Hawaii Form N-11 - Individual Income Tax Return Instructions

Changes for 2013

  • Adopts the federal provision that extends (1) the $250 deduction for educator expenses through 2013, (2) the election to deduct state and local general sales taxes instead of state and local income taxes through 2013, (3) the deduction for mortgage insurance premiums through 2013, (4) the tax-free distributions from individual retirement plans for charitable purposes through 2013, and (5) the exclusion from gross income of discharge from qualified principal residence indebtedness through 2013. (Act 43, SLH 2013)
  • Amends the motion picture, digital media, and film production income tax credit for taxable years beginning after December 31, 2012 by (1) changing the repeal date from January 1, 2016, to January 1, 2019; (2) increasing the credit ceiling from $8,000,000 per qualified production to $15,000,000 per qualified production; and (3) increasing the credit amount from 15 percent of qualified production costs to 20 percent in a county with a population of over 700,000, and from 20 percent of qualified production costs to 25 percent in a county with a population of 700,000 or less. (Act 89, SLH 2013)
  • For taxable years beginning after December 31, 2012, exempts charitable contributions from the itemized deduction caps that were placed on taxpayers with federal adjusted gross income above a certain amount. (Act 256, SLH 2013)
  • Re-enacts the tax credit for qualified research activities to apply to taxable years from 2013 to 2019; amends the definitions of "qualified high technology business" and "qualified research"; and requires that in order to claim the credit, taxpayers must also claim the federal credit for increasing research activities. (Act 270, SLH 2013)
  • Adopts the federal provision that increases the threshold for the itemized deduction for medical expenses to 10 percent of adjusted gross income for taxable years beginning after December 31, 2012. However, for 2013 to 2016, if either the taxpayer or the taxpayer's spouse is age 65 or older at the end of the tax year, the threshold will remain at 7.5 percent of adjusted gross income. (Act 91, SLH 2011)
  • For taxable years beginning after December 31, 2012, increases the standard deduction amount to $2,200 for single or married filing separately filers; $3,212 for head of household filers; and $4,400 for married filing jointly or qualifying widow(er) filers. (Act 60, SLH 2009, Act 97, SLH 2011)
  • For taxable years beginning after December 31, 2012, increases the personal exemption amount to $1,144 (Act 60, SLH 2009, Act 97, SLH 2011)
  • Increases the amount of the military reserve or Hawaii national guard duty pay exclusion to $6,076 for taxable years beginning after December 31, 2012. (Act 197, SLH 2004)
  • The Department of Taxation has issued temporary administrative rules that focus on the calculation of the renewable energy technologies income tax credit for "other solar energy systems", including photovoltaic systems, installed and placed in service on or after January 1, 2013. "Total output capacity" is now the key factor in what determines a system on which a credit can be claimed.

Important Reminders for 2013

  • If you are unable to file by April 20, 2014, you are granted an automatic 6-month extension of time to file Form N-11, Form N-13, and Form N-15 without filing Form N-101A (or any other form) unless an additional tax payment must be made. The extension of time to file is NOT an extension of time for payment of tax.You must file Form N-101A if you are making a payment.You may not use federal Form 4868 instead of Form N-101A.
  • Please complete all required entries on your tax return and make sure all required forms and statements are attached. Failure to do so may result in a notice of adjustment being sent to you and you may be required to file an amended tax return to correct missing entries or provide missing forms or statements.
  • The following lines MUST be filled in: Form N-11, line 24; Form N-13, line 13; and Form N-15, line 41. Failure to do so could cause delays in processing your return.
  • Please be sure to check the appropriate filing status box.
  • Please check all arithmetic on the return. A correct return will help us process your return efficiently and issue refunds quickly.
  • If you are married and filing separate returns, the refund from your spouse's return cannot be applied to your liability.
  • Include your spouse's social security number if you are married whether a joint or separate return is filed. If your spouse is an alien and was issued an ITIN by the IRS, enter your spouse's ITIN. If your spouse has applied for an ITIN but the IRS has not yet issued the ITIN, write "Applied For".
  • Attach your employee earning statements (HW-2's or federal W-2's) to the front of your return.
  • If someone prepares your tax return and charges you a fee, the preparer must sign and complete the Paid Preparer's Information box.
  • Please file your return on or before April 20, 2014. Mail your return to the appropriate mailing address as stated in "Where to File".
  • Enclose only one return per envelope.
  • Please place proper postage on the envelope before mailing. If there is insufficient postage on the envelope, it will be returned to you by the U.S. Postal Service.
  • Keep a copy of your return for your records.

Items To Note

  • The Hawaii Taxpayer Bill of Rights is reprinted inside the back cover.
  • The Department of Taxation is a proud partner with the Missing Child Center - Hawaii, Department of the Attorney General (MCCH). Photographs of missing children selected by the Center may appear in this instruction booklet on pages that would otherwise be blank.You can help bring these children home by looking at the photographs and calling MCCH at 1-808-586-1449 if you recognize a child.
  • Federal Income Tax Law changes enacted during the 2013 calendar year (after January 2, 2013) have not been adopted for Hawaii income tax purposes at the present time. A conformity bill will be introduced to the 2014 Hawaii State Legislature which may adopt certain of the federal provisions.You cannot claim any of the federal provisions on your Hawaii income tax return until the Hawaii State Legislature adopts the federal provisions for Hawaii income tax purposes.

Form N-11 - General Instructions

Guidelines for Filling in Scannable Forms

Form N-11 and Schedule CR are designed for electronic scanning that permits faster processing with fewer errors. In order to avoid unnecessary delays caused by manual processing, taxpayers should follow the guidelines listed below:

  • Print amounts only on those lines that are applicable.
  • Use only a black or dark blue ink pen. Do not use red ink, pencil, or felt tip pens.
  • Because this form is read by a machine, please print your numbers inside the boxes.
  • Do NOT print outside the boxes.
  • Fill in ovals completely.
  • Do NOT enter cents. For numbers that are required to be rounded to the nearest dollar, do NOT print over the zeros printed on the form that are used to designate cents.
  • Do NOT use dollar signs, slashes, dashes or parentheses in the boxes.
  • Photocopying of this form could cause delays in processing your return.

Special Instructions for Civil Unions

Effective January 1, 2012, civil unions are recognized in Hawaii. Civil unions entered into in a jurisdiction other than Hawaii are also recognized, provided that the relationship meets Hawaii's eligibility requirements, has been entered into in accordance with the laws of the other jurisdiction, and can be documented.

The Internal Revenue Code (IRC) provisions referred to in Hawaii's Income Tax Law that apply to a husband and wife, spouses, or person in a legal marital relationship shall be deemed to apply to partners in a civil union with the same force and effect as if they were "husband and wife", "spouses", or other terms that describe persons in a legal marital relationship. Accordingly, references to "married", "unmarried", and "spouse" also means "in a civil union", "not in a civil union", and "civil union partner", respectively.

For Hawaii income tax purposes, civil union couples have the same tax filing status options as married couples. Also, if an employee benefit is tax-exempt when extended to the opposite sex spouse of an employee, or to the children of the spouse, the benefit is tax-exempt when extended to a civil union partner of an employee, or to the children of the civil union partner.

Note: The U.S. Department of the Treasury and the Internal Revenue Service has ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. However, individuals who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law are not considered married for federal tax purposes. Since the federal government does not recognize civil unions as married individuals for federal income tax purposes, civil unions will continue to file as unmarried individuals on their federal income tax returns. Also, the income reported for federal and for Hawaii income tax purposes may differ, depending on the situation. For example, certain employee benefits that are tax-exempt when provided to opposite sex spouses and the children of opposite sex spouses may be taxable federally when they are provided for civil union partners and their children, unless the civil union partner or their children qualify as dependents under IRC section 152.

Who Must File

  1. Every individual doing business in Hawaii during the taxable year must file a return, whether or not the individual derives any taxable income from that business.

    "Doing business" includes all activities engaged in or caused to be engaged in with the object of gain or economic benefit, direct or indirect, except personal services performed as an employee under the direction and control of an employer.

    For example, every person receiving rents from property owned in Hawaii is "doing business" and must file a return whether or not the person's expenses exceed the gross rental income.

  2. Every individual receiving more than the following amounts of gross income subject to taxation under Hawaii Income Tax Law, including amounts received as salaries and wages for services rendered by an employee to an employer, must file a return:

    For Individuals Under Age 65

    Filing Status.......................... Gross Income of
    Married filing separately............ $3,344
    Single or legally separated......... $3,344
    Single, head of household.......... $4,356
    Qualifying widow(er) with a
    dependent child........................ $5,544
    Married couple filing jointly....... $6,688

    For Individuals Age 65 or older

    Filing Status.......................... Gross Income of
    Married filing separately.............$4,488
    Single or legally separated......... $4,488
    Single, head of household.......... $5,500
    Qualifying widow(er) with a
    dependent child......................... $6,688
    Married couple filing jointly,
    one is 65 or older...................... $7,832
    Married couple filing jointly,
    both are 65 or older.................. $8,976

    These threshold amounts will be higher for persons who are blind, deaf, or totally disabled, and who have completed and filed a certification with the Department of their disability on Form N-172 before filing their income tax return.

    For individuals who can be claimed as dependents on the tax return of another taxpayer, the threshold amount is the amount of the dependents' standard deduction.

    For nonresident aliens, the threshold amount is $1,144 for individuals under 65, and $2,288 for individuals 65 or older.

    For nonresident individuals, the threshold amounts stated above must be multiplied by the ratio of Hawaii adjusted gross income to total adjusted gross income from all sources to determine whether the individual must file a return.

  3. Individuals who took up residence in Hawaii after attaining the age of 65 years and before July 1, 1976, may elect to be taxed only on Hawaii source income. See Election Under Act 60, SLH 1976 on page 5.
  4. Children who receive unearned income during the taxable year and have not attained the age of 14 years before the end of the taxable year must file their own returns to report their income unless their parent or parents report that income.

    However, the Department of Taxation will, administratively, not require the filing of a State income tax return if the child's total earned and/or unearned income for the taxable year is $500 or less and the application of the standard deduction amount results in no taxable income for the child. Children who must file a return may need to file Form N-615, Computation of Tax for Children Under Age 14 Who Have Investment Income of More than $1,000. Parents may report income of their children by filing Form N-814, Parent's Election to Report Child's Interest and Dividends.

  5. If you need to report additional tax from Form N-2, Distribution from an Individual Housing Account; Form N-103, Sale of Your Home; Form N-152, Tax on Lump-Sum Distributions; Form N-312, Recapture of Capital Goods Excise Tax Credit; Form N-318, Recapture of High Technology Business Investment Tax Credit; Form N-338, Recapture of Tax Credit for Flood Victims; Form N-344, Recapture of Important Agricultural Land Qualified Agricultural Cost Tax Credit; Form N-405, Tax on Accumulation Distribution of Trusts; Form N-586, Recapture of Low-Income Housing Tax Credit; or Form N-814, Parent's Election to Report Child's Interest and Dividends, then you must file a return regardless of income level.

Who Should File

Even if you do not have to file, you should file to get a refund if too much income tax was withheld from your pay. Also, if you are eligible for refundable credits, you need to file a return to claim the credits.

Residents and Nonresidents

Resident

A resident is taxed on income from all sources.

A resident must file an Individual Income Tax Return - Resident (Form N-11 or N-13), if required to do so.

A Hawaii resident is (1) Every individual domiciled in Hawaii, and (2) Every other individual whether domiciled in Hawaii or not, who resides in Hawaii for other than a temporary or transitory purpose.

An individual domiciled outside Hawaii is presumed to be a resident if he or she spends more than 200 days in Hawaii during the taxable year. This presumption may be overcome by evidence satisfactory to the Department of Taxation that the individual maintained a permanent place of abode outside the State and was in the State for a temporary or transitory purpose. No person shall be deemed to have gained or lost a residence simply because of his or her presence or absence in compliance with military or naval orders of the United States, while engaged in aviation or navigation, or while a student at any institution of learning. See Tax Information Release No. 971, "Determination of Residence Status".

Nonresident

A Hawaii nonresident is an individual who is in Hawaii for a temporary or transient purpose, and whose permanent domicile is not Hawaii.

A nonresident must file an Individual Income Tax Return - Nonresident and Part-Year Resident (Form N-15), if required to do so. A nonresident will be taxed on income from Hawaii sources only.

A nonresident married to a Hawaii resident may choose to file a joint return with the resident spouse on Form N-11 or N-13; however, the nonresident will then be taxed on all income from all sources. For more information, see Married Filing Joint Return on page 8.

Election Under Act 60, SLH 1976

Individuals who took up residence in Hawaii after attaining the age of 65 years and before July 1, 1976, may elect to be taxed only on Hawaii source income. To make the election, attach a signed statement to Form N-11 setting forth the date that the individual established residence in Hawaii and the individual's date of birth (which must be before July 1, 1911). Individuals making this election must file a return regardless of the amount of income earned, and may not use Form N-13.

Part-Year Resident

A part-year resident is an individual who was a Hawaii resident for part of the year, and who was a nonresident during the other part of the year. This includes those who moved to Hawaii during the year and those who moved away from Hawaii during the year.

A part-year resident must file an Individual Income Tax Return - Nonresident and Part- Year Resident (Form N-15), if required to do so. A part-year resident will be taxed on all income from all sources during the period of residency, and on income from Hawaii sources only during the period of nonresidency.

Domicile Defined

The term "domicile" means the place where an individual has a true, fixed, permanent home and principal establishment, and to which place the individual has, whenever absent, the intention of returning. It is the place in which an individual has voluntarily fixed the habitation of himself or herself and family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. Three things are necessary to create a new domicile: first, abandonment of the old domicile; second, the intent to establish a new domicile; and third, actual physical presence in the new domicile. Once a domicile is established, the intent to abandon it is not itself sufficient to create a new domicile; a new domicile must be shown.

Reminder: If you are in Hawaii because of military orders and do not intend to make Hawaii your permanent home, you are not considered a Hawaii resident for income tax purposes, even though you have been in Hawaii for more than 200 days in 2013. File a resident return with your home state, and file a Hawaii nonresident and part-year resident return (Form N-15) to report your Hawaii income.

Resident and Nonresident Examples

Note: For more information, see Tax Information Release No. 90-3, "Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or from Nonresident to Resident", Tax Information Release No. 90-10, "Clarification of Taxation and the Eligibility for Personal Exemptions and Credits of Residents and Nonresidents in the Military and Spouses and Dependents of Persons in the Military", and Tax Information Release No. 97-1, "Determination of Residence Status".

