What are qualified catastrophe expenses?
Qualified catastrophe expenses are expenses paid or incurred by reason of a major disaster that has been declared by the governor to be an emergency by executive order. These expenses include payment of insurance deductibles and other uninsured risks of loss from hurricane, rising flood-waters, or other catastrophic windstorm event damage.

Example: Tom has a $1,000 insurance deductible. Tom established a catastrophe savings account. Hurricane Devon made landfall in South Carolina and the governor declared a state of emergency. Tom can withdraw money from his catastrophe savings account to pay for the $1,000 insurance deductible. The $1,000 withdrawal will not be included in his South Carolina taxable income for that year.

Catastrophe Savings Accounts

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1. Why open a catastrophe savings account?
2. What are qualified catastrophe expenses?
3. What are the requirements of a catastrophe savings account?
4. Who can contribute to a catastrophe savings account?
5. Where can I establish a catastrophe savings account?
6. Can I invest my catastrophe savings account in stocks and bonds?
7. How much can be deposited in a catastrophe savings account?
8. How do I report contributions to a catastrophe savings account on my South Carolina income tax return?
9. How much will I save on state income taxes?
10. Can I transfer money from my regular savings account into a catastrophe savings account?
11. How are interest earnings from my catastrophe savings account reported on my tax returns?
12. What records do I need to keep regarding withdrawals from my catastrophe savings account to pay for qualified catastrophe expenses?
13. What if I withdraw the money in my account for purposes other than qualified catastrophe expenses?