SC SCH TC 12: Credit for Employers Hiring Recipients of Family Independence Payments (Revision 2019-07)

Who files this form

This form is for employers claiming a credit for hiring employees who received Family Independence, also called Aid to Families with Dependent Children (AFDC), payments for the three months immediately before the month of hire.

To claim the credit:

• You must make health insurance available to the qualified employee on the same basis and under the same conditions as other employees.
• Any employer-imposed health insurance waiting period cannot exceed 12 months.
• The position cannot have been made available by terminating or forcing another employee to resign for the purpose of obtaining the credit.

The credit covers only the qualified employee’s first three consecutive years of employment.

When it's due

For the taxable year in which the employee is hired, submit an employee release and request certification of Family Independence eligibility by writing to the South Carolina Department of Social Services by the 15th day of the first month after that taxable year ends.

What you'll need

Have the following information and materials ready:

• Your name and SSN or FEIN. Individual taxpayers must provide their SSN.
• The number of qualifying employees and, where applicable, how many remain employed.
• Total qualifying wages paid for the employment periods shown on the form.
• An employee release to submit with your request for Family Independence eligibility certification.
• SC1040TC or SC1120TC, where you enter the total credit from this form.

How to file

1. Complete the applicable employment-period sections using the qualifying employee counts and wages. The credit rates are 20% for each full month of the first 12 months of employment, 15% for each full month of the second 12 months, and 10% for each full month of the third 12 months.
2. Add the credit amounts in Section E and enter the total on SC1040TC or SC1120TC.
3. If filing on paper: attach this form to your Income Tax return.
4. If filing electronically: keep a copy with your tax records.

Separately, submit an employee release and request eligibility certification by writing to the South Carolina Department of Social Services. The text does not provide a mailing address.

Common mistakes

• Counting partial months or employment beyond the eligible period. The credit is based on full months and applies only to the first three consecutive years of employment.
• Overlooking the health insurance rules. Coverage must be available on the same basis and under the same conditions as for other employees. A waiting period longer than 12 months makes the employer ineligible for this credit.
• Claiming the credit for a position created by displacing another employee to obtain it. The form prohibits this.
• Exceeding the combined credit limit. This credit combined with TC-4, TC-4SB, or TC-4SA cannot exceed $5,500 per employee.
• Forgetting the filing requirement. Attach the form to a paper Income Tax return, or keep a copy with your tax records if filing electronically.

Questions people ask

How much is the credit?

The credit is 20% of wages for each full month of the first 12 months of employment, 15% for each full month of the second 12 months, and 10% for each full month of the third 12 months.

Must I pay for the qualified employee’s health insurance?

You must make health insurance available on the same basis and under the same conditions as for all employees, including employer contributions and waiting periods. You are not required to make insurance payments for the qualified employee unless you make payments for nonqualified employees.

Does a health insurance waiting period delay the credit?

If an employer-imposed waiting period exists, the credit begins from the employee’s hire date. However, an employer with a waiting period longer than 12 months may not claim the credit.

Can the credit be carried forward?

Yes. It may be carried forward 15 years from the taxable year in which it is earned.

Can this credit be combined with other job tax credits?

This credit combined with the jobs tax credit (TC-4), small business job tax credit (TC-4SB), or small business alternative job tax credit (TC-4SA) cannot total more than $5,500 per employee.

Official sources

• https://dor.sc.gov/sites/dor/files/forms/TC12.pdf