Example 1 - A Hawaii resident who enlists in the military normally will remain a Hawaii resident regardless of the length of absence from Hawaii while stationed outside of Hawaii.

Example 2 - A Hawaii resident working in a foreign country will remain a Hawaii resident unless permanent resident status is granted by the foreign country.

Example 3 - Foreign students who are granted entry into the United States on "F" visas are nonresidents for Hawaii tax purposes. Researchers and faculty members who are granted entry into the United States on "H", "J", or "Q" visas, and who have been in Hawaii for more than 200 days during the taxable year may be considered Hawaii residents.

Example 4 - Spouses of those in the military service do not become Hawaii residents if their principal reason for moving to Hawaii was the transfer of the service member spouse to Hawaii, and if it is their intention to leave Hawaii when the service member spouse either is transferred to another military station or leaves the service.

Example 5 - A Hawaii resident who marries a nonresident will remain a Hawaii resident unless the three requirements for changing his or her domicile are also met. (Refer to "Domicile Defined" on this page.) This situation applies in reverse to a nonresident who marries a resident. A person's residence status will not change just because of marriage.

Which Form to File

You must file resident Form N-11 or N-13, as appropriate, if you were a resident for the full year. File Form N-15 if you were a nonresident for the full year or a part-year resident.

Generally, you MUST use Form N-11 if:

  • You were a resident for the full year, or, if married filing jointly, either spouse was a resident for the full year (however, the nonresident spouse would be taxed on their worldwide income for the full year).
  • But if you qualify to file Form N-13, you may file it instead of Form N-11.
  • You were a resident for the full year as described above and you file your return on a fiscal year basis.

You MUST use Form N-15 if:

  • You were a nonresident for the full year, or, if married filing jointly, both spouses were nonresidents for the full year.
  • You are taking up residence in Hawaii during the tax year. (Part-year resident).
  • You are giving up residence in Hawaii during the tax year. (Part-year resident).

You MAY Be Able to Use Form N-13 if:

  • You were a resident for the full year, or, if married filing jointly, either spouse was a resident for the full year (however, the nonresident spouse would be taxed on their worldwide income for the full year);
  • You had only wages, salaries, tips, interest, ordinary dividends, and unemployment compensation, AND
  • Your taxable income (adjusted gross income less standard deduction and personal exemptions) is less than $100,000.

Form N-13 is a simplified form. However, Form N-11 may allow you to pay less tax.

If you are eligible to file Form N-13 but you filed a federal resident return, you may want to file Form N-11 instead because it uses information you already entered on your federal return.

To see if you qualify to use Form N-13, see the instructions for Form N-13.

When to File

Note: If any due date falls on a Saturday, Sunday, or legal holiday, substitute the next regular work day as the due date.

You should file as soon as you can after January 1, but not later than April 20, 2014. If you file late, you may have to pay penalties and interest if you owe taxes on your return. Please see the instructions for Penalties and Interest on page 31. If you cannot meet the deadline, you are automatically granted a 6-month extension without the need to file anything with the Department unless an additional tax payment must be made. As long as the following conditions are met, you are deemed to have made an application for the 6-month extension to file an income tax return on the prescribed due date:

  1. On or before April 20, 2014, 100% of the properly estimated tax liability is paid;
  2. The tax return is filed on or before the expiration of the 6-month extension period;
  3. The tax return is accompanied by full payment of any tax not already paid; and
  4. You are not bound by a court order to file a tax return on or before the prescribed due date.

If you must make an additional payment of tax on or before April 20, 2014 in order to meet the condition requiring payment of 100% of the properly estimated tax liability, you must file Form N-101A with your payment. The extension of time to file is not an extension of time for payment of tax.

Form N-101A can be filed and payment made electronically through the State's Internet portal. For more information, go to www. ehawaii.gov/efile. Federal Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, may not be used in lieu of Form N-101A.

Note: Returns for fiscal year taxpayers must be filed on or before the 20th day of the fourth month following the close of the fiscal year.

Note: Under Hawaii Income Tax Law, certain tax credits must be claimed within 12 months from the close of the tax year.

The official U.S. Post Office cancellation mark will be considered primary evidence of the date of filing of tax documents and payments. If you want to keep evidence that you mailed your return on time, ask your Post Office for a Certificate of Mailing. It is NOT necessary to get a certified or registered mail return receipt.

Hawaii has adopted the Internal Revenue Code provision to allow documents and payments delivered by a designated private delivery service to qualify for the "timely mailing treated as timely filing/paying rule." The Department of Taxation will conform to the Internal Revenue Service listing of designated private delivery service and type of delivery services qualifying under this provision. Timely filing of mail which does not bear the

U.S. Post Office cancellation mark or the date recorded or marked by the designated delivery service will be determined by reference to other competent evidence. The private delivery service can tell you how to get written proof of the mailing date.

Where to File

If you are enclosing a check or money order with your tax return, mail your return with payment to:

Hawaii Department of Taxation
Attn: Payment Section
P. O. Box 1530
Honolulu, Hawaii 96806-1530

If you are NOT enclosing a check or money order with your tax return, mail your return to:

Hawaii Department of Taxation
P. O. Box 3559
Honolulu, Hawaii 96811-3559

If two pre-addressed envelopes were received with your forms, please use the appropriate envelope as stated above.

Where to Get Forms and Information

Taxpayer Services Branch

Website: tax.hawaii.gov

E-mail: Taxpayer.Services@hawaii.gov

Telephone:
808-587-4242
Toll-Free: 1-800-222-3229

Telephone for the hearing impaired:
808-587-1418
Toll-Free: 1-800-887-8974

Other Information

Death of Taxpayer

Did the taxpayer die before filing a return for 2013? If so, the taxpayer's spouse or personal representative may have to file a return and sign it for the person who died (decedent) if the decedent was required to file a return. A personal representative can be an executor, administrator, or anyone who is in charge of the taxpayer's property.

If the decedent did not have to file a return but either had State income tax withheld, made estimated tax payments, or is eligible for various tax credits, a return must be filed to get a refund.

If your spouse died in 2013 and you did not remarry in 2013, or if your spouse died in 2014 before filing a return for 2013, you may still file a joint return for the 2013 tax year.

A return filed for a deceased taxpayer, including a joint return with a surviving spouse, must have the word "DECEASED" written on the top middle of the return. The words "TAXPAYER DECEASED" or "SPOUSE DECEASED"and the date of death also must be written in the space below the "THIS SPACE RESERVED" box.

Generally, the personal representative or other responsible individual must sign the return on behalf of the decedent. If a refund is due, Form N-110, Statement of Person Claiming Refund Due a Deceased Taxpayer, must be completed and attached to the return to ensure that the refund check will be issued in the name of the surviving spouse, personal representative, or other responsible individual instead of in the decedent's name. A personal representative or other individual may be required to attach other documents such as the death certificate. See Form N-110 for further information.

Exception for joint returns filed by surviving spouse. If a joint return is being filed by the decedent and the decedent's spouse, the spouse should write, "Filing as surviving spouse", on the signature line which the decedent would have signed, and then the surviving spouse should sign his or her name on the other signature line. If a refund is being claimed on the return, Form N-110 is not required. The refund check will be issued to the surviving spouse.

Filing a Final Return

If you are giving up your Hawaii residency at the end of the year, write the words "FINAL RETURN" on the top middle of the return.

Declaration of Estimated Tax

Basic rules. Individuals who must pay more tax than is withheld, or who have no withholding, may have to file a declaration of estimated tax and pay that tax in a lump sum or installments. Income tax obligations might not be satisfied through withholding when an individual has income not subject to withholding, such as from self-employment, rent, gains from sales of property, interest and dividend income, unemployment compensation, or distributions from deferred compensation plans.

Who Must File a Declaration on Form N-1. An individual subject to Hawaii net income tax generally must file Form N-1, Declaration of Estimated Tax for Individuals, unless: (a) his or her estimated tax liability for the taxable year, after taking into account all taxes withheld or collected at the source, is less than $500, or (b) the taxpayer did not have any tax liability for the preceding taxable year. See Form N-1 for details. Form N-1 can be filed and payment made electronically through the State's Internet portal. For more information, go to www.ehawaii.gov/efile.

Date and Payment of Estimated Tax. Your declaration for 2014 must be filed on or before April 20, 2014. The tax may be paid in full with the declaration, or in equal installments on or before April 20, 2014, June 20, 2014, September 20, 2014, and January 20, 2015. Each installment payment must be submitted with a payment voucher. Make checks or money orders payable to the "Hawaii State Tax Collector".

Penalties. If you are required to file a declaration but you fail to do so, you may be subject to penalties. See Penalties and Interest on page 31.

Multistate Tax Compact Act

Any taxpayer, other than a corporation acting as a business entity in more than one state, who is required by Hawaii Income Tax Law to file a return and whose only activities in the State consist of sales and who does not own or rent real estate or tangible personal property and whose annual gross sales in or into the State during the tax year are not in excess of $100,000, may elect to report and pay a tax of .5 percent of such annual gross sales. Taxpayers who elect the foregoing shall file Form N-310 in lieu of Form N-11.

Special Instructions for Nonresident Aliens

In certain situations, a taxpayer may be considered a nonresident alien for federal income tax purposes and a resident for Hawaii income tax purposes. In these situations, the special rules applicable to individuals who are considered nonresident aliens for federal income tax purposes will apply when the individual files a Hawaii resident income tax return. See Tax Information Release No. 97-1, Determination of Residence Status.

Steps for Preparing Your Return

These instructions consist of 11 steps. You should complete the first 3 steps that follow BEFORE you begin to fill in your return.

Step 4, filling in the return through line 6e, begins on this page and ends on page 11. Step 5, filling in the rest of the return, is on page 11. The Line-By-Line Instructions for Form N-11 begin on page 11 and end on page 30.

Finally, steps 6 through 11 begin on page 30. These are the steps you should take after your Form N-11, and other schedules and forms you need, are filled in.

If you follow these steps and read the LineBy- Line Instructions, we feel you can fill in your return quickly and accurately. If you have any questions, call our Taxpayer Services staff.

Step 1

Get all of your income records together.

These include any Forms HW-2 and federal Forms W-2 or 1099 that you received. If you don't receive a Form HW-2 or federal Form W-2 by January 31, or if the one you get isn't correct, please contact your employer as soon as possible. Only your employer can give you a Form HW-2 or federal Form W-2, or correct it. If you cannot get a Form HW-2 or federal Form W-2 by February 15, please contact our Taxpayer Services staff.

If you have someone prepare your return for you, make sure that person has all your income and expense records so he or she can fill in your return correctly. Remember, even if someone else prepares your return incorrectly, YOU are still responsible.

Step 2

If you plan to claim tax credits or itemize deductions, get the information and expense records you need.

These instructions tell you what credits and deductions you can claim. Some of the records you may need are:

  • Medical and dental payment records.
  • Real estate and income tax receipts.
  • Interest payment records for a home mortgage.
  • Receipts for charitable contributions.

Step 3

Get any forms, schedules, or information you need.

All forms and instructions you need may be picked up at any district tax office. You may also request that the forms and publications be mailed to you. Please allow approximately 10 days for the mailing of the tax forms. Tax forms are also available on the Internet. See page 6 for the phone number to request the forms you need and for the Department's website address.

Step 4

Fill in your tax year, name, address, filing status, and exemptions.

Note: If you are filing your return on a fiscal year basis, you must fill in the dates that your fiscal year begins and ends.

Note: Fill in the appropriate oval above the name and address area of the tax return if you are filing a tax return for the first time or if your address or name has changed.

Note: Enter your social security number and name at the top of Form N-11, pages 2, 3, and 4. If you are married and filing a joint return, also enter your spouse's social security number and name at the top of Form N-11, pages 2, 3, and 4.

If you requested a forms booklet, take the mailing label from the booklet we sent to you and make sure the information is correct. If any information is incorrect, do not use the mailing label. Instead, print the entries in this section.

After you have completed and checked all entries, attach your label (if the information is correct) to the return over the mailing address area where indicated. Use of the label helps us identify your account, saves processing time, and speeds refunds.

Do not attach your label to the envelope. It may get separated from your return.

If you did not receive a label, print the entries in this section.

Do not use the IRS mailing label.

Note: Your social security number is no longer printed on the mailing label. You must write your social security number in the space provided on your tax return.

Note: You must write the first four letters of your last name in the boxes provided. If you are married, you must also write the first four letters of your spouse's last name in the boxes provided whether joint or separate returns are filed.

Name

You must use your legal name. Nicknames are not permitted. If you have changed your name because of marriage, divorce, etc., make sure you immediately notify the Social Security Administration so that the name on your tax return is the same as the name on the social security records. If these names do not match, your refund may be delayed.

If you file joint returns, write the names in the same order every year. There is a separate line for the spouse's name.

Write any descriptions (e.g. Jr., III, etc.) after your last name.

Address

Write your current mailing address in the space provided. If you receive your mail "in care of" someone else (i.e., your mail is sent to an address belonging to someone other than yourself), fill in that person's name in the space provided.

If your address is outside the United States or its possessions or territories, enter the city in the space provided for "City, town or post office", and enter the postal code in the space provided for "Postal/ZIP code." Enter the province and/or state, and the name of the country in the space provided. Do not abbreviate the country name.

Important: If your address should change after you file your return, you must notify the Department in writing of your new address. Please include your social security number and your signature. Any refund checks due to you will not be forwarded to your new address by the U.S. Postal Service.

Social Security Number

Write your social security number in the space provided. If you are married, you must also write your spouse's social security number in the space provided whether joint or separate returns are filed. Your social security numbers must be written in the same order as your names are written on your return.

If you are an alien and was issued an individual taxpayer identification number (ITIN) by the IRS, enter your ITIN. If you have applied for an ITIN but the IRS has not yet issued the ITIN, write "ITIN Applied For" in the space below the "THIS SPACE RESERVED" box.

Filing Status

Fill in oval 1, 2, 3, 4, or 5 as appropriate. Fill in only one oval.

Note: Civil union couples have the same tax filing status options as married couples.

Note: More than one filing status may apply to you. Choose the one that will give you the lowest tax. Your Hawaii filing status may or may not be the same as your federal filing status.

Single

Note: Civil union couples may not choose "single" as their filing status.

Select oval 1, Single, if on December 31, 2013, you were unmarried, divorced, or separated from your spouse under a separate maintenance decree. State law governs whether you are married, divorced, or legally separated.

If you are married on December 31, 2013, consider yourself married for the whole year.

Note: If you are in a civil union on December 31, 2013, consider yourself married for the whole year.

