SC SCH TC 2: Credit for State Contractors Subcontracting with Socially and Economically Disadvantaged Small Business (Revision 2019-07)
South Carolina · South Carolina DOR · Used for tax years 2024, 2025, 2026
South Carolina Schedule TC-2 calculates the Income Tax credit for state contractors subcontracting with certified socially and economically disadvantaged small businesses. It reports subcontractor information, payment dates, and qualifying payments, and calculates a credit of 4%
Who files this form
SC SCH.TC-2 is for taxpayers claiming an Income Tax credit for payments to a qualifying subcontractor. To qualify, you must have a contract with the state of South Carolina and subcontract with a certified socially and economically disadvantaged small business for work related to that contract.
The subcontractor must be certified as defined in SC Code Section 11-35-5010 and associated regulations.
What you'll need
Have the following information and records available:
- Your name and SSN or FEIN. Individual taxpayers must provide their Social Security Number.
- Each subcontractor's name and street address, including city, state, and ZIP code.
- Each payment date, in MM-DD-YYYY format, and the amount paid on the contract.
- Evidence of the work the subcontractor performed for the contract. You must maintain this evidence when claiming the credit.
How to file
- Enter your identifying information and the subcontractor details, payment dates, and amounts paid.
- Add the qualifying payments in column C and enter the total on line 1.
- Multiply line 1 by 4% and enter the result on line 2.
- On line 3, enter the smaller of line 2 or $50,000. Include the credit on the appropriate tax schedule.
Paper return: Attach SC SCH.TC-2 to your Income Tax Return.
Electronic return: Keep a copy of SC SCH.TC-2 with your tax records.
Common mistakes
- Claiming more than the annual limit. The credit used may not exceed $50,000 in a single year.
- Claiming the credit beyond the allowed period. Eligibility ends after 10 consecutive tax years, beginning with the year of the first payment to a qualifying subcontractor.
- Failing to maintain evidence of the subcontractor's work on the contract.
- Forgetting to attach the form to a paper Income Tax Return or keep a copy with your records when filing electronically.
- Leaving out your Social Security Number if you are an individual taxpayer. The form says it is mandatory.
Questions people ask
How much is the credit?
The credit is 4% of qualifying payments to the subcontractor for work related to your state contract. The credit used cannot exceed $50,000 in a single year.
How long can I claim the credit?
You may claim it for 10 consecutive tax years, starting with the tax year in which you first pay a qualifying subcontractor. After those 10 consecutive tax years, you are no longer eligible.
Does the subcontractor need to be certified?
Yes. The subcontractor must be certified as a socially and economically disadvantaged small business under SC Code Section 11-35-5010 and associated regulations. The form directs you to dor.sc.gov/policy to review the code section.
Was this credit previously called something else?
Yes. The form identifies it as formerly the Minority Business Credit.