Form SC W-4: Withholding Allowance Certificate in South Carolina

Form SC W-4 Withholding Allowance Certificate: Key Takeaways

Form SC W-4 is a South Carolina-specific document used by employees to inform employers of the correct state income tax withholding.
Employees claim allowances and exemptions that directly influence how much tax is withheld from their paychecks.
Employers must withhold state tax at zero allowances if a new hire fails to submit a completed SC W-4 form.

Understanding Form SC W-4 is essential for South Carolina employees and employers. It ensures proper withholding of state income taxes according to individual circumstances.

This article covers key aspects of filling out, submitting, and managing tax withholdings using Form SC W-4.

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1. Overview of Form SC W-4 and Its Purpose

Form SC W-4, or the South Carolina Employee's Withholding Allowance Certificate, is distinct from the federal W-4 and is customized for state tax regulations.

Employees in South Carolina complete this form to specify their withholding allowances, exemptions, and any additional withholding amounts, guiding employers on the proper state income tax to withhold.

Personal Information on Form SC W-4

Employees must provide essential identifying details, including:

Full name
Address
Social Security Number

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Filing Status, Allowances, and Exemptions

The filing status options include Single, Married, or Married but withholding at the higher Single rate.

Allowances claimed reduce the amount of tax withheld; the more allowances, the less tax withheld.

Employees can also claim exemptions if they qualify, such as having no tax liability the previous year and expecting none for the current year or being a military spouse claiming the same state of residence as their servicemember spouse.

2. Employer Responsibilities Regarding Form SC W-4

Employers in South Carolina have specific duties to ensure compliance with state withholding laws.

New Hire Withholding Requirements

Employees hired after December 31, 2019, must provide both a federal W-4 and the SC W-4.

If the SC W-4 is not submitted, employers must withhold state income tax as if the employee claimed zero allowances, which results in higher tax withholding until a completed form is provided.

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Handling Existing Employees

Employees hired before 2020 are not required to fill out the new SC W-4 form unless they wish to adjust withholding or previously claimed exemption from state withholding.

Submission to South Carolina Department of Revenue (SCDOR)

Employers must submit a copy of the SC W-4 to SCDOR when an employee claims 10 or more allowances or if they suspect the form’s validity.

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3. Calculating State Income Tax Withholding Using Form SC W-4

The number of allowances claimed on the SC W-4 affects the withholding amount according to South Carolina’s yearly withholding tables.

For example, in 2020, each allowance corresponded to a personal exemption of $2,590, and there was a standard deduction of 10% of gross wages up to $3,820 for those claiming one or more exemptions.

Employers use this data along with gross wages to compute the correct withholding amount to remit to the state.

Considerations for Multiple Jobs or Working Spouses

Employees who have multiple sources of income or spouses who also work may need to adjust their withholding to avoid underpayment of taxes.

They can do this by claiming fewer allowances or requesting additional amount withheld on their SC W-4.

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4. Importance of Annual Review and Updates to Form SC W-4

Life changes such as marriage, divorce, the birth of a child, or a change in income can affect withholding needs.

It is advisable for employees to review and update their SC W-4 annually or whenever a major life event occurs to prevent unexpected tax liabilities or penalties due to incorrect withholding.

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5. Final Thoughts on Form SC W-4 Withholding Allowance Certificate

Form SC W-4 is a critical tax form for employees and employers in South Carolina to ensure the accurate withholding of state income taxes.

By understanding the allowances, exemptions, and employer responsibilities, and by keeping Form SC W-4 updated, both parties can avoid under- or over-withholding issues.

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Additional Resources for Form SC W-4 and Tax Withholding

01. What is the purpose of the Form SC W-4?

Form SC W-4 is used by South Carolina employees to indicate their withholding allowances and exemptions for proper state income tax withholding by employers.

02. What happens if an employee does not submit Form SC W-4?

Employers must withhold state income taxes at zero allowances, resulting in higher withholding until the completed SC W-4 form is provided.

03. Who needs to submit Form SC W-4?

Employees hired after December 31, 2019, must submit both federal W-4 and South Carolina Form SC W-4 to their employers.

04. How often should employees update their Form SC W-4?

Employees should review and update their Form SC W-4 annually or when significant life changes occur, such as marriage or having a child.

05. When must employers submit Form SC W-4 to the South Carolina Department of Revenue?

Employers must submit the SC W-4 form to SCDOR if an employee claims 10 or more allowances or if the form's validity is in question.