If your spouse died during 2013, consider yourself married to that spouse for the whole year, unless you remarried before the end of 2013.

If you are unmarried and provide a home for certain other persons, you may be able to file as Head of Household. See Head of Household on this page.

If you were married in 2013, had a child living with you, and lived apart from your spouse during the last 6 months of 2013, you may be able to file as Head of Household. See Married Persons Who Live Apart on page 9.

Married Filing Joint Return

In most cases, married couples will pay less tax if they file a joint return. You must report all income, exemptions, deductions, and credits for you and your spouse. Both of you must sign the return, even if only one of you had income.

You and your spouse can file a joint return even if you did not live together for the whole year. Both of you are responsible for any tax due on a joint return, so if one of you doesn't pay, the other may have to.

Note: If you and your spouse file a joint return for the year and later decide to file separately, both you and your spouse MUST file amended returns on or before the due date of the original return (April 20). You may not change your filing status from married filing jointly to married filing separately after that date.

If your spouse died in 2013 or in 2014 before filing a return for 2013, see Death of Taxpayer on page 6.

Tax Savings. If you decide not to file a joint return and plan to file a separate return, see if you can lower your tax by meeting the tests described on page 9 under Married Persons Who Live Apart. If you can, you should fill in oval 4 for Head of Household.

Special Rule for Nonresidents of Hawaii Who File a Joint Return With a Hawaii Resident. If at the end of the taxable year you were a nonresident of Hawaii (but you were a U.S. resident) who is married to a resident of Hawaii, you may choose to file a joint return with the resident spouse. By filing a joint return, however, you and your spouse agree to be taxed on your combined worldwide income.

Special Rule for Nonresident and Dual-Status Aliens. Generally, you cannot file a joint return if either spouse was a nonresident alien at any time during the tax year. However, nonresident aliens married to U.S. citizens or residents can elect to be taxed as a U.S. resident on their federal income tax return and file joint returns. If you and your spouse have made that election on your federal return, you also may choose to file a joint Hawaii return. By filing a joint return, you and your spouse agree to be taxed on your combined worldwide income.

Special Rule When One Spouse Is a Nonresident or Part-Year Resident. If one spouse is a resident and the couple files a joint return, both spouses are taxed on worldwide income. If at least one spouse is a part-year resident and the couple files a joint return, the couple is taxed on worldwide income for the period in which either spouse was a resident.

Note: For purposes of filing a joint return, common law marriages are not recognized under Hawaii law unless they began in a state which permits common law marriages.

Married Filing Separate Returns

You may file separate returns whether both you and your spouse had income, only one of you had income, or neither of you had income.

If you choose to file separate returns, both you and your spouse must figure your tax the same way. This means that if one of you itemizes your deductions, the other must also itemize their deductions. You each report only your own income, exemptions, deductions, and credits, and you are responsible only for the tax due on your own return.

If you file a separate return, write your spouse's full name in the space after oval 3 and your spouse's social security number in the space provided for that number. Also write the first four letters of your spouse's last name in the boxes provided.

If your spouse does not file a Hawaii tax return, you may be able to claim the exemptions for your spouse. See the instructions for lines 6a and 6b.

Special Rule for Nonresident and Dual-Status Aliens. Married nonresident aliens must file separate returns. However, nonresident aliens who are married to U.S. citizens or residents and who elect to be taxed as a U.S. resident may file joint returns. However, see Married Persons Who Live Apart on page 9.

Head of Household

Note: Since this filing status is for unmarried individuals who provide a home for certain other persons, a person in a civil union may not choose "head of household" as their filing status. However, a person in a civil union may file as "head of household" if the person is considered unmarried because they lived apart from their civil union partner for the last 6 months of 2013 and they meet the other rules under Married Persons Who Live Apart on page 9.

This filing status is for unmarried individuals who provide a home for certain other persons. (Some married persons who live apart are considered unmarried. See Married Persons Who Live Apart on page 9.) You can fill in oval 4 only if you were unmarried or legally separated (according to State law) under a decree of divorce or separate maintenance at the end of 2013 and either 1 or 2 below applies.

  1. You paid over half the cost of keeping up a home that was the main home for all of 2013 of your parent whom you can claim as a dependent, except under a multiple support agreement (see page 10). Your parent did not have to live with you.
  2. You paid over half the cost of keeping up a home in which you lived and in which one of the following also lived for more than half of the year (if half or less, see Exception to Time Lived With You below).
    1. Any person whom you can claim as a dependent. But do not include:
      1. Your qualifying child (as defined in Step 1 on page 9) whom you claim as your dependent based on the rules for Children of Divorced or Separated Parents on page 10,
      2. Any person who is your dependent only because he or she lived with you for all of 2013, or
      3. Any person you claimed as a dependent under a multiple support agreement. See page 10.
       
    2. Your unmarried qualifying child who is not your dependent.
    3. Your married qualifying child who is not your dependent only because you can be claimed as a dependent on someone else's 2013 return.
    4. Your child who is neither your dependent nor your qualifying child because of the rules for Children of Divorced or Separated Parents on page 10.
     

If the child is not your dependent, enter the child's name on line 4.

Dependent. To find out if someone is your dependent, see the instructions for line 6c that begin on page 9.

Exception to time lived with you. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, and detention in a juvenile facility, count as time lived in the home. If the person for whom you kept up a home was born or died in 2013, you can still file as head of household as long as the home was that person's main home for the part of the year he or she was alive. Also see Kidnapped Child on page 10, if applicable.

Keeping up a home. To find out what is included in the cost of keeping up a home, see federal Publication 501.

Note: If you received payments under the Aid to Families with Dependent Children (AFDC) program and used them to pay part of the cost of keeping up this home, you may not count these amounts as furnished by you.

Special Rule for Nonresident and Dual- Status Aliens. - If you were a nonresident or dual-status alien during the tax year, you cannot file as Head of Household.

Married persons who live apart. Even if you were not divorced or legally separated at the end of 2013, you are considered unmarried if all of the following apply.

  • You lived apart from your spouse for the last 6 months of 2013. Temporary absences for special circumstances, such as for business, medical care, school, or military service, count as time lived in the home.
  • You file a separate return from your spouse.
  • You paid over half the cost of keeping up your home for 2013.
  • Your home was the main home of your child, stepchild, or foster child for more than half of 2013 (if half or less, see Exception to Time Lived With You on page 10).
  • You claim this child as your dependent or the child's other parent claims him or her under the rules for Children of Divorced or Separated Parents on page 10.

Adopted child. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

Foster child. A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

Special Rule for Nonresident and Dual-Status Aliens. - If you were a nonresident or dual-status alien during the tax year, the special rules for Married Persons Who Live Apart will not apply to you unless you meet all of the tests previously stated, and you are a resident of Canada or Mexico. If you are considered unmarried under these rules, you may file as a single individual rather than married filing separately. You cannot file as Head of Household.

Qualifying Widow(er) With Dependent Child

You can fill in oval 5 and use joint return tax rates for 2013 if all of the following apply.

  • Your spouse died in 2011 or 2012 and you did not remarry in 2013.
  • You have a child or stepchild whom you claim as a dependent. This does not include a foster child.
  • This child lived in your home for all of 2013. If the child did not live with you for the required time, see Exception to Time Lived With You below.
  • You paid over half the cost of keeping up your home.
  • You could have filed a joint return with your spouse the year he or she died, even if you did not actually do so.

If your spouse died in 2013, you cannot file as qualifying widow(er) with dependent child. Instead, see the instructions for Married Filing a Joint Return on page 8.

Adopted child. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

Dependent. To find out if someone is your dependent, see the instructions for line 6c that begin on this page.

Exception to time lived with you. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, and detention in a juvenile facility, count as time lived in the home. A child is considered to have lived with you for all of 2013 if the child was born or died in 2013 and your home was the child's home for the entire time he or she was alive. Also see Kidnapped Child on page 10, if applicable.

Keeping up a home. To find out what is included in the cost of keeping up a home, see federal Publication 501.

Note: See Death of Taxpayer on page 6 for more information.

Special Rule for Nonresident and Dual-Status Aliens. - The special rules for Qualifying Widow(er) With Dependent Child will not apply unless the surviving spouse meets all of the tests previously stated, and was a resident alien or U.S. citizen the year their spouse died. The residency status refers to the surviving spouse's actual status, and not the election that some nonresident aliens make to be taxed as U.S. residents.

Exemptions

Lines 6a and 6b

Regular

You can take one exemption for yourself unless you can be claimed as a dependent on another person's tax return. Take two exemptions if you are married and filing a joint return.

If you are married filing separately, you can take your spouse's exemption only if your spouse is not filing a return, had no income, and was not the dependent of someone else. If your spouse meets these qualifications, fill in the oval under line 6b.

If at the end of the taxable year, you were divorced or legally separated, you cannot take an exemption for your former spouse. If you were separated by a divorce that is not final (interlocutory decree), you may take an exemption for your spouse if you file a joint return.

If your spouse died during the taxable year and you did not remarry before the end of the taxable year, fill in the ovals for the exemptions you could have taken for your spouse on the date of death.

Age 65 or Over

You can take the extra exemption for age 65 or over only for yourself and your spouse. You cannot take them for your dependents.

Age is determined as of December 31. However, if your 65th birthday was on January 1, 2014, you can take the extra exemption for age in 2013.

If you are married filing separately, you may NOT claim the extra exemption for age 65 or over for your spouse.

Lines 6c and 6d

Children and Other Dependents

Enter on lines 6c and 6d the full names, social security numbers, and other information for your dependent children and other dependents. Each dependent must have a social security number. If you have more than four dependents, attach a statement with the required information. Enter the number of your dependent children in the box for line 6c. Enter the number of other dependents in the box for line 6d.

Follow the steps below to find out if a person qualifies as your dependent.

Step 1 - Do You Have a Qualifying Child?

A qualifying child is a child who is your:

  • Son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew), and
  • Was younger than you, and under age 19 at the end of 2013, or under age 24 at the end of 2013 and a student, or any age and permanently and totally disabled, and
  • Who did not provide over half of his or her own support for 2013, and
  • Who lived with you for more than half of 2013. If the child did not live with you for the required time, see Exception to Time Lived With You on page 10, and
  • Who has not filed a joint return, unless the return was filed only as a claim for refund.
  1. Do you have a child who meets the conditions to be your qualifying child?

Yes. Go to Step 2.

No. Go to Step 3.

Step 2 - Is Your Qualifying Child Your Dependent?

  1. Was the child a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico? If the child was adopted, see Exception to Citizen Test on page 10.

    Yes. Go to Question 2.

    No. Stop. Go to Form N-11, line 7.

  2. Was the child married?

    Yes. See Married Person on page 10.

    No. Go to Question 3.

  3. Could you, or your spouse if filing jointly, be claimed as a dependent on someone else's 2013 tax return?

    Yes. You cannot claim any dependents.

    No. You can claim this child as a dependent.

Step 3 - Is Your Qualifying Relative Your Dependent?

A qualifying relative is a person who is your:

  • Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or

Brother, sister, or a son or daughter of either of them (for example, your niece or nephew), or

Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), or

Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father- in-law, mother-in-law, brother-in-law, or sister-in-law, or

Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship does not violate local law. If the person did not live with you for the required time, see Exception to Time Lived With You on this page, and

  • Who was not a qualifying child of any person for 2013, and
  • Who had gross income of less than $3,900 in 2013. If the person was permanently and totally disabled, see Exception to Gross Income Test on this page, and
  • For whom you provided over half of his or her support in 2013. But see the exceptions for Children of Divorced or Separated Parents, Multiple Support Agreements, and Kidnapped Child on this page.
  1. Does any person meet the conditions to be your qualifying relative?

    Yes. Go to Question 2.

    No. Stop. Go to Form N-11, line 7.

  2. Was your qualifying relative a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico? If your qualifying relative was adopted, see Exception to the Citizen Test on this page.

    Yes. Go to Question 3.

    No. Stop. Go to Form N-11, line 7.

  3. Was your qualifying relative married?

    Yes. See Married Person on this page.

    No. Go to Question 4.

  4. Could you, or your spouse if filing jointly, be claimed as a dependent on someone else's 2013 tax return?

    Yes. Stop. You cannot claim any dependents.

    No. You can claim this person as a dependent.

Definitions and Special Rules

Adopted child. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

Children of divorced or separated parents. A child will be treated as being the qualifying child or qualifying relative of his or her noncustodial parent (the parent who had custody of the child for the lesser part of 2013 or did not have custody at all ) if all of the following apply.

  1. The parents are divorced, legally separated, separated under a written separation agreement, or lived apart at all times during the last 6 months of 2013.
  2. The child received over half of his or her support for 2013 from the parents (with-out regard to the rules on Multiple Support Agreements on this page).
  3. The child is in custody of one or both of the parents for more than half of 2013.
  4. Either of the following applies.
    1. The custodial parent signs federal Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for 2013. The noncustodial parent must attach federal Form 8332 or a similar statement to his or her tax return to claim the child as a dependent.
    2. A decree of divorce or separate maintenance or written separation agreement between the parents that applies to 2013 provides that the noncustodial parent can claim the child as a dependent. If your decree or agreement went into effect before 1985, the noncustodial parent must provide at least $600 for support of the child during 2013.
     

If the rules above apply and this child would otherwise be the qualifying child of more than one person:

  • Only the noncustodial parent can claim the child for purposes of the dependency exemption.
  • Only one person can file as head of household. No other person can file as head of household unless he or she has a different qualifying child. If you and any other person claim the child as a qualifying child, the rules shown under Qualifying Child of More Than One Person on this page will apply.

See federal Publication 501 for more details.

Exception to citizen test. If you are a U.S. citizen or U.S. national and your adopted child lived with you all year as a member of your household, that child meets the citizen test.

Exception to gross income test. If your relative (including a person who lived with you all year as a member of your household) is permanently and totally disabled (defined on this page), certain income for services performed at a sheltered workshop may be excluded for this test. For details, see federal Publication 501.

Exception to time lived with you. A person is considered to have lived with you for all of 2013 if the person was born or died in 2013 and your home was this person's home for the entire time he or she was alive. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, or detention in a juvenile facility, count as time lived with you. Also see Children of Divorced or Separated Parents or Kidnapped Child on this page.

Foster child. A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

Kidnapped child. If your child is presumed by law enforcement authorities to have been kidnapped by someone who is not a family member, you may be able to take the child into account in determining your eligibility for head of household or qualifying widow(er) filing status, and the deduction for dependents. See federal Publication 501.

