With rising homeowner’s insurance rates, especially near the coast, a little known South Carolina tax credit can help counter those costs. After all, it’s no secret that homeowner’s insurance in South Carolina has gotten quite expensive. Luckily, every year, awareness of the Excess Insurance Premium Tax Credit increases, but the fact remains that thousands of people, who could reap the benefits of the credit, still don’t know it exists. And, the result is – those homeowners fail to receive hundreds of dollars in tax breaks that they’re entitled to.
The credit can reduce the amount of money owed in South Carolina income tax, dollar for dollar, by up to $1,250. In addition, if the cost of insuring your primary residence exceeds 5 percent of your federal adjusted gross income (from your federal tax return), you probably qualify.
Since tax season is upon us once again, why not take advantage of a simple tax credit that can offset some of your home insurance bills? An added benefit for people residing along or near the coast, an area plagued with soaring insurance costs, is that even those with substantial incomes may qualify because coverage is so high. Furthermore, homeowners insurance as well as any additional policies for hurricanes, such as “wind pool” premiums and flood insurance count when calculating the tax credit.
As for how it works – a family with an adjusted gross income of $60,000 would qualify if the cost of insuring their home is greater than $3,000. In other words, if that same family’s insurance costs $3,500, then they would receive a $500 reduction in the amount of income tax owed to the state. In order to claim the credit, South Carolina taxpayers should file a Schedule TC-44 and tax form sc1040tc (tax credits).
While the tax credit is nonrefundable, which simply means it can reduce your state tax bill, you won’t receive a check should the credit exceed the amount you would otherwise owe in taxes. However, any unused portion of the credit can be carried over to future years, for up to five years.
In the event you have no South Carolina income tax liability – as is often the case for retirees whose incomes are mostly untaxed by the state – you won’t benefit from the credit, unless you expect to owe taxes in coming years and choose to carry over the unused credit.
Of the 3,090 South Carolina homeowners who filed taxes last year and claimed the tax credit on their 2013 returns, they received an average of $984 reduction in their tax liability. That amounted to 690 more households taking advantage of the credit over the total of 2012 and nearly six times the number of tax payers who claimed it in 2008.
Given the tax credit was implemented in 2007 as part of the state’s insurance reforms, awareness has been relatively slow, while insurance premiums have continued to rise. But, with knowledge of the Excess Insurance Premium Tax Credit spreading each year throughout the state, awareness should eventually reach the majority of South Carolina’s residents to help provide long needed relief of their homeowner’s insurance woes.
Take advantage of every money saving credit or discount by making sure you’re getting the best rate on your homeowners insurance. Why not get a free homeowners insurance quote today?
Have you taken advantage of the Excess Insurance Premium Tax Credit? Feel free to share your thoughts in the comments section below.