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SC Military Reserve Retirement

Forum|Forum|6 years ago
April 2, 2020
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Just found out my Reserve Retirement is not taxed by SC. Why is this not prominent in Turbo Tax? It is hidden in "Other Subtractions" and there is no help in figuring out what percentage is active duty and what percentage is reserve. If this truly tax free, I have way overpaid my SC taxes for a couple of years.

Best answer by SusanY1

When you have retirement income on your tax return, one of the first questions you should see when you start the South Carolina interview is "Do you have eligible military retirement income?" on a screen that looks like the one below.

Do you not see this screen in your version of TurboTax? This screen opens the interview that allows you to deduct part of your retirement income connected to your prior service.

You are correct that retirement pay connected to full-time active duty as well as reserve service counts for this deduction.

The amount that is deductible has been increased in recent years and varies based on your age in the year the income is received. (There has been a gradual increase from a modest amount in 2015 to a full phase-in next year, 2020, of $17,500 for retirees under age 65 and $30,000 for retirees age 65 and older.)

Also note, you can amend your return for up to three years, using TurboTax's amendment software, if you overpaid your taxes in those years, to claim your refund. You can find the 2018 amendment software here, as well as a link to instructions for the other years: 2018 TurboTax Amendment Software.

AmyC

Employee

Yes, you need to amend and SC 1040 instructions, top of page 18 says the deduction is for retirement income from the Reserves or National Guard.

If you are under age 65, the deduction is limited to $14,600 for 2019.
If you are age 65 and above, the deduction is limited to $27,000 for 2019.

This is considered self-prepared tax returns. We are happy to help and try to make things as clear as we can. You should have seen a page that says Here's the income that South Carolina handles differently. We have Learn More buttons as a guide.

At this point, you will want to amend the last 3 years for a refund.

Please see how to:

file an amended return

You will submit 2016, 201 and 2018 in separate envelopes and will want to have them tracked to be sure they arrive safely.

Most important, thank you very much for your service!

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B

BMinton411Author

When I looked at the SC tax code, it looks like deductions you refer to pertain to active duty retirement.

Thanks for the point to page 18 of the SC1040 instructions. It basically says the same as SC 117-640.3 "That portion of the pension or retirement income received by retried service personnel, residents of this State, that can be attributed to time served in the National Guard or Reserve components of the Armed Forces of the United States, is not taxable." I had 8 years of active duty and then 28 years of Reserve duty so I have a reserve retirement. That really changes my tax return.

Am I reading that right?