Married person. If the person is married, you cannot claim that person as your dependent if he or she files a joint return. But this rule does not apply if the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns. If the person meets this exception, go to Step 2, Question 3, on page 9 (for a qualifying child) or Step 3, Question 4, on this page (for a qualifying relative). If the person does not meet this exception, stop. Go to Form N-11, line 7.

Multiple support agreements. If no one person contributed over half of the support of your relative (including a person who lived with you all year as a member of your household) but you and another person(s) provided more than half of your relative's support, special rules may apply that would treat you as having provided over half of the support. For details, see federal Publication 501.

Permanently and totally disabled. A person who, at any time in 2013, cannot engage in any substantial gainful activity because of a physical or mental condition and a doctor has determined that this condition (a) has lasted or can be expected to last continuously for at least a year, or (b) can be expected to lead to death.

Qualifying child of more than one person. If the child is the qualifying child of more than one person, only one person can claim the child as a qualifying child for (1) the dependency exemption, and (2) head of household filing status, unless the rules for Children of Divorced or Separated Parents on this page apply.

No other person can take any of the two tax benefits listed above unless he or she has a different qualifying child. If you and any other person claim the child as a qualifying child, the following rules will apply.

  • If only one of the persons is the child's parent, the child will be treated as the qualifying child of the parent.
  • If two of the persons are the child's parents, the child will be treated as the qualifying child of the parent with whom the child lived for the longer period of time in 2013. If the child lived with each parent for the same amount of time, the child will be treated as the qualifying child of the parent who had the higher adjusted gross income (AGI) for 2013.
  • If none of the persons is the child's parent, the child will be treated as the qualifying child of the person who had the highest AGI for 2013.
  • If the parents of a child can claim the child as a qualifying child but no parent so claims the child, no one else can claim the child as a qualifying child unless that person's AGI is higher than the highest AGI of any parent of the child.

Example. Your daughter meets the conditions to be a qualifying child for both you and your mother. If you and your mother both claim tax benefits based on the child, the rules above apply. Under these rules, you are entitled to treat your daughter as a qualifying child for any of the two tax benefits listed above for which you otherwise qualify. Your mother would not be entitled to take any of the two tax benefits listed above unless she has a different qualifying child.

If you will be claiming the child as a qualifying child, go to Step 2 on page 9. Otherwise, stop; you cannot claim any benefits based on this child.

Student. A child who during any part of 5 calendar months of 2013 was enrolled as a full-time student at a school, or took a full- time, on-farm training course given by a school or a state, county, or local government agency. A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or Internet school.

Birth or Death of Dependent. You can take an exemption for a dependent who was born or who died during the taxable year if he or she met the tests for a dependent while alive. This means that a baby who lived only a few minutes can be claimed as a dependent.

Line 6e

Add the numbers you entered in the boxes 6a, 6b, 6c and 6d. Enter the total in the box on line 6e.

Step 5

Fill in your return.

Line-By-Line instructions for filling in Form N-11 begin on this page and end on page 30. Please read and follow the instructions carefully.

Rounding Off to Whole Dollars - The Department of Taxation is requiring individual taxpayers to round off cents to the nearest whole dollar for all dollar entries on the tax return and schedules. To do so, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example: $1.39 becomes $1 and $2.69 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, schedule, or worksheet, you may choose to use one of two methods. Once a method of rounding is established, you must use the same method throughout the return. The first method is to include the cents when adding and round off only the total. The other method is to round off each entry. For example: You received two W-2 forms, one showing Hawaii withholding of $50.55 and one showing Hawaii withholding of $185.73. For rounding method 1, show your total Hawaii withholding as $236, ($50.55 + $185.73 = $236.28 rounded to $236). For rounding method 2, show your total Hawaii withholding as $237, ($50.55 rounded to $51.00 + $185.73 rounded to $186.00 = $51 + $186 = $237).

Line-By-Line Instructions Form N-11

Special Note to Part-Year Residents

Form N-11 is to be filed by full-year residents only. If you were a Hawaii resident for only part of 2013, you must file Form N-15 instead.

Caution: The dates to be entered at the top of Form N-11 are not for part-year residents to enter the period of their Hawaii residency.

Income

An individual who was a Hawaii resident for the entire year is subject to income tax on his or her entire income, computed without regard to source in the State.

Line 7 - Federal Adjusted Gross Income (Federal AGI)

Report the federal AGI from the appropriate line of federal Form 1040, Form 1040A, or Form 1040EZ. If you are not required to file a federal income tax return, use federal Form 1040 as a worksheet to determine the amount to report as your federal AGI.

If you are filing a joint return for federal income tax purposes and a married filing separate return for state income tax purposes, use federal Form 1040 as a worksheet to determine the amount to report as your federal AGI. Your federal AGI must be calculated as if you are filing a federal married filing separate return.

Note: Since the federal government does not recognize civil unions as married individuals for federal income tax purposes, civil unions will continue to file as unmarried individuals on their federal income tax returns. Therefore, they should use federal Form 1040 as a worksheet to determine the amount to report as their federal AGI. Their federal AGI must be calculated as if they are filing a federal married filing joint return or a federal married filing separate return.

If the federal AGI is a negative number, shade the minus (-) in the box to the left of the amount boxes.

Hawaii Additions to Federal AGI

Line 8 - Difference Between State and Federal Wages

If the amount in Form W-2, Box 16 (State wages) is larger than Form W-2, Box 1 (Federal wages), subtract the federal wages from the state wages and enter the difference here. If you receive more than one Form W-2, add the differences from all of the forms. For example, federal employees getting Cost of Living Allowance (COLA) or Living Quarter Allowance (LQA) may see a difference that must be reported here. If you received COLA or LQA and do not see a difference between state and federal wages, enter the amount of COLA or LQA reported on your Form W-2. State or County employees who are in the contributory or hybrid plan of the Employees Retirement System also will see a difference that must be reported here.

Line 9 - Interest on Out-of-State Bonds, Including Municipal Bonds

If you received interest from bonds issued by another State, or a county, city, or political subdivision of another State (including interest distributions from a mutual fund investing in these bonds), enter the interest on line 9. Do not include interest from bonds issued by the Governments of Puerto Rico, U.S. Virgin Islands, Guam, and American Samoa, or any of their political subdivisions. Also, do not include distributions of short-term or long-term gains because these amounts are included in federal AGI.

Line 10 - Other Hawaii Additions to Federal AGI

This line is used to report other items that are taxed by Hawaii but are not taxed by the federal government, such as:

  • Differences in the taxable portion of the Hawaii tax refund.
  • Distributions and deemed distributions from Individual Housing Accounts.
  • Peace Corps compensation.
  • Differences in depreciation and gain.
  • Compensation from temporary employment outside the United States.
  • Differences in the deduction for student loan interest.
  • Differences in the taxable portion of employer- provided adoption benefits.
  • Qualified higher education expenses.
  • Distributions from certain foreign corporations.
  • Other adjustments.

These items are explained in more detail as follows.

Taxable Refund of State Income Taxes

Note: A refundable state tax credit (except for the refundable food/excise tax credit, credit for low-income household renter, credit for child and dependent care expenses, and credit for child passenger restraint system(s)) is subject to income tax to the extent the refundable credit exceeds the taxpayer's tax liability and results in a cash payment from the state. Because such a payment is not actually a refund of prior taxes paid, it is not treated as a tax refund potentially excludable under Internal Revenue Code section 111 (recovery of tax benefit items). Therefore, the State Tax Refund Worksheet on page 37 should not be used to determine the taxable portion of these refundable state tax credits. For more information, see Tax Information Release No. 2010-10, "Common Income Tax & General Excise Tax Issues Associated with the Renewable Energy Technologies Income Tax Credit, HRS § 235-12.5".

The taxable portion of your Hawaii tax refund may be different from the amount claimed on your federal return. Use the State Tax Refund Worksheet on page 37 to figure the taxable portion of your refund and to determine if an adjustment needs to be made here.

Note: None of your refund is taxable if, in the year you paid the tax, you either (a) did not itemize deductions, or (b) elected to deduct state and local general sales taxes instead of state and local income taxes.

If you received a refund or credit in 2013 for state income taxes you paid before 2013, you may have to report it as income on your Hawaii income tax return. You should receive federal Form 1099-G, or a similar statement, showing the amount of the refund.

Any part of a refund of state or local income taxes paid before 2013 that you were entitled to receive in 2013 but chose to apply to your 2013 estimated state income tax is considered to have been received in 2013.

If you received a refund of 2012 taxes and you itemized deductions in 2012, figure the taxable portion of your refund using the State Tax Refund Worksheet on page 37. When completing the State Tax Refund Worksheet on page 37, enter an amount on line 2e only if the carryover of the residential construction and remodeling tax credit was claimed for construction or renovation costs for a residential unit that does not constitute business property.

Note: If you received income tax refunds from other states, include these amounts on line 1 of the State Tax Refund Worksheet on page 37.

If your refund included taxes from any previous year in which you itemized deductions, a similar calculation must be done for each previous year.

If part of your refund was interest, you should include that part in your federal Form 1040, 1040A, or 1040EZ as taxable interest income.

If your 2012 Hawaii AGI was over $166,800 ($83,400 for married taxpayers filing separately), you may be able to report a smaller amount of your tax refund as income because your itemized deductions were reduced in 2012. To compute the proper amount, see federal Publication 525, "Taxable and Nontaxable Income", under Itemized deductions limited. In the computation, however, the Hawaii standard deduction amounts must be used, the amount of the refund due to the Hawaii credits listed in the State Tax Refund Worksheet is subtracted, and the base amount for the limitation of itemized deductions remains at $166,800 ($83,400 for married taxpayers filing separately). If you use this calculation, enter the result on line 8 of the State Tax Refund Worksheet on page 37.

If your 2012 state and local income tax refund is more than your 2012 state and local income tax deduction minus the amount you could have deducted as your 2012 state and local general sales taxes, see federal Publication 525, "Taxable and Nontaxable Income", under Recoveries.

Individual Housing Accounts

If you purchased a principal residence with an Individual Housing Account (IHA), or you are notified by an IHA trustee that you have received a taxable distribution, report the taxable amount on line a of the Hawaii Additions Worksheet on page 37.

  • If you purchased residential property before January 1, 1990, with a distribution from an IHA, you must include in gross income in the year the property is sold, conveyed, or transferred an amount equal to the amount of the distribution, unless an election was made to include one-tenth of the distribution in gross income each year for ten years. In addition, a penalty is added to your gross income. Attach Form N-103, Sale of Your Home, to figure the additional gross income.
  • If you purchased residential property after December 31, 1989, you must include in gross income one-tenth of the distribution each year for ten years. If you sell the property purchased with an IHA distribution before the end of the ten-year period, the remaining amount of the distribution not previously reported must be included in gross income in the year of sale. In addition, a penalty is added to your tax liability. Attach Form N-103, Sale of Your Home, to figure the additional tax liability.
  • If you purchased residential property after December 31, 1996, with a distribution from an IHA established prior to January 1, 1990, and you have made the election to do so, you must include in gross income in the year the property is sold, conveyed, or transferred an amount equal to the amount of the distribution. In addition, a penalty is added to your gross income. Attach Form N-103, Sale of Your Home, to figure the additional gross income.
  • If you use an IHA distribution for any purpose other than to purchase a first principal residence in Hawaii, or if you borrow against the IHA for such a purpose, the distribution (or the loan amount) is taxable, and a 10% penalty tax is imposed. The additional tax is the same amount shown in Box 4 of Form N-2, Distribution from an Individual Housing Account, and must be included on line 27.
  • If you establish an IHA and later marry a person owning residential property, the IHA will terminate and distribute all of the assets to you. In this case, you must include the total distribution in your gross income. No penalty tax is imposed, but the 10% is still withheld. Be sure to claim the withheld amount on line 37.
  • If an individual establishes an IHA and then dies or becomes totally disabled, special rules apply. For more information, see sections 18-235-5.5(r) and (s), Hawaii Administrative Rules.

Peace Corps Compensation

If you received compensation for working with the Peace Corps, include the amount of that compensation on line c of the Hawaii Additions Worksheet on page 37.

Depreciation and Gain Adjustments

Note: Hawaii did not adopt the federal provisions for bonus depreciation, increased IRC section 179 deduction (Hawaii limit is $25,000), and inclusion of off-the-shelf computer software as property qualifying for the IRC section 179 deduction. If the bonus depreciation, increased IRC section 179 deduction, or IRC section 179 deduction for off-the-shelf computer software is claimed for federal tax purposes, you must: (a) complete a federal Form 4562 for Hawaii tax purposes, (b) attach the completed federal Form 4562 to the Hawaii tax return, (c) make the necessary adjustments to the Hawaii tax return for the depreciation difference between federal and Hawaii on line d of the Hawaii Additions Worksheet on page 37, and (d) attach to the Hawaii tax return any worksheet showing the computation of the adjustments. You must also keep records of the differences in the asset's depreciable basis for federal and Hawaii tax purposes.

If you claimed the capital goods excise tax credit, hotel construction and remodeling tax credit, technology infrastructure renovation tax credit, or drought mitigating water storage facility income tax credit, and did not include the amount of the credit as income in the year in which it is properly recognized under your method of accounting, then your adjusted basis in the assets was decreased by the amount of the credit claimed.

  • If you are claiming a depreciation deduction for any such asset, multiply the depreciation percentage for this taxable year by the amount of the applicable income tax credit. Add the results for all of your assets for which the applicable income tax credit was claimed, and enter this amount on line d of the Hawaii Additions Worksheet on page 37.
  • If you sold or otherwise disposed of any such asset, your gain or loss will be different from that reported on your federal return. The difference will be the amount of the applicable income tax credit that has not already been recovered through depreciation deductions. Enter this amount on line e of the Hawaii Additions Worksheet on page 37. In addition, you may need to file Form N-312, Recapture of Capital Goods Excise Tax Credit; see Form N-312 for more information.

Temporary Employment Outside the U.S.

If, while you were a Hawaii resident, you worked outside the United States and you filed federal Form 2555 or 2555-EZ to exclude some of your earned income, you need to add back the amounts here because Hawaii does not have this exclusion. On line f of the Hawaii Additions Worksheet on page 37, enter:

  • The amount on Form 2555-EZ, line 18; or
  • The sum of Form 2555, line 43, and Form 2555, line 48.

Student Loan Interest Deduction

The student loan interest deduction may be different from the amount claimed on your federal return since your Hawaii modified adjusted gross income must be used in the computation instead of your federal modified adjusted gross income, and Hawaii's modified adjusted gross income ranges for phasing out the deduction will not be adjusted for inflation. Use the Student Loan Interest Deduction Worksheet on page 40 to determine if an adjustment needs to be made here.

