South Carolina residents will be able to obtain a tax credit of up to 9 cents for every gallon of gasoline they purchased in 2021, if they keep detailed records and claim them.
The Motor Fuel Income Tax Credit was created when the state raised its gas tax from 16 cents per gallon in early 2017 to eventually 28 cents in the second half of 2022.
The change made it appear that residents would not have to pay the tax – that they could get the money back as a tax credit on their income tax returns – but the rules are so onerous that taxpayers collectively left dozens millions of unclaimed dollars.
For 2019 statements, South Carolina set aside $ 65 million for the tax credit, which that year was based on 5 cents per gallon. Only $ 3.4 million was claimed in income tax returns, despite being a “refundable” credit, which means that you receive the money even if you owe no tax.
For 2020, the credit is worth 7 cents per gallon. You have either kept detailed records throughout the year or it is too late to think about claiming that credit.
Because of the burdensome regulations of the SC Revenue Department, it’s the only tax credit I qualify for yet I haven’t bothered to claim it before. Countless residents of the state seem to have made the same calculation.
But each year credit becomes more valuable as the gasoline tax hike starts with another 2-cent increase every July 1, and now a couple from Charleston has developed a cheap smartphone app that simplifies record. So one of my New Year’s resolutions will be to claim credit for 2021.
The SC Gas Tax Credit app offers an easy way to record gas purchases and car maintenance costs – both needed to claim credit – as well as receipts, which can be photographed and loaded onto a smartphone. I tested the app the last time I bought gas and found it easy to use.
The last lines of the South Carolina flowchart, to determine if a taxpayer qualifies for Vehicle Fuel Tax Credit.
“I am a licensed accountant in South Carolina and I realized that no one was claiming the credit because of the load of documentation of maintaining receipts and calculating the credit,” said Brett Snell of Charleston, who founded the app company with wife Jaleh Snell .
The app costs $ 4.99 on the Apple Store (iPhones) or Google Play (Android), and can be used to track records for two vehicles. A South Carolina taxpayer can claim credit for up to two vehicles.
What is the value of the tax credit? It depends on the amount of gas consumed by the person, as the credit is equal to the lower of the amount spent on increasing the gas tax or the amount spent on preventive maintenance, such as tires and oil changes.
So a person who buys 500 gallons of gasoline in 2021 can get a tax credit of $ 45. Someone who buys 1,000 gallons of gas can get $ 90.
Claiming credit could and should have been simple. Instead, we obtained a 13-page explanation of one-year record-keeping rules and requirements, an eligibility flowchart and an extra income tax form with three pages of instructions.
At least, now, there is an app for that.
Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.