Tax tips about working remotely

June 21, 2022

The relief offered to out-of-state employers from South Carolina’s requirements to withhold taxes from wages for employees who temporarily work in the state due to COVID-19 will end on June 30. The end of the relief was previously announced with SC Revenue Ruling #22-3.

This relief offered by the South Carolina Department of Revenue (SCDOR) since May 2020 began when many South Carolina residents who traveled out of state for work started working temporarily from home as a result of the pandemic.

Effective July 1, employers will have to withhold taxes from wages for all employees who work in South Carolina, including those who may still be temporarily working in the state due to COVID-19.

​The U.S. Bureau of Labor Statistics reported that in March 2022, 10% of workers were doing their jobs from home solely due to the COVID-19 pandemic, down from 13% in February 2022 and 11.1% in December 2021. Gallup estimated that as many as 45% of full-time employees worked at least part of the time from home in September of 2021.

Though remote work directly related to COVID-19 may be declining, telecommuting options are becoming more popular with both employees and employers. With remote work becoming more common, here are some tips for remote employees and their employers.

If you live in South Carolina and work from home for an out-of-state employer:

  • South Carolina Income Taxes will be withheld from your paycheck, and you will need to file a South Carolina Individual Income Tax return.
  • Residents in South Carolina who pay taxes both to South Carolina and another state may be eligible for a credit on their South Carolina Individual Income Tax return.
    • The amount of the credit is the lesser amount paid in taxes to South Carolina or the other state.
    • Claim this credit electronically using your filing software or with the SC1040TC if filing by paper.

If you are an out-of-state employer with remote employees who work in South Carolina, in general:

  • You are subject to South Carolina’s wage withholding laws.
  • You must register and pay South Carolina Withholding Tax. For full instructions, click the Can I help? button on MyDORWAY to open Dorwin, a virtual assistant, and enter remote employee.

​If you are an employer in South Carolina and you hire employees who are not SC residents and work outside of South Carolina:

  • Generally, the remote employees’ wages are not taxable in South Carolina since they are located out of state.
  • You may be required to withhold Income Taxes from the wages for the state the remote employee is physically located in.

Some exceptions to the South Carolina’s withholding laws include:

  • An employee who makes less than $1,000 in wages a year.
  • An employee who has requested a waiver of withholding requirements.
  • A military spouse who requests an exemption from South Carolina withholding under federal law.
  • Employees who perform certain agricultural services on a farm.
  • Workers who perform domestic services in a private residence.

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