Employer-Provided Adoption Benefits

The taxable portion of your employer-provided adoption benefits may be different from the amount claimed on your federal return since your Hawaii modified adjusted gross income must be used in the computation instead of your federal modified adjusted gross income, and Hawaii's exclusion amount and modified adjusted gross income limit will not be adjusted for inflation. Use the Adoption Benefits Worksheet on page 40 to determine if an adjustment needs to be made here.

Qualified Higher Education Expenses

Hawaii has not adopted the federal provision relating to the deduction for qualified higher education expenses. If you deducted qualified higher education expenses on your federal return, include the amount you deducted on line i of the Hawaii Additions Worksheet on page 37.

Owners of Certain Foreign Corporations

Certain foreign corporations are classified as Controlled Foreign Corporations (CFCs), Passive Foreign Investment Companies (PFICs), or Foreign Personal Holding Companies (FPHCs). Federal law requires that shareholders of these foreign companies recognize certain income earned by these companies before the companies distribute dividends. Hawaii has no comparable provisions. If you own one or more of these corporations, you had to file federal Form 5471, or you sold stock in any of these kinds of companies, you may need to make an adjustment here.

Other Adjustments

Other adjustments to federal AGI include the following:

  • Hawaii has not adopted the federal provisions relating to:
    • the deduction for capital costs incurred in complying with environmental protection agency sulfur regulations,
    • the election for qualifying film and television productions to deduct certain production expenditures in the year the expenditure is incurred,
    • the deduction for U.S. production activities, and
    • the exclusion from income of benefits under a dependent care assistance program that increases the amount of income that is treated as having been earned by a spouse who is either a full-time student or not able to care for himself or herself.
     
  • The special federal election for capital assets acquired in tax years beginning before January 1, 2001 (election under section 311 of the Taxpayer Relief Act of 1997) is not available for Hawaii income tax purposes.
  • Taxpayers who took up residence in Hawaii after attaining the age of 65 years and before July 1, 1976, and who elect to be taxed only on Hawaii source income, may have to make an adjustment here since only Hawaii source income and adjustments are included in the Hawaii adjusted gross income.

There may be other adjustments to federal AGI that are not discussed in these instructions. Such adjustments arise, for example, if a taxpayer makes an election for federal tax purposes (such as an IRC section 179 election) but does not make the same election for Hawaii tax purposes. If you believe that an additional adjustment is needed to arrive at Hawaii adjusted gross income, enter the amount of the adjustment on line j of the Hawaii Additions Worksheet on page 37, write "X" on the dotted line next to line 10, and attach an explanation to Form N-11 that includes the amount of the adjustment and how you calculated it.

Line 11 - Total Hawaii Additions to Federal AGI

Add the amounts on lines 8, 9, and 10. Enter the result on this line.

Line 12

Add lines 7 and 11. Enter the result on this line.

If line 12 is a negative number, shade the minus (-) in the box to the left of the amount boxes.

Hawaii Subtractions from Federal AGI

Line 13 - Pensions

Hawaii does not tax qualifying distributions from an employer-funded pension plan. If you received qualifying distributions from an employer-funded profit sharing, defined contribution, or defined benefit plan, or from a government retirement system (e.g., federal civil service, military pension, state or county retirement system), enter the qualifying amount here.

Nontaxable Distributions

The following lines describe what qualifying distributions are. These qualifying distributions were included in your federal AGI and will be excluded on this line. For a distribution to qualify, it must be paid by a pension plan by reason of retirement, disability, or death. The pension plan does not have to be a "qualified plan" as defined in section 401 of the Internal Revenue Code.

Employer-Funded Pension Plans

The following three types of distributions are not taxed by Hawaii and should be included on line 13:

  1. Pension or annuity distributions from a public (i.e., government) retirement system (e.g., federal civil service annuity, military pension, state or county retirement system).
  2. Distributions from a private employer pension plan received upon retirement (including early retirement and disability retirement) if the employee did not contribute to the pension plan.
  3. Distributions from a pension plan at age 70-1/2 that are made to comply with the federal mandatory payout rule do qualify as a retirement payment whether or not the employee is still working full time.

Distributions from a private employer pension plan received upon retirement are partially taxed by Hawaii if the employee contributed to the pension plan.

Rollover IRAs

A rollover IRA is treated as a continuation of the original plan that provided the money that is rolled over. If distributions from the original plan would be characterized as a qualified distribution, distributions out of the rollover IRA need not be reported as well.

Example - In 1997, an individual received a lump sum distribution from an employer- funded profit-sharing plan upon retirement. The individual did not contribute to the profit- sharing plan. The entire lump sum distribution was rolled over to an IRA. In 2013, the individual rolled over $50,000 from the IRA to a Roth IRA. The entire amount rolled over to the Roth IRA represents the lump sum distribution received by the individual upon retirement and earnings thereon. Since the lump sum distribution that the individual received upon retirement qualifies as a pension, the amount rolled over from the regular IRA to the Roth IRA also qualifies as a pension. Therefore, the amount rolled over to the Roth IRA is exempt from Hawaii's income tax.

Taxable Pensions and Annuities

Early Distributions - Early distributions from a pension plan that are subject to the 10% federal penalty tax do not qualify and are taxable.

Deferred Compensation Plans - Distributions from a deferred compensation plan may be partly or fully taxable. A deferred compensation plan includes any plan in which the employee has a choice of whether to contribute money into the plan or take that amount in cash or property. Examples include 401(k) plans, salary reduction Simplified Employee Pension (SARSEP) plans, the Federal Thrift Savings Plan, and section 457 plans like the State of Hawaii Deferred Compensation Plan.

Annuity Plans - Retirement vehicles that you fund yourself, such as annuity plans and Individual Retirement Accounts (IRAs) that are not funded through a Simplified Employee Pension (SEP) plan, are considered to be your own investments. Distributions from these plans may be fully or partly taxable, depending on whether your IRAs include deductible or nondeductible contributions. See federal Publication 590 and federal Form 8606, for more details.

Rollover IRAs - A rollover IRA is treated as a continuation of the original plan that provided the money that is rolled over. If distributions from the original plan would be characterized as taxable, distributions out of the rollover IRA would be taxable as well.

Example -In 1997, an individual received a lump sum distribution from an employer- funded profit-sharing plan upon separation from service before retirement. The individual did not contribute to the profit-sharing plan. The entire lump sum distribution was rolled over to an IRA. In 2013, the individual rolled over $50,000 from the IRA to a Roth IRA. The entire amount rolled over to the Roth IRA represents the lump sum distribution received by the individual upon separation from service and earnings thereon. Since the lump sum distribution that the individual received upon separation from service does not qualify as a pension (the distribution is not paid upon retirement, disability, or death), the amount rolled over from the regular IRA to the Roth IRA also does not qualify as a pension. Therefore, the amount rolled over to the Roth IRA is taxable for Hawaii's income tax.

Hybrid Plans - If you received a distribution from a plan that is partly pension and partly deferred compensation, such as a 401(k) plan with a profit sharing component or an employer matching program, a SEP plan with employer contributions as well as a salary reduction option, or a similar hybrid plan, attach Schedule J to figure the taxable amount.

Lump-Sum Distributions - If you received a lump-sum distribution from a pension plan and you are electing to use the special ten-year averaging method, attach Schedule J and Form N-152, Tax on Lump Sum Distributions, to figure the taxable amount.

Note: If your lump-sum distribution included capital gain amounts, you may be able to reduce your tax by including the capital gain amounts on Form N-152 and electing the capital gains treatment. See Form N-152 Instructions for more information.

To compute the taxable portion of your annuity or pension, use Schedule J.

Caution: Certain transactions, such as loans against your interest in a qualified plan, may be treated as taxable distributions.

For more information on the taxation of pensions, see sections 18-235-7-01 to 18-235-7-03, Hawaii Administrative Rules, Tax Information Release No. 90-4, "Taxability of Benefit Payments from Pension Plan to Participants who Attain Age 70-1/2 as Required by the Internal Revenue Code Section 401(a)(9) (C)", and Tax Information Release No. 96-5, "Taxation of Pensions Under the Hawaii Net Income Tax Law: Deferred Compensation Arrangements; Rollover IRAs; Sub-Accounts of Pension Plans; Social Security and Railroad Retirement Act Benefits; Limitation on Deductions for Contributions to a Nonqualified Plan".

Line 14 - Social Security Benefits

Hawaii does not tax Social Security or first tier Railroad Retirement Act benefits. Enter the amount from Form 1040, line 20b, or Form 1040A, line 14b.

Line 15 - Military Reserve or Hawaii National Guard Duty Pay Exclusion

Hawaii does not tax the first $6,076 received by each member of the reserve components of the army, navy, air force, marine corps, coast guard of the United States of America, and the Hawaii national guard, as compensation for performance of duty as such. If you qualify, enter the smaller of:

  • $6,076, or
  • Your pay, as shown on Box 16 of the Form W-2 sent to you by your reserve component.

If you are married filing a joint return, and you and your spouse qualify, add the exclusions for both of you and enter the total on line 15.

Line 16 - Payments to an Individual Housing Account

You may be able to deduct from your gross income up to $5,000 paid in cash during the taxable year into a trust account which is established for saving for a down payment on your first principal residence. A deduction not to exceed $10,000 shall be allowed for a married couple filing a joint return. No deduction shall be allowed on any amounts distributed less than 365 days from the date on which a contribution is made to the account. Any deduction claimed for a previous taxable year for amounts distributed less than 365 days from the date on which a contribution was made shall be disallowed and the amount deducted shall be included in the previous taxable year's gross income and the tax reassessed. The account is to encourage first-time home buyers to save money for a down payment on a home.

The "first principal residence" means a residential property purchased with the payment or distribution from the individual housing account which shall be owned and occupied as the only home by an individual who did not have any previous interest in, individually, or if the individual is married, whose spouse did not own any interest in a residential property inside or outside of Hawaii within the last 5 years prior to opening the IHA.

The amounts paid in cash allowable as a deduction for all taxable years are limited to $25,000, in the aggregate, excluding interest earned or accrued. This limitation also applies to married individuals having separate accounts; the sum of such separate accounts and the deduction shall not exceed $25,000 in the aggregate, excluding interest income earned or accrued.

For more information, see section 18-2355.5, Hawaii Administrative Rules.

Line 17 - Exceptional Trees Deduction

You may deduct up to $3,000 per exceptional tree for qualified expenditures you made during the taxable year to maintain the tree on your private property. The tree must be designated as an exceptional tree by the local county arborist advisory committee under chapter 58, HRS. Qualified expenditures are those expenses you incurred to maintain the exceptional tree (excluding interest) that are deemed "reasonably necessary" by a certified arborist. No deduction is allowed in more than one taxable year out of every three consecutive taxable years. The deduction is allowed for amounts paid in taxable years beginning after December 31, 2003.

An affidavit signed by a certified arborist stating that the amount of expenditures are deemed reasonably necessary must be attached to your tax return. The affidavit also must include the following information: (1) type of tree, (2) location of tree, and (3) description and amount of expenditures made in 2013 to maintain the tree. The affidavit must be notarized.

Line 18 - Other Hawaii Subtractions From Federal AGI

This line is used to report other items that are taxed by the federal government but are not taxed by Hawaii, such as:

  • Interest on federal obligations, including U.S. Savings Bonds.
  • Differences in the taxable portion of the Hawaii tax refund.
  • Interest earned on an Individual Housing Account.
  • Compensation earned by patients with Hansen's disease.
  • Expenses not allowed on your federal return because they were connected with federal credits.
  • Unearned income of children that you included in your federal return, if the children are filing Hawaii returns.
  • Benefits from or premiums paid to legal services plans.
  • Differences in the deduction for student loan interest.
  • Differences in the taxable portion of employer- provided adoption benefits.
  • Certain income from a qualified high technology business.
  • Contributions to and interest earned by an individual development account.
  • Section 235-7(a)(14), HRS, capital gain.
  • Undistributed income earned by certain foreign corporations.
  • Other adjustments.

These items are explained in more detail as follows.

Interest on Federal Obligations, Including U.S. Savings Bonds

If you reported for federal purposes any interest received on federal obligations, including Treasury bills and notes and U.S. Savings Bonds, enter the amount of that interest on line a of the Hawaii Subtractions Worksheet on page 37.

For more information about what kinds of obligations should be reported here, see Tax Information Release No. 84-1, "Taxability of Interest on U.S. Obligations".

If you filed federal Form 8815: If you redeemed U.S. Savings Bonds to pay for higher education tuition and fees and excluded some or all of the interest for federal purposes, subtract the amount from Form 8815, Line 14, before entering it on line a. That amount was already excluded on your federal return.

Taxable Refund of State Income Taxes

See the instructions for line 10, Taxable Refund of State Income Taxes, on page 11. In some cases, the worksheet may call for an adjustment to be made here.

Interest on an Individual Housing Account

If you have an Individual Housing Account, enter the interest earned by the account, as it appears on federal Form 1099-INT, on line c of the Hawaii Subtractions Worksheet on page 37.

Patients With Hansen's Disease

Hawaii does not tax compensation by Hawaii or the U.S. to a patient affected with Hansen's disease (also known as leprosy). Enter the amount of the qualifying compensation on line d of the Hawaii Subtractions Worksheet on page 37.

Expenses Disallowed Because They Were Connected with Federal Credits

If you are a business taxpayer; you claimed the work opportunity credit or the credit for qualified clinical testing expenses; and some of your business expenses were disallowed because you took the credits (section 280C, Internal Revenue Code), enter the amount of the disallowed expenses on line e of the Hawaii Subtractions Worksheet on page 37. Hawaii does not have those credits, and does allow the expense deductions.

Children Having Unearned Income

If you filed federal Form 8814, Parent's Election to Report Child's Interest and Dividends, and you are not filing Form N-814 because your child will file a Hawaii tax return, enter the total amount from line 12 of federal Form(s) 8814 on line f of the Hawaii Subtractions Worksheet on page 37. Attach a copy of Form(s) 8814.

Legal Services Plans

If you received benefits from a qualified group legal services plan or if your employer contributed to a group legal services plan, and you reported these benefits or contributions as taxable income on your federal return, check with your plan to see that it qualifies under Hawaii standards. If it does, Hawaii will not tax these amounts. Enter the amount of federally taxable benefits or contributions on line g of the Hawaii Subtractions Worksheet on page 37.

