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Hawaii Tax Form Schedule X - Tax Credits for Hawaii Residents Instructions
Use Schedule X to claim the low-income refundable tax credit, credit for low-income household renters, and the credit for child and dependent care expenses. Even if you have no taxable income, you should complete and attach Schedule X to your Form N-11 to claim these credits so they can be refunded to you.
Warning: The low-income refundable tax credit and the credit for low-income household renters MUST be claimed on or before the end of the twelfth month following the end of the taxable year. If you do not claim these credits within that period, the credits are waived and cannot be claimed later, even on an amended return.
Refundable Food/Excise Tax Credit
Note: Act 211, SLH 2007, (1) Changes the name of the Low-Income Refundable Tax Credit to the Refundable Food/Excise Tax Credit, (2) Amends the adjusted gross income amounts and tax credit payout table, and (3) Defines “adjusted gross income” as a taxpayer’s federal adjusted gross income.
Each resident taxpayer who files an individual income tax return for the taxable year, including those who have no income or no income taxable under chapter 235, HRS, may claim this credit provided that the taxpayer is not eligible to be claimed as a dependent for federal or State income tax purposes by another taxpayer.
The low-income refundable tax credit may be claimed for each resident individual who:
- Was a resident of Hawaii and was physically present in Hawaii for more than nine months during the taxable year;
- Is not claimed and is not eligible to be claimed as a dependent by any taxpayer for federal or Hawaii individual income tax purposes; and
- Was not confined in jail, prison, or a youth correctional facility for the full taxable year.
For Whom the Credit May Be Claimed
A resident taxpayer filing Form N-11 or N-13, or a part-year resident taxpayer filing Form N-15 may claim the credit for any of the following people who are “qualified exemptions” as defined above:
- The taxpayer’s self;
- The taxpayer’s spouse, if the spouse is filing jointly with the taxpayer;
- The taxpayer’s dependents; and
- The taxpayer’s minor children receiving support from the Department of Human Services of the State, social security survivor benefits, and the like.
Birth or Death of a Qualified Exemption
- A person who dies during the yearmay be a qualified exemption so long as the person was alive and physically present within the State for more than nine months. If a person who was continuously living inHawaii died after September 30, 2008, that person could still be a qualified exemption.
- A child who is born during 2008 could be a qualified exemption if the mother was physically present in the State while pregnant with the child and the total days of gestation and life after birth total more than nine months during the taxable year.
Federal Adjusted Gross Income
If the adjusted gross income shown on your return (Form N-11, line 7) is over $50,000, stop here; you cannot take this credit. However, you may claim the credit for a minor child receiving support from theDepartment of Human Services, etc.
Married filing separately. If you are married filing separately, you must add your spouse’s adjusted gross income to your own. If you are married filing separately and your spouse is a nonresident, you need to determine your spouse’s adjusted gross income from all sources, within and outside of Hawaii, and add that amount to your own adjusted gross income. If the total is over $50,000, you cannot claim this credit.
On line 2, enter the names of the qualified exemptions. Start with yourself, enter your spouse’s name if you are filing a joint return, and list your dependents. However, do not list minor children receiving more than half of their support from public agencies even though you may claim them as a dependent. List these minor children on line 3.
If married filing separately, only one spouse may claim the dependents.
Enter the number of qualified persons on line 2.
Minor Children Receiving Public Support
On line 3, list your minor children who are also qualified exemptions, and who receive more than half of their support from the Department of Human Services, Social Security benefits, and other government payments. If you are married filing separately, only one spouse may claim each child. Enter the number of children here, and on the space provided beside Form N-11, line 34.
Enter your spouse’s adjusted gross.
Amount of the Credit
Add lines 8 and 9. Enter this amount on Form N-11, line 34.
Deadline for claiming this credit. Claims for this credit, including any amended claims, must be filed on or before the end of the twelfth month after the close of your taxable year.
