New South Carolina Catastrophe Savings Accounts
This year a new account for SC residents has been established. This allows an income tax deduction to individuals for certain contributions to a Catastrophe Savings Account (CSA) to cover an insurance deductible or self-insured losses for the taxpayer’s legal residence from certain hurricanes, rising floodwaters or other catastrophic windstorm event damage.
This account does not apply for those individuals who have second homes in South Carolina. It is tied to the taxpayer’s legal residence which allows only one CSA (if jointly owned). The amount that may be contributed depends on the taxpayer’s deductible amount (if any) for the homeowner’s policy.
The limits are as follows –
1. The qualified deductible is $1,000 or less.
The total contribution is up to $2,000.
2. The qualified deductible is over $1,000.
The lesser of $15,000 or twice the qualified deductible.
3. No insurance deductible – the taxpayer is “self-insured.”
The lesser of $250,000 or the value of the legal residence.
Qualified catastrophe expenses are defined as expenses paid or incurred by reason of a major disaster that has been declared by the Governor to be an emergency by executive order. The CSA must be established prior to a catastrophic event.
This is a short version of the notice establishing the CSA accounts so please let us know if you need more information. And yet again, we ask you to let us know if you set up an account so that we may take the proper deduction on your SC tax return for 2021.