Student Loan Interest Deduction

The student loan interest deduction may be different from the amount claimed on your federal return since your Hawaii modified adjusted gross income must be used in the computation instead of your federal modified adjusted gross income, and Hawaii's modified adjusted gross income ranges for phasing out the deduction will not be adjusted for inflation. Use the Student Loan Interest Deduction Worksheet on page 40 to determine if an adjustment needs to be made here.

Employer-Provided Adoption Benefits

The taxable portion of your employer-provided adoption benefits may be different from the amount claimed on your federal return since your Hawaii modified adjusted gross income must be used in the computation instead of your federal modified adjusted gross income, and Hawaii's exclusion amount and modified adjusted gross income limit will not be adjusted for inflation. Use the Adoption Benefits Worksheet on page 40 to determine if an adjustment needs to be made here.

Certain Income from a Qualified High Technology Business

  • Royalties and other income derived from patents, copyrights, and trade secrets. Amounts received by an individual or a qualified high technology business as royalties and other income derived from patents, copyrights, and trade secrets (1) owned by the individual or qualified high technology business, and (2) developed and arising out of a qualified high technology business are excluded from gross income, adjusted gross income, and taxable income. If you reported these amounts for federal purposes, include that amount on line j of the Hawaii Subtractions Worksheet on page 37.
  • Stock options income from qualified high technology business. All income earned and proceeds derived from stock options or stock, including stock issued through the exercise of stock options or warrants, from a qualified high technology business or from a holding company of a qualified high technology business by an employee, officer, or director of the qualified high technology business, or investor who qualifies for the high technology business investment tax credit is excluded from income taxes. If you reported these amounts for federal purposes, include that amount on line j of the Hawaii Subtractions Worksheet on page 37.

Individual Development Accounts

If you have an individual development account, enter the amount of contributions you made to the account, and the amount of interest earned by the account (as it appears on federal Form 1099-INT) on line k of the Hawaii Subtractions Worksheet on page 37.

Section 235-7(a)(14), HRS, Capital Gain

For taxable years beginning after December 31, 2007, and ending prior to January 1, 2018, all of the gain realized by a fee simple owner from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development, to the association of apartment owners or the residential cooperative corporation of the leasehold units is exempt from Hawaii income taxes. If you reported these amounts for federal purposes, include that amount on line l of the Hawaii Subtractions Worksheet on page 37.

For purposes of this exemption, "fee simple owner" means the person who owns the fee simple title to the land which is leased, including a life tenant with a remainder over, vested or contingent, and a holder of a defeasible estate, and the holder's heirs, successors, legal representatives, and assigns. A fee simple owner includes legal and equitable owners. "Leased fee interest" means all of the interests of the fee owner, lessor, and all legal and equitable owners of the land which is leased, other than the lessee's interest as defined by chapter 516, HRS. "Legal and equitable owners" means the fee simple owner and all persons having legal or equitable interests in the fee or in the lessor's leasehold estate, including mortgagees, developers, lienors, and sublessors, and their respective heirs, successors, legal representatives, and assigns. "Condominium project" means a real estate condominium project; a plan or project whereby a condominium of two or more units located within the condominium property regime have been sold or leased or are offered or proposed to be offered for sale or lease. "Cooperative project" means a real estate cooperative housing corporation project; a plan or project whereby two or more apartments located in a building owned by a cooperative housing corporation have been leased or are offered or proposed to be offered to be leased.

Owners of Certain Foreign Corporations

If you own an interest in a CFC, PFIC, or FPHC, you had to file federal Form 5471, or you sold stock in any of these kinds of companies, see page 13 for further information. You may need to make an adjustment here.

Other Adjustments

Other adjustments to federal AGI include the following:

  • Scholarship grants received by a student under the Nursing Scholars Program is not subject to Hawaii income tax.
  • The amount of payment stipend waived by Department of Education coaches and dispensed to the school for the benefit of the coach's team is not subject to Hawaii income tax.
  • The special federal election for capital assets acquired in tax years beginning before January 1, 2001 (election under section 311 of the Taxpayer Relief Act of 1997) is not available for Hawaii income tax purposes.
  • The capital loss carryover for qualified high technology businesses is 15 years.
  • Taxpayers who took up residence in Hawaii after attaining the age of 65 years and before July 1, 1976, and who elect to be taxed only on Hawaii source income, may have to make an adjustment here since only Hawaii source income and adjustments are included in the Hawaii adjusted gross income.

There may be other adjustments to federal AGI that are not discussed in these instructions. Such adjustments arise, for example, if a taxpayer makes an election for Hawaii tax purposes (such as an IRC section 179 election) but does not make the same election for federal tax purposes. If you believe you are entitled to an additional subtraction to arrive at Hawaii adjusted gross income, enter the amount of the adjustment on line m of the Hawaii Subtractions Worksheet on page 37, write "X" on the dotted line next to line 18, and attach an explanation to Form N-11 that includes the amount of the adjustment and how you calculated it.

Line 19 - Total Hawaii Subtractions from Federal AGI

Add the amounts on lines 13 through 18. Enter the result on this line.

Line 20 - Hawaii Adjusted Gross Income

Subtract line 19 from line 12. Enter the result on this line. If line 19 is larger than line 12, you may have a net operating loss.

If the Hawaii AGI is a negative number, shade the minus (-) in the box to the left of the amount boxes.

Note: Hawaii has not adopted the federal net operating loss carryback provisions of the American Recovery and Reinvestment Act of 2009, and the Worker, Homeownership, and Business Assistance Act of 2009.

Note: If you carry back the loss and are due a refund from the carryback, you may use Form N-109, Application for Tentative Refund from Carryback of Net Operating Loss, to get a quick refund. But if you elect to carry the loss forward instead, you must attach a statement to this effect on a timely filed return (including extensions). If you make such an election, it cannot be changed later.

Deductions and Taxable Income Computation

Note: If you can be claimed as a dependent on another person's return, fill in the oval above line 21. Complete the "Standard Deduction for Dependents" worksheet on page 22 and enter the appropriate amount on line 23 if you do not itemize your deductions.

Lines 21a to 21f - Itemized Deductions

Taxpayers who itemize their deductions may deduct certain kinds of expenses from their adjusted gross income.

Taxpayers who do not itemize their deductions may reduce their adjusted gross income by the amount of the standard deduction appropriate to their filing status. The amount of the standard deduction is determined on line 23.

You will fall into one of the following three classes:

  • You MUST itemize deductions,
  • You choose to itemize, or
  • You do not itemize.

The three classes are described as follows:

You MUST Itemize Deductions

You must itemize deductions if:

  • You are married, filing a separate return, and your spouse itemizes.
  • You are making a return under IRC section 443(a)(1) for a period of less than 12 months because of a change in your annual accounting period.

You Choose to Itemize

You may choose to itemize your deductions if you are:

  • Married and filing a joint return, or a qualifying widow(er) with dependent child, and your itemized deductions are more than $4,400.
  • Married and filing a separate return, or Single, and your itemized deductions are more than $2,200.
  • Head of Household, and your itemized deductions are more than $3,212.
  • A dependent of another taxpayer and your itemized deductions are more than the greater of (1) $500 or (2) your earned income up to the amount of the standard deduction for your filing status.

You Do Not Itemize

If your itemized deductions are less than the amount shown above for your filing status (or you choose not to itemize), go to line 23 and enter your standard deduction amount there (unless you MUST itemize as described earlier).

If you itemize, you can deduct part of your medical and dental expenses, and amounts you paid for certain taxes, interest, contributions, casualty and theft losses, and other miscellaneous expenses. These deductions are explained on the pages that follow.

If you do itemize, complete Worksheets A-1 through A-6 and enter the amounts on Form N-11, lines 21a to 21f.

Line 21a - Medical and Dental Expenses

Note: Act 91, Session Laws of Hawaii 2011, adopts the federal provision that increases the threshold for the itemized deduction for medical expenses to 10% of adjusted gross income for taxable years beginning after December 31, 2012. However, for 2013 to 2016, if either the taxpayer or the taxpayer's spouse is age 65 or older at the end of the tax year, the threshold will remain at 7.5% of adjusted gross income.

Before you can figure your total deduction for medical and dental expenses, you must first figure your adjusted gross income.

If you itemized deductions on your 2013 federal return, enter the number from line 1 of federal Form 1040, Schedule A on Worksheet A-1, line 1.

If you did not itemize on your 2013 federal return, consult the instructions below to see which medical and dental expenses you may deduct.

Only that part of your medical and dental expenses that is more than 10% of your Hawaii adjusted gross income is deductible (7.5% of your Hawaii adjusted gross income if either you or your spouse was born before January 2, 1949). To figure this amount, use Worksheet A-1.

On Worksheet A-1, line 1, include medical and dental bills you paid for:

  • Yourself;
  • Your spouse;
  • All dependents you list on your return;
  • Your child whom you do not claim as a dependent because of the rules explained on page 10 for Children of Divorced or Separated Parents; and
  • Any person that you could have listed as a dependent on your return if that person had not received $3,900 or more of gross income or had not filed a joint return.

Example - You provided more than half of your mother's support but cannot list her as a dependent because she received $3,900 of wages during 2013. If part of your support was the payment of her medical bills, you can include that part in your medical expenses.

You should include all amounts you paid during 2013, but do not include amounts repaid to you, or paid to anyone else, by hospital, health or accident insurance, or by your employer, or paid through a medical savings account or health savings account.

Examples of Medical and Dental Payments You CAN Deduct

To the extent you were not reimbursed, you can deduct what you paid for:

  • Qualified long-term care services.
  • Premiums for qualified long-term care contracts, subject to dollar limitations based on a person's age. See the federal instructions to Form 1040 for the dollar limits.
  • Hospital, medical, dental, and extra Medicare (Medicare B) insurance.
  • Prescription drugs and insulin.
  • Medical doctors, dentists, eye doctors, gynecologists, chiropractors, osteopaths, podiatrists, psychiatrists, psychologists, physical therapists, acupuncturists, and psychoanalysts (medical care only).
  • Medical examinations, X-ray and laboratory services, insulin treatment, and whirlpool baths the doctor ordered.
  • Nursing help. If you pay someone to do both nursing and housework, you can deduct only the cost of nursing help.
  • Hospital care (including meals and lodging), clinic costs, lab fees.
  • Medical treatment at a center for drug or alcohol addiction.
  • Medical aids such as hearing aids (and batteries), false teeth, eyeglasses, contact lenses, braces, orthopedic shoes, crutches, wheelchairs, guide dogs and the cost of maintaining the dogs.
  • Ambulance service and other travel costs to get medical care. If you used your own car, you can claim what you spent for gas and oil to go to and from the place you received medical care; or you can claim 24 cents a mile. Add parking and tolls to the amount you claim under either method.
  • Cosmetic surgery or procedure that is necessary to correct a deformity arising from, or directly related to:
    • a congenital abnormality;
    • a personal injury resulting from an accident or trauma; or
    • a disfiguring disease.
     

Examples of Medical and Dental Payments You CANNOT Deduct

You cannot deduct the following:

  • The basic cost of Medicare insurance (Medicare A).

Note: If you are 65 or over and are not entitled to social security benefits, you may deduct premiums you voluntarily paid for Medicare A coverage.

  • Life insurance or income protection policies.
  • The Medicare tax on your wages and tips or the Medicare tax paid as part of the self- employment tax.
  • Nursing care for a healthy baby. (You may qualify for the child care credit; see Schedule X, Part III.)
  • Illegal operations or drugs.
  • Nonprescription medicines or drugs.
  • Travel your doctor told you to take for rest or change.
  • Funeral, burial, or cremation costs.
  • Amounts paid for cosmetic surgery which is directed at improving the appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.

Note: If expenses for cosmetic surgery are NOT deductible as medical expenses, then amounts paid for insurance coverage for such expenses are NOT deductible. Furthermore, if an employer health plan reimburses you for such expenses, the reimbursement must be included in your gross income.

Line 21b - Taxes

Note: Taxpayers can claim a deduction for state and local, and foreign, income, war profits, and excess profits taxes if their federal adjusted gross income is less than $100,000 and they are single or married filing separately; or less than $150,000 and they are a head of household; or less than $200,000 and they are married filing jointly or a qualifying widow(er).

Certain taxes you paid during the year can be deducted.

If you itemized deductions on your 2013 federal return, you may enter the same amount from Form 1040, Schedule A, line 9 on line 21b.

Exception: You should complete Worksheet A-2 on page 38 if:

  • You are a federal employee receiving a Cost Of Living Allowance (COLA). Not all of your Hawaii income taxes are deductible for federal purposes. (See IRS Revenue Ruling 74-140, 1974-1 C.B. 50, for more information.) Enter on line 5 of Worksheet A-2 on page 38 the entire amount of state and local income taxes you paid in 2013, even if you reported a different amount on line 5 of federal Form 1040, Schedule A.
  • You claimed a deduction for state and local, and foreign, income, war profits, and excess profits taxes and your federal adjusted gross income is $100,000 or more and you are single or married filing separately; or $150,000 or more and you are a head of household; or $200,000 or more and you are married filing jointly or a qualifying widow(er). Taxpayers with federal adjusted gross income above these thresholds may not deduct state and local, and foreign, income, war profits, and excess profits taxes for taxable years beginning after December 31, 2010.

If you did not itemize deductions on your 2013 federal return, complete Worksheet A-2.

Taxes You CAN Deduct State and Local Income Taxes

Include on this line:

  • State and local income taxes withheld from your salary (as shown on your Form W-2) and withheld from your unemployment compensation (as shown on your Form 1099-G), estimated tax payments made in 2013, and payments made in 2013 for a prior year;
  • Any part of a prior year refund of state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes; and
  • The NET amount of taxes withheld from the sale of Hawaii real property interests. Do not reduce your deduction by any tax refund or credit for prior year state and local income taxes you received in 2013. See instead the instructions for line 10.

For more information about the treatment of taxes withheld from the sale of real property interests, see Tax Information Release No. 2002-2, "Withholding of State Income Taxes on the Disposition of Hawaii Real Property" and Tax Facts 2010-1, "Understanding HARPTA".

State and Local General Sales Taxes

Note: Act 43, Session Laws of Hawaii 2013, adopts the federal provision that extends the election to deduct state and local general sales taxes instead of state and local income taxes through 2013.

Note: For purposes of the deduction for state and local general sales taxes, Hawaii's general excise tax will qualify as a "sales tax."

If you elect to deduct state and local general sales taxes, check box b on line 5 of Worksheet A-2. To figure your deduction, you can use either your actual expenses or the optional sales tax tables.