Credit for Low-Income Household Renters
Each resident taxpayer who occupies and pays rent for real propertywithin the State as his or her residence and who files an individual income tax return for the taxable year, including those who have no income or no income taxable under chapter 235, HRS, may claim a tax credit of $50 per qualified exemption, including the additional exemption for taxpayers age 65 or over, provided the following four conditions are met:
- The taxpayer is not eligible to be claimed as a dependent for federal or State income tax purposes by another taxpayer;
- The taxpayer has adjusted gross income of less than $30,000; and
- The taxpayer has paid more than $1,000 in rent during the taxable year.
- The rented property is NOT exempt from real property tax. Rent paid for property which is partially or fully exempt from real property tax will not qualify for the credit. For example, county or State low-income housing projects, military housing, dormitories in schools, residential real property owned by a nonprofit organization, and homes in which the owner occupies a portion of the property, may have been granted real property tax exemptions by the county. If such exemptions, whether partial or full exemptions, have been granted, the rent paid for such properties will not qualify for the credit. To verify if real property tax exemptions have been granted on the rented property, please inquire with either the landlord, rental agent, or theReal Property Tax Office in the county in which the property is located.
Note: Minor children receiving more than half of their support from the State Department of Human Services, Social Security benefits, and the like, which you can claim as dependents, are considered qualified exemptions for purposes of claiming this credit. This means that the exemption for a child listed in line 3 of Part I does count toward this credit if you can claim them as a dependent.
A “residence” is defined as the dwelling place that constitutes the principal residence of the taxpayer or his or her immediate family in this State.
“Rent” means the amount paid in cash in any taxable year for the occupancy of a residence. Rent does not include:
- Charges for utilities, parking stalls, storage of goods, yard services, furniture, furnishings, and the like;
- Rental claimed as a deduction from gross income or adjusted gross income for income tax purposes;
- Ground rental paid for use of land only; and
- Rental allowances or rental subsidies received (i.e. housing allowance received from the armed forces or the Hawaii Housing Authority.).
Adjusted Gross Income
If the adjusted gross income (Form N-11, line 20) shown on your return is $30,000 or more, stop here; you cannot take this credit.
Married filing separately. If you are married filing separately, you must add your spouse’s adjusted gross income to your own. If you are married filing separately and your spouse is a nonresident, you need to determine your spouse’s adjusted gross income from all sources, within and outside of Hawaii, and add that amount to your own adjusted gross income. If the total is $30,000 or more, you cannot claim this credit.
Resident for More Than Nine Months
If you are a resident who has not been physically present in Hawaii for more than 9 months in 2008, stop here; you cannot take this credit.
Dependent of Another Taxpayer
If you can be claimed as a dependent on another person’s return, whether or not that person claims you, stop here; you cannot take this credit.
List your most recent address. Fill in all of the required information. If you lived in more than one location during 2008, attach a separate sheet listing the same information for the other locations.
Do not list any location that was partly or wholly exempt from real property tax, such as:
- County or State low-income housing projects;
- Military housing;
- Dormitories in schools;
- Residential real property owned by a nonprofit organization; or
- Homes in which the owner occupies a portion of the property.
Rent You Paid
Enter the total amount of rent you paid during 2008 to all of the locations listed on line 4. If you are sharing or were sharing the rent with somebody else, list only your share of the rent here
Enter that portion of the amount on line 5 which:
- Is for ground rent, utilities, goods, or services;
- You claimed as a deduction anywhere on your tax return; or
- You were reimbursed, through a rental allowance or rental subsidy from any source.
Line 5minus line 6. If this amount is $1,000 or less, stop here; you cannot take this credit.
Amount of the Credit
Line 8 times $50. Enter this amount on Form N-11, line 35.
Deadline for claiming this credit. Claims for this credit, including any amended claims, must be filed on or before the end of the twelfth month after the close of your taxable year.
Credit for Child and Dependent Care Expenses
If youmaintain a household that included a child under age 13 or a dependent or spouse incapable of self-care, you may be allowed this credit for expenses you paid during the taxable year to care for your dependent so you could work.
