This credit can only be claimed by a married couple filing jointly when both spouses have earned income. This credit is not allowed on returns with a filing status of single, married filing separately or head of household. Do not include gambling or bingo winnings reported on federal form W-2G.
You earned a salary taxed to South Carolina of $20,000. Your spouse earned $17,000 taxed to South Carolina and had an IRA deduction taxed to South Carolina of $1,000. Your SC qualified earned income is $20,000 and your spouse's is $16,000 ($17,000 minus $1,000). Because your spouse's qualified earned income is less than yours, the credit is based on your spouse's income. Therefore, the credit is $112 ($16,000 x .007).