Actual Expenses. Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2013 if the tax rate was the same as the general sales tax rate. However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Also include any state and local general sales taxes paid for a leased motor vehicle. Do not include sales taxes paid on items used in your trade or business.

Note: You must keep your actual receipts showing general sales taxes paid to use this method.

Refund of general sales taxes. If you received a refund of state or local general sales taxes in 2013 for amounts paid in 2013, reduce your actual 2013 state and local general sales taxes by this amount. If you received a refund of state or local general sales taxes in 2013 for prior year purchases, do not reduce your 2013 state and local general sales taxes by this amount. But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on line 10 (if not already included on line 7). See Recoveries in federal Publication 525 for details.

Optional Sales Tax Tables. Instead of using your actual expenses, you can use the tables in the instructions for federal Form 1040 to figure your state and local general sales tax deduction. You may also be able to add the state and local general sales taxes paid on certain specified items.

To figure your state and local general sales tax deduction using the tables, see the instructions for federal Form 1040.

Real Estate Taxes

Include taxes that you paid on property you own that was not used for business.

If your mortgage payments include your real estate taxes, deduct only the amount equal to the real estate taxes actually paid by the mortgage company to the taxing authority.

Personal Property Taxes

Include personal property tax you paid, but only if it is based on value alone and it is charged on a yearly basis.

Note: Hawaii does not have a personal property tax. However, you may include personal property taxes you paid to other states.

Other Taxes

If you had any deductible tax not listed on Worksheet A-2, lines 5, 6, or 7 (such as foreign income taxes), write the amount on Worksheet A-2, line 8.

Taxes You CANNOT Deduct

  • Federal income tax.
  • Social security tax (FICA).
  • Medicare tax.
  • Railroad retirement tax (RRTA).
  • Federal excise tax on personal property, transportation, telephone, and gasoline.
  • Customs duties.
  • Federal estate and gift taxes.
  • Certain state and local taxes, including:
    1. Tax on gasoline.
    2. Hawaii motor vehicle registration fees, including car inspection fees.
    3. Tax on liquor, beer, wine, cigarettes, and tobacco.
    4. Assessments for sidewalks or other improvements to your property.
    5. Taxes paid for your business or profession. (These business taxes are deducted elsewhere.)
    6. Tax you paid for someone else.
    7. License fees. (Marriage, driver's, dog, hunting, auto, etc.)
    8. Inheritance tax.
     

Line 21c - Interest You Paid

If you itemized deductions on your 2013 federal return, you may write the amount from line 15 of your 2013 federal Schedule A on line 21c. You need not complete Worksheet A-3 on page 38.

Exception:

  • If you had to file a 2013 federal Form 4952, you must refigure your investment interest deduction for state tax purposes on Hawaii Form N-158. Enter the amount from Form N-158 on line 14 of Worksheet A-3. Enter the amounts from lines 10, 11, 12, and 13 of federal Form 1040, Schedule A, on the corresponding lines of Worksheet A-3. Attach Form N-158 to your return.
  • If you filed a 2013 federal Form 8396, and you reduced your deduction for home mortgage interest on federal Form 1040, Schedule A, by the amount on line 3 of federal Form 8396, you must refigure your home mortgage interest for state tax purposes. Include the amount from line 3 of federal Form 8396 on line 10 of Worksheet A-3. Enter the amounts from lines 11, 12, 13, and 14 of federal Form 1040, Schedule A, on the corresponding lines of Worksheet A-3.

If you did not itemize deductions on your 2013 federal return, complete Worksheet A-3.

You should show on Worksheet A-3 interest on non-business items only. Business-related interest is deducted elsewhere.

Except for certain mortgage interest, the amount of your personal interest expense (such as credit card interest) is not allowed as an itemized deduction on Worksheet A-3.

Home Mortgage Interest

In most cases, you will be able to deduct all of your home mortgage interest. The following rules apply to any loans secured by your main home, including first and second mortgages, home equity loans and refinanced mortgages. Whether your home mortgage interest is deductible depends on the date you took out the mortgage, the amount of the mortgage and your use of its proceeds.

If ALL of your mortgages fit into one or more of categories a, b, and c below, you can deduct all of the interest on those mortgages and report it on Worksheet A-3, line 10 or 11, whichever applies. If one or more of your mortgages does not fit into any of the categories below, get federal Publication 936, Limits on Home Mortgage Interest Deduction, to figure the amount of interest you can deduct.

  1. Mortgages you took out on your main home ON or BEFORE October 13, 1987. These mortgages also include line-of-credit mortgages you had on October 13, 1987, and mortgages you had on October 13, 1987, that you refinanced after that date. But see Special Rules if you refinanced or borrowed additional amounts on a line-of-credit mortgage after October 13, 1987.
  2. Mortgages you took out on your main home AFTER October 13, 1987, to buy, build, or improve your home, but only if these mortgages plus any mortgages in a. above totaled $1 million or less throughout 2013. The limit is $500,000 or less if married filing separately.
  3. Mortgages you took out AFTER October 13, 1987, on your main home, OTHER THAN to buy, build, or improve your home, but only if these mortgages totaled $100,000 or less throughout 2013. The limit is $50,000 or less if married filing separately.

An example of a mortgage used for purposes other than to buy, build, or improve your home is a home equity loan you used to pay off credit card bills, to buy a car, or to pay tuition costs.

Special Rules

Refinanced Mortgages. If you had a mortgage on your home on October 13, 1987, and refinanced it after that date for no more than the balance of the existing mortgage, all of the new mortgage is treated as a mortgage described in a above. But, if you refinanced it for more than the balance of the existing mortgage, only the part of the new mortgage equal to the amount you owed on the mortgage at the time you refinanced is treated as a mortgage described in a. The part of the new mortgage that is more than the balance of the existing mortgage is a mortgage described in b or c (or b and c if a mixed-use mortgage - see below).

Line-of-Credit Mortgages. If you had a line-of-credit mortgage on your home on October 13, 1987, and you borrowed additional amounts on this line of credit after that date, the additional amounts borrowed are treated as a mortgage taken out after October 13, 1987, and are subject to the rules under b or c (or b and c if a mixed-use mortgage - see below).

Mixed-Use Mortgages. If you took out a new mortgage after October 13, 1987 (including refinancing for more than what you owe or borrowing additional amounts on a line-ofcredit mortgage you had on October 13, 1987) for purposes described in both b and c above, you have a mixed-use mortgage. The mortgage proceeds used to buy, build, or improve the home fit into category b and the rest of the proceeds fit into category c.

Example: You took out a mortgage on your home for $200,000 in 1980. You file as single for 2013. In March 2013, when the home had a fair market value of $400,000 and you owed $195,000 on the mortgage, you took out a home equity loan for $120,000. In 2013, you used $90,000 of the home equity loan proceeds for home improvements, and $30,000 for other purposes. You can deduct all of the interest on both mortgages. The first mortgage qualifies because it was taken out on or before October 13, 1987. The home equity loan qualifies under the dollar limits in b and c. The part of the mortgage subject to the dollar limit in b ($90,000) plus the first mortgage of $195,000 totaled less than $1 million. The part of the mortgage subject to the dollar limit in c ($30,000) was less than $100,000.

Note: Additional limits apply if the total amount of all mortgages exceeds the fair market value of the home. See federal Publication 936.

What is a Home. A home may be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations including sleeping space, a toilet, and cooking facilities.

More Than One Home. If you had a main home and a second home, the dollar limits explained in b and c above apply to the total mortgages on both homes.

Mortgage Insurance Premiums

Note: Act 43, Session Laws of Hawaii 2013, adopts the federal provision that extends the deduction for mortgage insurance premiums through 2013.

Enter the qualified mortgage insurance premiums you paid under a mortgage insurance contract issued after December 31, 2006, in connection with home acquisition debt that was secured by your first or second home. Box 4 of federal Form 1098 may show the amount of premiums you paid in 2013. If you and at least one other person (other than your spouse if filing jointly) were liable for and paid the premiums in connection with the loan, and the premiums were reported on federal Form 1098 under the other person's social security number, report your share of the premiums on line 13. See Prepaid mortgage insurance premiums later if you paid any premiums allocable to any period after 2013.

Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service (or their successor organizations), and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Mortgage insurance provided by the Department of Veterans Affairs and the Rural Housing Service is commonly known as a funding fee and guarantee fee respectively. These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Contact the mortgage insurance issuer to determine the deductible amount if it is not included in box 4 of federal Form 1098.

Prepaid mortgage insurance premiums. If you paid qualified mortgage insurance premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. The premiums are treated as paid in the year to which they are allocated. If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. See federal Publication 936 for details.

The allocation rules, explained earlier, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service (or their successor organizations).

Limit on amount you can deduct. You cannot deduct your mortgage insurance premiums if your adjusted gross income is more than $109,000 ($54,500 if married filing separately). If your adjusted gross income is more than $100,000 ($50,000 if married filing separately), your deduction is limited.

Example: For the 2013 tax year, H and W, married taxpayers, pay $2,000 for qualified mortgage insurance. For that tax year, H and W file a joint return that shows adjusted gross income (AGI) of $106,419. As a result, H and W's deduction for qualified mortgage insurance must be reduced by 70% of the otherwise deductible amount - 10% for each of the six full $1,000 amounts by which their AGI exceeds $100,000, and an additional 10% for the additional fraction of $1,000 ($419) by which their AGI exceeds $100,000. H and W's deduction for qualified mortgage interest is therefore $600 ($2,000 - (70% x $2,000) = $2,000 - $1,400 = $600). You may use the Mortgage Insurance Premiums Deduction Worksheet in the instructions to federal Form 1040 to compute the amount of the deduction. In the computation, however, the Hawaii adjusted gross income amount must be used.

Investment Interest

Investment interest is interest paid on money you borrowed that is allocable to property held for investment. It does not include any interest allocable to a passive activity.

Note: Expenses and interest for royalties and other income derived from any patents, copyrights, and trade secrets by an individual or a qualified high technology business are deductible.

Complete and attach Form N-158, Investment Interest Expense Deduction, to figure your deduction.

Exception. You do not have to file Form N-158 if ALL of the following apply:

  • Your only investment income was from interest or dividends,
  • You have no other deductible expenses connected with the production of the interest or dividends,
  • Your investment interest expense is not more than your investment income,
  • You have no carryovers of investment interest expense from 2012, and
  • You have no passive activity losses.

For more details, get federal Publication 550, Investment Income and Expenses.

Interest Expense You CANNOT Deduct

Do not include the interest you paid for -

  • Personal interest, such as credit cards and automobile loans.
  • Indebtedness of another person, when you are not legally liable for payment of the interest.
  • A gambling debt or other unenforceable obligation.
  • Money you borrowed to buy tax-exempt securities or single-premium life insurance.
  • Any kind of business-related interest. Business interest expenses are reported elsewhere.

See the instructions for federal Form 1040, Schedule A - Interest Expense for more information.

Line 21d - Gifts to Charity

If you itemized deductions on your 2013 federal return, write the amount from line 19 of Form 1040, Schedule A on line 21d. You need not complete Worksheet A-4 on page 38.

Exception: You should complete Worksheet A-4 on page 38 if:

  • Your charitable contribution deduction was limited based upon your federal adjusted gross income. You must refigure your charitable contribution deduction for state tax purposes using your Hawaii adjusted gross income, or
  • You have a contribution carryover from prior years and the amount is different for federal and State tax purposes. If you did not itemize deductions on your 2013 federal return, complete Worksheet A-4 on page 38.

Contributions You CAN Deduct

You may deduct what you gave to organizations that are religious, charitable, educational, scientific, or literary in purpose. You may also deduct what you gave to organizations that work to prevent cruelty to children or animals. An organization that tells you it is a "501(c)(3) organization" is telling you that it falls into this category.

Examples of these organizations are:

  • Churches, temples, synagogues, Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girl Scouts, Boys Club of America, etc.
  • Fraternal orders, if the gifts will be used for the purposes listed above.
  • Veterans' and certain cultural groups.
  • Nonprofit schools, hospitals, and organizations whose purpose is to find a cure for or help people who have arthritis, asthma, birth defects, cancer, cerebral palsy, cystic fibrosis, diabetes, heart disease, hemophilia, mental illness or retardation, multiple sclerosis, muscular dystrophy, tuberculosis, etc.
  • Federal, State, and local governments if the gifts are solely for public purposes.

Contributions can be cash (including checks and money orders), property, or out-of-pocket expenses you paid to do volunteer work for the kinds of organizations described above. If you drive to and from the volunteer work, you can take 14 cents a mile or the actual cost of gas and oil. Add parking and tolls to the amount you claim under either method. But don't deduct any amounts that were repaid to you.

If you made a gift and received a benefit in return, such as food, entertainment, or merchandise, you may deduct only the amount that is more than the value of the benefit. For example, if you paid $70 to a charitable organization to attend a fund raising dinner and the value of the dinner was $40, you may deduct only $30.

If you do not know whether you can deduct what you gave to an organization, check with that organization.

Contributions You CANNOT Deduct

  • Political contributions.
  • Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups.
  • Cost of raffle, bingo, or lottery tickets.
  • Tuition to a private school.
  • The value of your time or services.
  • Value of blood given to a blood bank.
  • The transfer of a future interest in tangible personal property (generally until the entire interest has been transferred).
  • Gifts to:
    1. Individuals.
    2. Foreign organizations.
    3. Groups that are run for personal profit.
    4. Groups whose purpose is to lobby for changes in the law.
    5. Civic leagues, social and sports clubs, labor unions, and chambers of commerce.
     

Limit on the Amount You May Deduct

See federal Publication 526 to figure the amount of your deduction if any of the following applies:

  • Your cash contributions, or contributions of ordinary income property, are more than 30% of your Hawaii adjusted gross income.
  • Your gifts of capital gain property are more than 20% of your Hawaii adjusted gross income.
  • You gave gifts of property that increased in value, or gave gifts of the use of property.

Gifts by Cash or Check

On Worksheet A-4, line 16, enter the total contributions you made in cash or by check (including out-of-pocket expenses).

Note: Charitable contributions of $250 or more must be substantiated by a written acknowledgment from the donee organization to be deductible.

Note: You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. The written communication must include the name of the charity, date of the contribution, and amount of the contribution. For more information, see federal Publication 526, Charitable Contributions.

Other Than by Cash or Check

On Worksheet A-4, line 17, enter the total contributions you made other than by cash or check. If you gave property, you should keep records stating the kind of property you gave, the name of the organization you gave it to, the date you gave it, how you figured its value at the time you gave it, and whether it was capital gain or ordinary income property. If you determine the value of a gift by an appraisal, keep a signed copy of it.

