H 3149 General Bill, By D.A. Wright
 A Bill to amend Section 12-7-1210, Code of Laws of South Carolina, 1976,
 relating to the tax credit allowed on a joint income tax return for the earned
 income of a spouse, so as to provide that the credit equals the difference
 between the South Carolina income tax due on the joint return and the total of
 the tax that would be due if both spouses filed separately and to delete
 provisions limiting the credit to earned income, prohibiting the credit when a
 taxpayer lives abroad or in Guam, American Samoa, and the Northern Mariana
 Islands, and when the taxpayer files a nonresident return.

   12/27/90  House  Prefiled
   12/27/90  House  Referred to Committee on Ways and Means
   01/08/91  House  Introduced and read first time HJ-81
   01/08/91  House  Referred to Committee on Ways and Means HJ-81
   02/05/91  House  Tabled in committee

A BILL

TO AMEND SECTION 12-7-1210, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE TAX CREDIT ALLOWED ON A JOINT INCOME TAX RETURN FOR THE EARNED INCOME OF A SPOUSE, SO AS TO PROVIDE THAT THE CREDIT EQUALS THE DIFFERENCE BETWEEN THE SOUTH CAROLINA INCOME TAX DUE ON THE JOINT RETURN AND THE TOTAL OF THE TAX THAT WOULD BE DUE IF BOTH SPOUSES FILED SEPARATELY AND TO DELETE PROVISIONS LIMITING THE CREDIT TO EARNED INCOME, PROHIBITING THE CREDIT WHEN A TAXPAYER LIVES ABROAD OR IN GUAM, AMERICAN SAMOA, AND THE NORTHERN MARIANA ISLANDS, AND WHEN THE TAXPAYER FILES A NONRESIDENT RETURN.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Section 12-7-1210 of the 1976 Code, as added by Act 170 of 1987, is amended to read:

"Section 12-7-1210. (A) In the case of married individuals filing a joint return under Section 12-7-440 for the taxable year, there is allowed as a credit against South Carolina income tax due an amount equal to seven-tenths of one percent of the lesser of: (1) thirty thousand dollars; or (2) the qualified earned income of the spouse with the lower qualified earned income for the taxable year.

(B) (1) For purposes of this section, the term 'qualified earned income' means an amount equal to the excess of: (a) the earned income of the spouse for the taxable year, over (b) an amount equal to the sum of the deductions described in paragraphs (1), (2), (6), (7), and (12) of Internal Revenue Code Section 62 to the extent the deductions are properly allocable to or chargeable against earned income described in subitem (a). (2) For purposes of item (1), theterm 'earned income' means income which is earned income within the meaning of Internal Revenue Code Section 911(d)(2) or 401(c)(2)(C), except that: (a) the term does not include any amount: (i) not includable in gross income; (ii) received as a pension or annuity; (iii) paid or distributed out of an individual retirement plan (within the meaning of Internal Revenue Code Section 7701(a)(37); (iv) received as deferred compensation; or (v) received for services performed by an individual in the employ of his spouse within the meaning of Internal Revenue Code Section 3121(b)(3)(A); and (b) Internal Revenue Code Section 911(d)(2)(B) must be applied without regard to the phrase 'not in excess of thirty percent of his share of net profits of such trade or business'.

(C) No credit is allowed under this section for any taxable year if either spouse claims the benefits of Internal Revenue Code Sections 911 or 931 for the taxable year.

(D) Married individuals filing a nonresident return for the applicable taxable year are not eligible for the credit allowed pursuant to this section the difference between the tax due on the joint return and the total of the tax that would be due from both spouses if they were allowed to file separately, regardless of the filing status on their federal income tax return. The commission shall prescribe tables for use in determining the amount of the credit allowed for various levels of income."

SECTION 2. Upon approval by the Governor, this act is effective for taxable years beginning after 1990.