US Expat Tax Returns: Determining South Carolina State Residency

Americans living abroad are often puzzled by trying to determine if they have to file an expat tax return in a particular US state. For US expats who lived in South Carolina, the answer to that question requires you to look at a variety of factors.  You will have to decide whether or not you are still considered a South Carolina resident under their guidelines.

South Carolina Residency Requirements for Tax Purposes

If you determine that South Carolina will consider you a non-resident, then you should understand your South Carolina filing requirements as a non-resident. If you earned any income in South Carolina or received business income derived from South Carolina, you will have to file a South Carolina return as a non-resident.

How To Determine Whether You Need to File South Carolina State and Federal Expat Tax Returns

This excerpt from South Carolina’s Individual Income Tax guide explains how to determine if you are a resident for tax purposes.

“You are a South Carolina resident, even if you live outside South Carolina, when:

1. Your intention is to maintain South Carolina as your permanent home; and
2. South Carolina is the center of your financial, social and family life; and
3. When you are away, South Carolina is the place to which you intend to return.

You are a non-resident if your permanent home is outside South Carolina all year and none of the above applies.”

Take note that, as an American living abroad who will have to file expat tax returns, you may still be considered a South Carolina resident although you no longer live there. This means that you will have to file state taxes in addition to your Federal expat tax return. It will not be enough for you to tell the State of South Carolina that it was your intent to move your permanent home. You will have to prove your intent by your actions. According to the South Carolina Individual Income Tax Guide, if you were a South Carolina resident who moved away “for a temporary or indefinite period of time without intent of making the new place [your] home…” then you are still a South Carolina resident.

South Carolina Residency

If you consider yourself a non-resident, and South Carolina disagrees with you, the burden of proof will be on you. Your expat tax records should include documents that show your intent to establish your residence away from South Carolina. The following lists some of the factors that are used to help determine South Carolina residency:

• Address listed on legal documents, such as deeds, wills, and contracts
• Location of residences
• Location of employment (state or country where wages are earned)
• Address listed on federal, state, or local expat tax returns
• Address listed on bank statements, bills, tax notices
• Place registered to vote
• Address on car registration and on driver’s license
• Location of professional or trade licenses
• Where spouse and other family members reside
• Location claimed to be the domicile in prior years
• Status of citizenship or nature of visa admitting person to the United States or the foreign country
• Location of civic ties, social memberships and place of worship
• Maintaining a public library card or other privileges that require residency
• Business connections and relationships
• Location of professional services used (lawyer, doctor, etc.)

If there is anything that shows you intend to move back someday they may find you are a South Carolina resident. As a resident you will pay South Carolina tax on your worldwide personal service income, but not on non-personal service income.

If you are a non-resident of South Carolina you have South Carolina filing requirements if you received wages earned in South Carolina, or business income derived from South Carolina. Common types of business income that require non-residents to file South Carolina tax returns are:

• Income from real or tangible personal property located in South Carolina (such as rents, royalties, etc)
• Business income carried on in South Carolina
• Investment income (interest, dividends, capital gains) only if it comes from your business or property located in South Carolina
• South Carolina lottery or bingo winnings

Need Help with your State and US Expat Tax Returns?

Take a look at our “US Expat Taxes Explained” series for any questions you may have about your federal expat tax requirements. If you have any further questions about your state or US expat tax returns, or if you would like to learn more about our expat tax services, please contact us.