What records do I need to keep regarding withdrawals from my Catastrophe Savings Account to pay for qualified catastrophe expenses?
Account holders who make a withdrawal from their Catastrophe Savings Account to pay for qualified catastrophe expenses should keep records to verify, in case of an audit, that withdrawals were properly used to pay qualifying expenses. • What if I withdraw the money in my account for purposes other than qualified catastrophe expenses? Withdrawals from an account for any purpose other than qualified catastrophe expenses are subject to South Carolina income tax at your regular rate and an additional tax of 2.5% payable on your South Carolina income tax return for the year of withdrawal. This additional tax is reported on page one of the South Carolina 1040 under “Taxes.” There are certain exceptions that allow withdrawals without paying any South Carolina income taxes and certain exceptions that allow withdrawals which require the taxpayer to pay the regular state income tax rate, but not the 2.5% additional tax. These exceptions are: 1. Taxpayer is 70 years or older and has a homeowners
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- What records do I need to keep regarding withdrawals from my Catastrophe Savings Account to pay for qualified catastrophe expenses?