Who May Claim the Credit
If you are a resident taxpayer who files an individual income tax return for a taxable year, you are not claimed or eligible to be claimed as a dependent on another taxpayer’s federal or Hawaii income tax return, and you maintain a household which includes one or more qualifying persons (as defined on this page), you may be allowed a credit against your income tax. The credit ranges from 15% to 25% of employment-related expenses (up to certain limitations) PAID during the taxable year in order to enable you to work either full or part time for an employer or as a self-employed individual.
Maintaining a Household
You will be treated asmaintaining a household for any period only if you furnish over half the cost ofmaintaining the household for that period. If you are married during that time, you and your spouse must provide over half the maintenance cost for the period.
The expenses of maintaining a household include property taxes, mortgage interest, rent, utility charges, upkeep and repairs, property insurance, and food consumed on the premises. They do not include the cost of clothing, education, medical treatment, vacations, life insurance, and transportation.
A qualifying person is any one of the following persons:
- Any person under age 13 whom you claim as a dependent (but see Special Rule (4) below, Children of Divorced or Separated Parents).
- Your disabled spouse who is mentally or physically unable to care for himself or herself.
- Any disabled person who is mentally or physically unable to care for himself or herself and whom you claim as a dependent, or could claim as a dependent (as a qualifying relative) except that he or she had income of $3,500 or more.
Employment-related expenses are those paid for the following, but only if paid to enable you to be gainfully employed:
- Expenses for Household Services. Expenses will be considered for household services in your home if they are for the ordinary and usual services necessary for the operation of the home, and bear some relationship to the qualifying person. For example, payment for services of a domestic maid or cook ordinarily will be considered expenses for household services if performed at least partially for the benefit of the qualifying person.
- Expenses for the Care of a Qualifying Person. Expenses will be considered for the care of one or more qualifying persons if their main purpose was to assure that individual’s well-being and protection. You can include amounts paid for items other than the care of your child (such as food and schooling) only if the items are incidental to the care of the child and cannot be separated from the total cost.
You may NOT include any amount paid for services outside your household at a camp where the qualifying person stays overnight.
Do not include services outside your household as employment-related expenses for your spouse or a dependent age 13 or older. However, services outside your household are employment-related expenses for a dependent who has not reached his or her 13th birthday or for an individual who regularly spends at least eight hours each day in your household.
You may include expenses incurred for qualified dependent care centers as employment- related expenses. The dependent care center must comply with all applicable laws, rules, and regulations of Hawaii if the center is located within Hawaii. If the center is located outside Hawaii, the center must comply with all applicable laws, rules, and regulations of the state or country in which the center is located. Furthermore, these centers must provide care for more than six individuals (other than individuals who reside at the center), and must receive a fee, payment, or grant providing services for any of the individuals (regardless of whether such center is operated for profit).
Note: Payments made to the State of Hawaii A+ Program qualify for the credit.
Some dependent care expenses may qualify asmedical expenses. If you cannot use all the medical expenses to qualify for this credit because of the dollar limit or earned income limit (explained later), you can take the rest of these expenses as an itemized deduction for medical expenses. But if you deduct themedical expenses first onWorksheet A-1, you cannot use any part of these expenses on Schedule X.
- Married Couples Must File Joint Returns. If you are married at the end of the taxable year, the credit for employment-related expenses is allowable only if you and your spouse file a joint return for the taxable year.
- Marital Status. If you are legally separated from your spouse under a decree of divorce or separate maintenance, you are not considered married.
- Certain Married Individuals Living Apart and Filing Separate Returns. If during the last 6 months of the taxable year your spouse was not a member of your household and you (a) maintained a household which was for more than one-half of the taxable year the principal place of abode of a qualifying person, and (b) furnished over half of the cost of maintaining such household during the taxable year, then you are not considered married for purposes of the credit or the exclusion.
