South Carolina Form I-290 for Nonresident Real Estate Withholding is required for anyone making a lump sum or installment payment to a seller who is not a state resident for the purchase of real property. The form is used to collect withholding taxes from the seller.
Steps to Complete Form I-290
Determine the amount realized from the sale. If the seller provides an affidavit of gain, place that amount on line 1. If you did not receive an affidavit of gain from the seller, then you must first calculate the amount realized from the sale by subtracting the selling expenses from the selling price to determine the gross amount from sale. Then subtract the property "basis" from the gross amount received from the sale.
Check the box indicating if seller is or is not a corporation. A corporation selling property is taxed at a different rate than an individual seller. Multiply the percentage that is indicated next to the box you checked by the amount on line 1, and enter the result on line 2.
Calculate the total payment to the seller by taking the gross sales price less all selling expenses, less any mortgage on the property that was paid off for the seller or assumed by you as buyer. Place this figure on line 3.
Compare the figures on lines 2 and 3, and enter the smaller amount on line 4.
Calculate any penalty and interest due on late payments. Place the total onto line 5.
Add lines 4 and 5 to determine the tax due from seller and put the answer on line 6.
Check the box on line 7 if the seller has elected not to use installment sales treatment in South Carolina.
On line 8, fill in the date of your first installment payment to the seller.
Check the box on line 9 that reflects how often you will be paying the seller. If using a period other than monthly or annually, you must attach an explanation.
Sign and date return.
Completing the Filing Process
Review your form for completeness and accuracy.
Send two copies of the form to the seller.
Send form and payment to this address: SCDOR Withholding Columbia, SC 29214-0004
If there is more than one seller, separate I-290 forms must be filed with the tax department. If the seller is a partnership, S corporation, estate or trust, you need only issue one I-290 to the entity. If the amount to be withheld for the entire year is less than $350, then it is not necessary to file this form. Withholding on installment sales can be deferred until the total amount to be withheld exceeds $500. However, if the installment sale withholding amount will never equal at least $500, the form must be filed with the Department of Revenue by Jan. 15 of the following year. The withholding must be sent to SCDOR on or before the 15th day of the month following the month in which the sale took place. I-290 can be filed electronically 24 hours a day, seven days a week through the agency’s website.
Report your figures accurately and completely. Willfully furnishing false information to the tax department is a crime. Filing the form after the due date will result in penalties and interest being added to tax bill.
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