SC Question

[Lion EA]

Clients moved from CT to SC during 2017. They paid property tax on their vehicles in CT. They paid tax on their vehicles in SC, and they paid out of state reg fees on their vehicles, stating it's a tax for new residents one time only. Are all of those SC taxes deductible on Schedule A as personal property taxes?

While I have your attention, anything I need to watch out for on the SC PY return?

[Edsel]

I don't know why any of them wouldn't be deductible on the Federal Sch A.

The one possible problem might be with the "new resident" fee on their vehicle.  In my vague recollection, the "acid test" might be whether the fee is a fixed amount or varies with the value of the vehicle.  I think anything based on value is deductible, whereas a fixed amount is not.

Where I live, I average about one SC return per year.  These are PY or full-year from people who move to my state, and there is nothing substantial that has ever caused me a problem.  But a SC preparer would probably be aware of more nuances than I would.

[Abby Normal]

The CT tax is deductible but I'd lean towards the SC taxes as either being sales tax or nondeductible registration fees... but I'd have to research that.

[Lee B]

I believe that for vehicle taxes to be deductible, they have to be based on value like a property tax.

[JohnH]

Nothing definitive here, but I don't think the registration fee is deductible as property tax (as much as I'd like to say it is).  I prepare a few SC returns for residents and nonresidents, but is has been a while since I prepared a PY return. 

SC follows fairly common rules for allocation of income between states for a PY resident, although sometimes you'll need to prepare your own supplemental worksheet to break out the allocation of interest, dividends, retirement income, etc for the transition year.  If the clients are retired, SC gives some generous allowances for retirement income.  

One quirk is how SC handles the K-1 income of a SC resident with ownership in an operating company doing business as an S corporation in another state. If that situation applies, you have some extra work to do, and it is s a little counterintuitive.  

[Lion EA]

OK, the reg fee is the same amount for both cars, so a flat amount and not based on value. Great reminder, Edsel. Not deducting. Leaning toward the tax being a personal property tax, they are based on value, and deductible. Cars came down from CT and weren't purchased in SC and were 2014 and 2015 so not new in 2017. Tough to understand federal instructions re state taxes at times!

[Catherine]

Not germane in this case, but in NH only the part of the fee payable to the locality is deductible.  The part for the state isn't.  

Your trivia for today...

[Lion EA]

Thank you, all. Think I've sorted the loose ends and am ready to proofread and get this one to signatures today. Or, at least, by very late tonight.