- Children of Divorced or Separated Parents. If you were divorced, legally separated, or lived apart from your spouse during the last 6 months of 2008, you may be able to claim the credit even if your child is not your dependent. If your child is not your dependent, he or she is a qualifying person if all five of the following apply:
- You had custody of the child for the longer period during the year;
- The child received over half of his or her support from one or both of the parents;
- The child was in the custody of one or both of the parents over half of the year;
- The child was under age 13, or was physically or mentally unable to care for himself or herself; and
- The child is not your dependent because:
- As the custodial parent, you signed federal Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, or a similar statement, agreeing not to claim the child’s exemption for 2008; or
- You were divorced or separated before 1985 and your divorce decree or written agreement states that the other parent can claim the child’s exemption, and the other parent provides at least $600 in child support during the year. Note: This rule does not apply if your decree or agreement was changed after 1984 to specify that the other parent cannot claim the child’s exemption.
- Payments to a Related Individual. You can count work-related expenses you pay to relatives who are not your dependents, even if they live in your home. However, do not count any amounts you pay to:
- A dependent for whom you (or your spouse if you are married) can claim an exemption, or
- Your child who is under age 19 at the end of the year, even if he or she is not your dependent.
Complete columns (a) through (e) for each person or organization that provided the care. If you do not give the information asked for in each column, or if the information you give is not correct, your credit and, if applicable, the exclusion of employer-provided dependent care benefits may be disallowed.
You can use Form HW-16, “Dependent Care Provider’s Identification and Certification”, to get the correct information from the care provider. (This form is available at our website, by calling our Forms by Fax/Mail request line, and at any district tax office.) If the provider does not comply with your request to certify the information, complete the entries you can, such as the provider’s name and address. Write “See attached” in the columns for which you do not have the provider’s certification of information. Attach a statement that you requested the information from the care provider, but the provider did not comply with your request. You must keep records to show that you exercised due diligence in attempting to provide the required information. For more details, including what is considered “due diligence,” see federal Publication 503.
Columns (a) and (b). Enter the care provider’s name and address. If you were covered by your employer’s dependent care plan and your employer furnished the care (either at your workplace or by hiring a care provider), enter your employer’s name in column (a), write “See W-2” in column (b), and leave columns (c) through (e) blank. But if your employer paid a third party (not hired by your employer) on your behalf to provide the care, you must give information on the third party in columns (a) through (e).
Column (c). If the care provider is an individual, enter his or her social security number (SSN). If the individual is an alien and was issued an individual taxpayer identification number (ITIN) by the IRS, enter the ITIN. If the individual has applied for an ITIN but the IRS has not yet issued the ITIN, write “Applied For”. For other than an individual, enter provider’s federal employer identification number (FEIN). If the provider is a tax-exempt organization, write “Tax-Exempt” in column (c).
Column (d). Enter the care provider’s Hawaii Tax I.D. Number. If the provider is a tax-exempt charitable organization (IRC section 501(c)(3)), enter “Tax-Exempt”.
Column (e). Enter the total amount you actually paid during the taxable year to the care provider. Also include amounts your employer paid on your behalf to a third party. It does not matter when the expenses were incurred. Do not reduce this amount by any reimbursement you received.
Dependent Care Benefits
If you received dependent care benefits from an employer (you have a federal form W-2 that has an amount in Box 10), enter the amount shown inBox 10 of your W-2 form(s). If you were self-employed or a partner, include amounts you received under a dependent care assistance program from your sole proprietorship or partnership.
Amount Forfeited or Carried Over to 2009
If you participated in an employee plan in which the amount you contributed to an employer- paid dependent care benefit plan was deducted from your income, and you did not receive the full benefit from this plan, you may be entitled to deduct the amount forfeited on this line. See your employer for the forfeited amount you are allowed to deduct.
Also include on this line any amount you did not receive but are permitted by your employer to carry forward and use in the following year during a grace period.
Your Earned Income
In general, earned income is wages, salaries, tips, and other employee compensation. It also includes net earnings from self-employment. For more information, see the instructions to lines 18 and 19.
