South Carolina taxes all income that is earned by the state, such as wages, tips, and commissions from employment. Forms of unearned income, such as unemployment compensation, lottery winnings, or rental property income, is also taxable.http://www.sctax.org/NR/rdonlyres/9EA05818-4B57-4913-B451-D70190AC742D/0/SC1040Inst.pdf

It is important to note that tax laws vary greatly from state to state, and all state tax laws differ from the federal tax code enforced by the Internal Revenue Service. This means that, even if you have prepared your own federal tax return or a tax return in another state, you will want to consult South Carolina state tax laws before you commence your South Carolina return.http://www.sctax.org/NR/rdonlyres/9EA05818-4B57-4913-B451-D70190AC742D/0/SC1040Inst.pdf

The first step to preparing a South Carolina state tax return is to collect all of your relevant tax paperwork. To complete the tax form, you will need the following:

1. Your Social Security number
2. Your current mailing address
3. Your spouse's name and Social Security number, if you are filing a joint tax return
4. Documentation of your total earned income for the tax year - If you are an employee, this will be the amount of wages shown on your Form W-2 or Form 1099. If you work for yourself, this will be the amount of your gross earnings minus any applicable business expenses.
5. Documentation of your unearned income for the year - This includes unemployment compensation, interest and dividends, and other forms of taxable non-work income.
6. The total amount of your state income tax payments for the year - If you are employed, this will be shown on your Form W-2 as state taxes withheld. If you are self-employed, this will be the amount of any estimated tax payments you made in the last calendar year.
7. A copy of your federal income tax return, if you are filing onehttp://www.sctax.org/NR/rdonlyres/9EA05818-4B57-4913-B451-D70190AC742D/0/SC1040Inst.pdf 

If you will be filing a federal tax return, it's a good idea to complete that form before beginning your state return, since you will need the amount of your federal taxable income to complete your state form. If you will not be filing a federal return, you may want to ask a tax professional to help you to calculate your federal taxable income.http://www.irs.gov/pub/irs-pdf/f1040.pdf

Now that you have all of your essential information in one place, you need to get the proper tax form for your state taxes. In South Carolina, this form is Form SC-1040 "South Carolina Individual Income Tax Return." You can download this form, as well as the accompanying instructions, from the South Carolina Department of Revenue website, or you can pick up a paper copy from your local library.http://www.sctax.org/NR/rdonlyres/9EA05818-4B57-4913-B451-D70190AC742D/0/SC1040Inst.pdf 

If you will be using tax preparation software or a tax preparation website to file your federal income tax return, you will usually be given the option to file your state return for an additional fee. This is generally the easiest and most convenient option for filing, since most of the information you need will be directly imported from your federal return.http://www.sctax.org/Electronic+Services/FastFile/default.htm 

To complete the form by hand, write clearly and legibly and use only black ink to avoid any processing delays. Begin by completing the personal information section, entering your name, Social Security number and address. Select the appropriate filing status and exemption information.http://www.sctax.org/NR/rdonlyres/19E5B103-9965-4291-AE84-2C4F3423ACB0/0/SC1040.pdf

Now, you should stop and read the form instructions carefully before proceeding. The instructions will explain all forms of taxable income and all of the state credits that you may qualify to claim. As you come to each line on the state return, you should stop and consult the instructions for anything about which you are unclear.http://www.sctax.org/NR/rdonlyres/9EA05818-4B57-4913-B451-D70190AC742D/0/SC1040Inst.pdf

Continue with the tax return by entering your federal taxable income. The South Carolina tax form will tell you where to find this information on your IRS Form 1040. Proceed through the form, adding and subtracting any applicable income adjustments.http://www.sctax.org/NR/rdonlyres/19E5B103-9965-4291-AE84-2C4F3423ACB0/0/SC1040.pdf 

Once you calculate your South Carolina taxable income, you will consult the tax tables located in the instructions to find the amount of taxes owed on your income. This amount is your tax liability. From this total, you will subtract the state income tax payments you have made and any state credits that you are eligible to claim. This will leave you with either a refund (the amount you overpaid) or a balance due (the amount you underpaid).http://www.sctax.org/NR/rdonlyres/19E5B103-9965-4291-AE84-2C4F3423ACB0/0/SC1040.pdf 

You have completed your return. Now sign and date it and, if you are filing jointly with your spouse, he or she needs to sign and date it also. Make a copy of the form for your records. If you will be receiving a refund, simply mail the form to the address given on the return.http://www.sctax.org/NR/rdonlyres/19E5B103-9965-4291-AE84-2C4F3423ACB0/0/SC1040.pdf 

On the other hand, if you owe a balance due you need to enclose a check or money order for the total and send it with your tax return. If you are unable to pay the entire balance, send what you can and contact the Department of Revenue about establishing a payment plan. Be sure that you submit your return by April 18, 2011.http://www.sctax.org/NR/rdonlyres/9EA05818-4B57-4913-B451-D70190AC742D/0/SC1040Inst.pdf

If you will be unable to file your South Carolina state tax return before the April 15 deadline, you may also want to learn about How to Get a State Tax Extension in South Carolina.

Disclaimer: The content in this page is not a substitute for professional financial advice. Please contact a finance professional before using the information presented here.