COLUMBIA -- Increasing the maximum income tax deduction for South Carolina's senior citizens has created confusion, and Wednesday, state revenue officials scrapped a faulty work sheet that could cost some older couples more than $600.
The Revenue Department produced a new work sheet to correct a critical error and reflect an interpretation of the deduction. "This is a more pro-taxpayer way of calculating the deduction," said Revenue Director Burnet Maybank III.
The confusion stems from a maximum $11,500 deduction for people 65 and older approved by the Legislature last year. The work sheet refers to the wrong line on the main tax form for married couples when one spouse meets the age threshold and the other does not.
"It's a very big mistake," said John Stinton, who coordinates the American Association of Retired Persons' tax program in the Midlands. "Anybody who uses Worksheet C and does it the way it says there ... will end up with a zero deduction," he said. "The department goofed."
A couple paying the highest rate and tax booklet instructions would forgo $632 in tax savings in the worst-case scenario, said Revenue Department spokeswoman Vicki Ringer.
Mr. Stinton pointed out the error in a letter to revenue officials about four weeks ago, too late to keep it from being included in the 1.8 million tax-form packages. Between 3,000 and 5,000 taxpayers would be affected, Mr. Maybank said.
Revised worksheets are available from the Revenue Department, AARP tax volunteer sites and other locations. Those reflect a more generous baseline for determining the allocation, suggested by the AARP.
Under the original interpretation, gross income was used. The deduction now will be based on net income.
"The statute was silent, and we tried to work our way through it," Mr. Maybank said. "We looked at the (AARP) criticism and decided they had a point. The more fair and equitable thing to do was to increase the deduction."
The Revenue Department is trying to alert taxpayers about the changes through newsletters and trade groups, Mr. Maybank said. Software companies also are being advised to update their tax programs.
Revision instructionsA Revenue Department mix up on a state income-tax work sheet could cost thousands of South Carolinians as much as $600. Here's how to get a revised work sheet for joint tax filers when one spouse is younger than 65 and the other is older:Call the Revenue Department at (800) 768-3676, and leave a message to have a form mailed or faxed.Check the agency's Internet site, www.dor.state.sc.us.Write to FORMS, P.O. Box 125, Columbia, SC 29214.Pick up a form Jan. 15 at The Grand Affair at the State Fairgrounds. Volunteer tax-preparers for AARP's Tax-Aide program also will have forms at their sites, which open Feb. 3. For more information, call (888) 227-7669 beginning Jan. 15.