The number of South Carolina homeowners with high insurance costs who have taken advantage of a state tax credit worth up to $1,250 has more than quadrupled.

Still, too few seem aware of it.

With hurricane and flood insurance on everyone's mind here in the Lowcountry, it's a tax credit every homeowner should know exists.

Soaring flood insurance rates - the federal solution to a $24 billion shortfall in the National Flood Insurance program - may be postponed by Congress, or maybe not. But the sharply higher rates some property owners already have seen near the coast will make even more people eligible for this tax credit.

The "excess insurance premium tax credit" has been available since 2007, but word seems to have been getting out slowly. Some readers have told me their accountants were unaware of it.

In 2008, just 511 taxpayers claimed the credit, but by 2012 more than 2,400 benefited, according to state Department of Revenue reports.

Here's how the tax credit works: If the cost of insuring your primary residence exceeds 5 percent of your adjusted gross income, the state will pay you the difference, up to $1,250, as a tax credit.

For example, if your adjusted gross income is $50,000 and you paid $3,000 to insure your home, you could get a $500 tax credit (5 percent of $50,000 is $2,500, so the "excess insurance premium" is $500).

With homeowner's insurance costs soaring in coastal areas, the number of people who should qualify for the credit is certainly rising. Safe to say, the roughly 2,400 taxpayers who claimed the credit in 2012 are a fraction of those who could have.

It's not a "refundable" tax credit, so if you don't owe state income tax you won't get a check, but it is a dollar-for-dollar reduction in your state tax bill. The credit is claimed on South Carolina returns by filing form TC44.

If the credit is greater than the amount of tax owed, then it will bring your tax bill down to zero and the difference can be carried forward for up to five years.

And if you didn't know about the tax credit, but would have qualified, you could file amended returns to claim the credit for up to three years. I know several people on the barrier islands near Charleston who were unaware of the credit and filed amended returns after reading one of my earlier columns.

The insurance costs that count toward the credit include homeowners insurance, any additional "wind and hail" insurance, and any flood insurance. Some homeowners might have three different policies, or maybe more.

The income used in the calculation is your federal adjusted gross income, or AGI. That's important, because for most people "adjusted gross income" is less than their salary.

For example, if your salary is $55,000, but $2,500 was deducted from your pay for health care, and you contributed another $2,500 to a 401k retirement plan, that brings your adjusted income down to $50,000. On the other hand, people with lots of stock dividends and rental property income may have an AGI that's higher than their salary.

So if you own a home and pay big insurance bills, make sure to check if you qualify for South Carolina's excess insurance premium credit before filing your state tax return.

Reach David Slade at 937-5552.