Spouse’s Earned Income
If your filing status is Married Filing Jointly, enter your spouse’s earned income on this line.
If your filing status isMarried Filing Separately, see Certain Married Individuals Living Apart and Filing Separate Returns discussed on page 32. If you are considered unmarried under that rule, enter your earned income (from line 8) on this line. If you are not considered unmarried under that rule, enter your spouse’s earned income on line 9.
If your spouse was a student or disabled in 2008, see Spouse Who Is a Full-time Student or Is Disabled.
All other taxpayers should enter the amount on line 8.
Enter the amount from the following worksheet.
The taxable portion of employer-paid dependent care benefits for federal income tax purposes is included in your federal AGI. If the taxable portion of employer-paid dependent care benefits is the same for federal and Hawaii income tax purposes, no additional adjustment needs to be made. If the taxable portion of employer-paid dependent care benefits is different for federal and Hawaii income tax purposes, an adjustment needs to be made to arrive at Hawaii AGI.
Complete columns (a) through (d) for each qualifying person. If you have more than three qualifying persons, attach a statement to your return with the required information. Be sure to put your name and social security number on the statement. Also,write “See attached” on the dotted line next to line 17.
Column (a). Enter each qualifying person’s name.
Column (b). Enter the qualifying person’s relationship to you.
Column (c). Enter the qualifying person’s social security number.
Column (d). Enter the qualified expenses you incurred and paid in 2008 for the person listed incolumn (a). Donot include incolumn (d) qualified expenses:
- You incurred in 2008 but did not pay until 2009. You may be able to use these expenses to increase your 2009 credit.
- You incurred in 2007 but did not pay until 2008. Instead, see the instructions for line 23 on page 34.
- You prepaid in 2008 for care to be provided in 2009. These expenses may only be used to figure your 2009 credit.
Lines 18 and 19
Earned Income Limit
The amount of your qualified expenses cannot be more than your earned income or, if married filing a joint return, the smaller of your earned income or your spouse’s earned income.
In general, earned income is wages, salaries, tips, and other employee compensation. It also includes net earnings from self-employment.
Unmarried taxpayers. If you are unmarried at the end of 2008 or are treated as being unmarried at the end of the year, enter your earned income on line 18.
Married Taxpayers. If you are married filing a joint return, figure each spouse’s earned income separately and disregard community property laws.Enter your earned income on line 18 and your spouse’s earned income on line 19.
Spouse Who Is a Full-time Student or Is Disabled. If your spouse was a full-time student or was mentally or physically unable to care for himself or herself, figure your spouse’s earned income on amonthly basis to determine your spouse’s earned income for the year. For each month that your spouse was disabled or a full-time student, your spouse is considered to have earned income of not less than $200 amonth ($400 amonth if more than one qualifying person was cared for in 2008). But if your spouse also worked during any month and earned more than that amount, use his or her actual earned income.
For any month that your spouse was not disabled or a full-time student, use your spouse’s actual earned income if your spouse worked during the month.
If, in the same month, both you and your spouse were full-time students and did not work, you cannot use any amount paid that month to figure the credit. The same applies to a couple who did not work because neither was capable of self-care.
A full-time student is one who was enrolled in a school for the number of hours or classes that is considered full time. The studentmust have been enrolled at least 5 months during 2008.
Self-employment Income. You must reduce your earned income by any loss from self-employment. If you only have a loss from self-employment, or your loss is more than your other earned income, you cannot take the credit.
Amount of the Credit
If you had qualified expenses for 2007 that you did not pay until 2008, youmay be able to increase the amount of credit you can take in 2008. To do this, multiply the 2007 expenses you paid in 2008 by the applicable percentage from the table on line 22 that applies to your 2007 adjusted gross income. Your 2007 expenses must be within the 2007 limits. Attach a computation showing how you figured the increase. If you can take a credit for your 2007 expenses, write “PYE” and the amount of the credit on the dotted line next to line 23. Enter the total amount of the credit on line 23. Also enter this amount on Form N-11, line 36.