Personal Income tax question South Carolina Specific

[GolfingDuo]

I know so many people say that a move should not be about taxes. Well in this day and age where taxes seem to be going up and the government spending all of that and more it has to enter into everyone's equations.

South Carolina is second in my list of states that I am considering. So to help me either drop it off the list or to move it up to tie in first I have a few questions. I am going to post information gathered about income tax and I hope that someone with experience here can answer them.

Personal Income Taxes

Tax Rate Range: Low – 3.0%; High – 7%; No tax on the first $2,630 of taxable income in tax year 2007.
Income Brackets: * Lowest – $2,800; Highest – $14,001
Number of Brackets: 6
Personal Exemptions: * Single – $3,700; Married – $7,400; Dependents – $3,700
Standard Deduction: Single – $5,700; Married filing jointly – $11,400
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Retirement Income Taxes: Retirement income is taxed. Social Security is exempt. Under age 65, $3,000 in pension income is exempt. If you are 65 or older you may exempt $15,000 of retirement income. You can take this deduction for income received from any qualified retirement plan. If both spouses receive retirement income, each spouse is entitled to an individual deduction. The $15,000 deduction must be offset by any other retirement deduction that is claimed. A surviving spouse may continue to tacke a retirement deduction on behalf of the deceased spouse. Some taxpayers age 65 and older may not have to file a tax return if they meet certain conditions. For more information,click here.
Retired Military Pay: Retirees with 20 or more years of active duty can deduct up to $3,000 annually until age 65 and up to $10,000 per year after age 65. This deduction extends to the surviving spouse. Pension or retirement income received for time served in the National Guard or Reserve components is not taxable. Survivor benefits are taxed following federal tax rules.

The lines in red are the questions.

1. retirement income is taxed. does that count for 401k withdrawals?
2 & 3. combination of all income from pensions gets 3k deduction <65 and 15k 65>?
4. National Guard pension is exempt, does that count for soldiers that earned the pension while serving in another state?

That last one is important. Some of the others I can kind of guess but it would be good to know the whole story. I have two pensions, one military and the other FERS. Outside of the tax situation SC has a nice COL and the weather is okay. It is also closer to New England and our only child. It might be a pretty good location for us. We will visit it before making our decision anyway.

 

[FinancialDave]

401k's generally fall under the category or qualified plans so they would be included as you describe qualified plans. The statement also applies to your FERS pensions.

From the SC1040 instructions, National Guard income from ANY state is exempt for all INACTIVE National Guard duty pay. Active duty pay is deducted only for so many days.


See the website www.sctax.org

Note: this should not be taken as tax advice and is only my opinion.

As far as NG pension income goes.

From the 2012 SC1040 - here is the text:

http://www.sctax.org/NR/rdonlyres/81EFE72D-97B6-49DA-AA3A-0F44A1689523/0/SC1040Inst_07192012.pdf


Retirement income paid by the United States government for service in the Reserves or National Guard is not taxed for South Carolina purposes. (You may deduct the entire amount of any stipend paid by the State of South Carolina for National Guard service.)


Determine the percentage of your military retirement income which is excludable by dividing the length of time you served in the Reserves and/or National Guard (not full time) by the length of time of your total military service as follows:
Determine the excludable amount of your military retirement income by multiplying it by the percentage of exclusion as follows:
=
excludable military retirement income
=% exclusion X
total taxable military retirement income shown on federal return
MILITARY RETIREMENT EXCLUSION WORKSHEET
Retirement income paid by the United States government for service in the Reserves or National Guard is not taxed for South Carolina purposes. (You may deduct the entire amount of any stipend paid by the State of South Carolina for National Guard service.)
Inactive Reserve time + Inactive National Guard time % exclusion Total Military time (Active and Inactive)
X
EXEMPTION WORKSHEET
$3,800Federal personal exemption amount
Number of dependents claimed on your federal return who had not reached age six during the tax year
Allowable deduction, enter this amount on line t.
2.
Include the amount of excludable military retirement income as a subtraction.

fd

 

[GolfingDuo]

Thanks this information is good and invaluable. I understand that it is how you view it. If I get to SC and decide to make it my choice I will consult with an attorney as I set up my trusts and personal finances.

401k's generally fall under the category or qualified plans so they would be included as you describe qualified plans. The statement also applies to your FERS pensions.

From the SC1040 instructions, National Guard income from ANY state is exempt for all INACTIVE National Guard duty pay. Active duty pay is deducted only for so many days.


See the website www.sctax.org

Note: this should not be taken as tax advice and is only my opinion.

As far as NG pension income goes.

From the 2012 SC1040 - here is the text:

http://www.sctax.org/NR/rdonlyres/81EFE72D-97B6-49DA-AA3A-0F44A1689523/0/SC1040Inst_07192012.pdf


Retirement income paid by the United States government for service in the Reserves or National Guard is not taxed for South Carolina purposes. (You may deduct the entire amount of any stipend paid by the State of South Carolina for National Guard service.)


Determine the percentage of your military retirement income which is excludable by dividing the length of time you served in the Reserves and/or National Guard (not full time) by the length of time of your total military service as follows:
Determine the excludable amount of your military retirement income by multiplying it by the percentage of exclusion as follows:
=
excludable military retirement income
=% exclusion X
total taxable military retirement income shown on federal return
MILITARY RETIREMENT EXCLUSION WORKSHEET
Retirement income paid by the United States government for service in the Reserves or National Guard is not taxed for South Carolina purposes. (You may deduct the entire amount of any stipend paid by the State of South Carolina for National Guard service.)
Inactive Reserve time + Inactive National Guard time % exclusion Total Military time (Active and Inactive)
X
EXEMPTION WORKSHEET
$3,800Federal personal exemption amount
Number of dependents claimed on your federal return who had not reached age six during the tax year
Allowable deduction, enter this amount on line t.
2.
Include the amount of excludable military retirement income as a subtraction.

fd

 

[FinancialDave]

Though it doesn't specifically say it, I don't see why it would make any difference which state you did the National Guard service in, as it is a federal program.

 

[GolfingDuo]

Though it doesn't specifically say it, I don't see why it would make any difference which state you did the National Guard service in, as it is a federal program.

They tax active duty military pensions so the question was still there in my mind. I am just making sure. There still could be questions.

It hasn't raised them higher but it hasn't completely dropped them off either. It might have dropped them below Florida to third. To me I needed to know how much of a bite I would be getting hit with. All part of the planning process in my house.