (please correct me if I am wrong) so the amount received for Military Retirement should be entered here.

Then it asks under the Surviving Spouse Retirement Income, "Did you receive any retirement income as a surviving spouse in 2024 while a resident of South Carolina?". She did received other income as a Surviving Spouse so this should be a YES and the Type of Retirement Income? would be a different Qualified Retirement Income (not the Military pay), followed with my Father's DOB and then, the amount of the alternate retirement income.

I HOPE the above can clear my cluttered mind. The instructions for the State just isn't providing the clarity for me to be comfortable in my entry without other input. Thank you in advance.

SusanY1

Yes, the amount your mother received from your father's military retirement pay would all be considered qualifying military retirement pay and you enter that amount as the answer to that first question.

The surviving spouse retirement pay question would be for non-military retirement pay that she received from accounts where she was the beneficiary. This is where you enter the amount of the non-military retirement pay followed by your father's date of birth and the amount. (This is because this deduction is limited based on the age of the individual.)

If she has her own retirement accounts from work, those are yet another entry.

I know the South Carolina rules are confusing but it sounds like you've got it from here and will receive the maximum deductions that she's entitled to for the retirement pay. If you continue to have questions, though, of course come back and we'll be happy to assist further.

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