Note: Charitable contributions of $250 or more must be substantiated by a written acknowledgment from the donee organization to be deductible.

If the amount of your deduction is more than $500, you must complete and attach federal Form 8283. For this purpose, the "amount of your deduction" means your deduction before applying any income limits that could result in a carryover of contributions. If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. If your total deduction is over $5,000, you may also have to get appraisals of the values of the donated property. See federal Form 8283 and its instructions for more information.

Contributions of clothing and household items after August 17, 2006. A deduction for these contributions will be allowed only if the items are in good used condition or better. However, this rule does not apply to a contribution of any single item for which a deduction of more than $500 is claimed and for which you include a qualified appraisal and federal Form 8283 with your tax return.

Line 21e - Casualty and Theft Losses

Use line 21e to report casualty or theft loss(es) of property that is not trade, business, or rent or royalty property. Complete federal Form(s) 4684, Casualties and Thefts, to figure your loss. Write the amount from federal Form 4684, line 16 on line 20 of Worksheet A-5 on page 38, fill in Worksheet A-5, and attach a copy of federal Form(s) 4684 to Form N-11.

Losses You CAN Deduct

You may be able to deduct all or part of each loss caused by theft, vandalism, fire, storm, and car, boat, and other accidents or similar causes.

If you have a nonbusiness casualty loss that is covered by insurance, you cannot take the casualty loss deduction unless you file a timely insurance claim for that loss. You can deduct nonbusiness casualty or theft losses only to the extent that:

  1. The amount of EACH separate loss is more than $100, and
  2. The total amount of ALL losses during the year (reduced by the $100 limit) is more than 10% of your adjusted gross income. You may also deduct the costs of proving that you had a property loss. Examples of these costs are appraisal fees and photographs used to establish the amount of your loss.

Losses You CANNOT Deduct

  • Money or property misplaced or lost.
  • Breakage of china, glassware, furniture, and similar items under normal conditions.
  • Progressive damage to property (buildings, clothes, trees, etc.) caused by termites, moths, other insects, or disease.

Line 21f - Miscellaneous Deductions

Note: The income tax deduction for political campaign contributions is repealed for taxable years beginning after December 31, 2010.

If you did not itemize deductions on your 2013 federal return, complete Worksheet A-6 on page 38.

If you itemized deductions on your 2013 federal return, take the amounts on Form 1040, Schedule A, lines 24 and 28 and write them on lines 27 and 31 of Worksheet A-6 on page 38. Then, complete the worksheet starting from line 25.

In General

Most miscellaneous deductions cannot be deducted in full. You must subtract 2% of your adjusted gross income from the total.

Generally, the 2% limit applies to job expenses you paid for which you were not reimbursed (line 24). The limit also applies to tax preparation fees (line 25) and certain expenses you paid to produce or collect taxable income or certain tax-exempt income (line 26).

The 2% limit does not apply to certain other miscellaneous expenses that you may deduct. These expenses can be deducted in full on line 31. Gambling losses (to the extent of winnings) and certain job expenses of handicapped employees can be deducted on line 31. See federal Publication 529, Miscellaneous Deductions, for more information.

Expenses Subject to the 2% Limit

Employee Business Expenses

On Worksheet A-6, line 24, report job expenses you paid for which you were not reimbursed. Attach a copy of federal Form 2106 or 2106-EZ, if:

  1. You claim any travel, transportation, meal, or entertainment expenses for your job; or
  2. Your employer paid you for any of your job expenses reportable on Worksheet A-6, line 24.

Examples of expenses to include on line 24 of Worksheet A-6 are:

  • Travel, transportation, meal, or entertainment expenses.
  • Union dues.
  • Safety equipment, small tools, and supplies you needed for your job.
  • Uniforms your employer said you must have, and which you may not usually wear away from work.
  • Protective clothing required in your work, such as hard hats, and safety shoes and glasses.
  • Physical examinations your employer said you must have.
  • Dues to professional organizations and chambers of commerce.
  • Subscriptions to professional journals.
  • Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new job.
  • Business use of part of your home, but only if you use that part exclusively and on a regular basis in your work and for the convenience of your employer. For details, including limits that apply, see federal Publication 587, Business Use of Your Home.
  • Education expenses you paid that were required by your employer, or by law or regulations, to keep your salary or job. In general, you may also include the cost of keeping or improving skills you must have in your job. For more details, see federal Publication 508, Educational Expenses. Some education expenses are not deductible. See Expenses You MAY NOT Deduct on this page.

Tax Preparation Fees

On Worksheet A-6, line 25, enter the total fees you paid to prepare your federal and Hawaii tax return, including fees paid for filing your return electronically. But do not include fees deducted elsewhere, such as business expenses.

Other Expenses

Note: Expenses and interest for royalties and other income derived from any patents, copyrights, and trade secrets by an individual or a qualified high technology business are deductible.

On Worksheet A-6, line 26, enter the total amount you paid to produce or collect taxable income and certain tax-exempt income as stated in the above note, and manage or protect property held for earning income. But do not include expenses deducted elsewhere. Attach a statement showing the type and amount of each expense to Form N-11. Examples of these expenses are:

  • Safe deposit box rental.
  • Certain legal and accounting fees.
  • Clerical help and office rent.
  • Custodial (e.g. trust account) fees.
  • Your share of the investment expenses of a regulated investment company.
  • Certain losses on uninsured deposits in an insolvent or bankrupt financial institution. For details, including limits on the amount you can deduct, see federal Publication 529.
  • Deduction for repayment of amounts under a claim of right whether more or less than $3,000. See Repayments in federal Publication 525, Taxable and Nontaxable Income, for more information.
  • Certain expenses related to an activity not engaged in for profit. For details, get federal Publication 535, Business Expenses.

Expenses NOT Subject to the 2% Limit

Other Deductions

List only the following expenses on Worksheet A-6, Line 31:

  • Gambling losses, but only to the extent of gambling winnings that were reported on federal Form 1040, line 21.
  • Hawaii estate and transfer tax.
  • Amortizable bond premium on bonds acquired before October 23, 1986.
  • Certain unrecovered investment in an annuity (IRC section 72(b)(3)). For details, see federal Publication 575, Pension and Annuity Income.
  • Impairment-related work expenses of a handicapped person.

List the type and amount of each expense and attach a copy of the list to your return. Enter one total in the amount space for line 31. For more information on these expenses, get federal Publication 529, Miscellaneous Deductions.

Note: Repayments under a claim of right over $3,000 are subject to the 2% limitation for Hawaii income tax purposes.

Expenses You MAY NOT Deduct

Some expenses are not deductible at all. Examples are:

  • Political contributions.
  • Personal legal expenses.
  • Lost or misplaced cash or property (but see casualty and theft losses).
  • Expenses for meals during regular or extra work hours.
  • The cost of entertaining friends.
  • Expenses of going to or from work.
  • Education that you need to meet minimum requirements for your job or that will qualify you for a new occupation.
  • Expenses of:
    1. Travel as a form of education.
    2. Attending a seminar, convention, or similar meeting unless it is related to your employment.
    3. Adopting a child, including a child with special needs.
     
  • Fines and penalties.
  • Expenses of producing tax-exempt income, except for expenses for royalties and other income derived from any patents, copyrights, and trade secrets by an individual or a qualified high technology business.

Line 22 - Total Itemized Deductions

Dependents

If your parent (or someone else) can claim you as a dependent on his or her return (even if that person chose not to claim you), fill in the oval above line 21. If you are claiming the standard deduction, see Standard Deduction for Dependents on page 22 to figure your standard deduction.

Itemized Deductions

Note: Taxpayers with Hawaii adjusted gross income above a certain amount will lose part of their itemized deductions for taxable years beginning after December 31, 2010.

Note: Taxpayers with federal adjusted gross income above a certain amount will have a cap placed on the amount of itemized deductions that may be claimed for taxable years beginning after December 31, 2010.

Note: For taxable years beginning after December 31, 2012, Act 256, Session Laws of Hawaii 2013, exempts charitable contributions from the itemized deduction caps that were placed on taxpayers with federal adjusted gross income above a certain amount.

Your state income tax will be less if the total of your itemized deductions is larger than the standard deduction. To figure your itemized deductions, fill in lines 21a to 21f.

Add lines 21a through 21f, and enter the result on line 22 if:

  • The amount on line 20 (Hawaii adjusted gross income) is $166,800 or less ($83,400 if married filing separately), and
  • The amount on line 7 (federal adjusted gross income) is less than $100,000 and you are single or married filing separately; or less than $150,000 and you are a head of household; or less than $200,000 and you are married filing jointly or a qualifying widow(er).

You may not be able to deduct all of your itemized deductions if:

  • The amount on line 20 (Hawaii adjusted gross income) is more than $166,800 ($83,400 if married filing separately), or
  • The amount on line 7 (federal adjusted gross income) is $100,000 or more and you are single or married filing separately; or $150,000 or more and you are a head of household; or $200,000 or more and you are married filing jointly or a qualifying widow(er).

Use the Total Itemized Deductions Worksheet on page 38 to figure the amount you may deduct.

Line 23 - Standard Deduction

Note: The standard deduction amounts are increased for taxable years beginning after December 31, 2012.

Taxpayers who do not itemize their deductions may reduce their adjusted gross income by the amount of the standard deduction appropriate to their filing status. The amount of the standard deduction for each filing status is as follows:

Filing Status.............................Standard Deduction

Single .........................................$2,200
Married filing jointly ....................$4,400
Married filing separately ..............$2,200
Head of Household .....................$3,212
Qualifying Widow(er) ..................$4,400

Standard Deduction for Dependents. If you can be claimed as a dependent by someone else and you do not itemize your deductions, your standard deduction is limited to the greater of $500 or your earned income (up to the full standard deduction for your filing status). The standard deduction for an individual who can be claimed as a dependent on the tax return of another taxpayer is computed as follows.

A. Enter your earned income (defined below). If none, enter zero.  
B. Minimum amount 500.00
C. Compare the amounts on lines A and B above. Enter the LARGER of the two amounts here  
D. Maximum amount. Enter the full standard deduction for your filing status, shown in the chart above, here  
E. Compare the amounts on lines C and D above. Enter the SMALLER of the two amounts here and on Form N-11, line 23.  

Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amounts you reported on Form 1040, lines 7 (wages), 12 (business income), and 18 (farming income), minus the amount, if any, on line 27 (deduction for self-employment tax).

Line 24

Line 20 minus line 22 or 23, whichever applies. This line MUST be filled in. If line 24 is a negative number, shade the minus (-) in the box to the left of the amount boxes.

Line 25 - Exemptions

Note: If the amount on line 20 is more than $89,981, you may not be able to deduct all of your personal exemptions. Use the Personal Exemptions Worksheet on page 39 to figure the amount you may deduct.

Caution: If you can be claimed as a dependent on another person's tax return, you may not claim an exemption for yourself.

Regular Exemptions

Note: The personal exemption amount is increased for taxable years beginning after December 31, 2012.

Residents are allowed $1,144 for each exemption they can claim. Multiply $1,144 by the total number of exemptions you claimed on line 6e.

Blind, Deaf, or Totally Disabled - Definition, Certification, and Exemptions

Fill in the appropriate oval(s) on line 25 if you are blind, deaf or totally disabled and your impairment has been certified. You must submit a completed Form N-172 prior to filing your return in order to claim this exemption. If you do not, the exemption will be disallowed and your return processed without the disability exemption(s) claimed.

"Blind" means a person whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or whose visual acuity is greater than 20/200 but is accompanied by a limitation in the field of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees.

"Deaf" means a person whose average loss in the speech frequencies (500-2000 Hertz) in the better ear is 82 decibels, A.S.A., or worse.

"Person totally disabled" means a person who is totally and permanently disabled, either physically or mentally, which results in the person's inability to engage in any substantial gainful business or occupation. It is presumed that a person whose earned income, before deductions and exemptions, exceeds $30,000 per year is engaged in a substantial, gainful business or occupation.

The impairment of sight, deafness or disability shall be certified on the basis of a written report on an examination performed by a qualified ophthalmologist, qualified optometrist or a qualified otolaryngologist, licensed audiologist, or a qualified physician, as the case may be, on Form N-172.

A blind, deaf or totally disabled person who qualifies, may be allowed a Disability Exemption of $7,000. The Disability Exemption is in lieu of the regular personal exemption of $1,144. The following maximum exemptions are allowed:

One Individual (any filing status) - $7,000

Husband and Wife (non-disabled spouse under 65) - 8,144

Husband and Wife (non-disabled spouse age 65 or over) - 9,288

Husband and Wife (both disabled) - 14,000

Note: If you claim this special exemption you will not be able to claim the additional exemptions for your children or other dependents, or for being 65 or older.

For more information, see Tax Information Release No. 89-3, "State Tax Benefits Available to Persons with Impaired Sight, Impaired Hearing, or Who are Totally Disabled" and

Tax Information Release No. 94-2, "State Tax Benefits Available to Persons Totally Disabled".

Line 26 - Taxable Income

Line 24 minus line 25, but not less than zero.

Tax Computation

Line 27 - Tax

To figure your tax, you will use one of the following methods. Read the conditions below to see which you should use, and fill in the appropriate oval on line 27 if you use the tax table, tax rate schedules, or alternative tax on capital gains. Fill in the oval for tax from the applicable forms if you use Form N-168 or Form N-615. Then, go to the Tax Computation Worksheet on page 39.

Tax Table - If your taxable income is less than $100,000, you MUST use the Tax Table on pages 42 through 53 to find your tax. Be sure you use the correct column in the Tax Table. After you have found the correct tax, enter that amount. There is an example at the beginning of the table to help you find the correct tax.

Tax Rate Schedules - You must use the Tax Rate Schedules on page 54 to figure your tax if your taxable income is $100,000 or more.

Form N-168 - An individual engaged in a farming or fishing business may elect to average their farm or fishing income over a three-year period. See Form N-168 for more information.

Form N-615 - If a child under age 14 has investment income of more than $1,000, use Form N-615, Computation of Tax for Children Under Age 14 Who Have Investment Income of More than $1,000, to see if any of the child's investment income is taxed at the parent's rate and, if so, to figure the child's tax. See Form N-615 for more information.

Alternative Tax on Capital Gains

If you have a net capital gain, you may be able to reduce your tax using the Tax on Capital Gains Worksheet on page 39 if your taxable income is over $48,000 ($24,000 for Single, and Married Filing Separately; or $36,000 for Head of Household classifications). If your taxable income is $48,000 ($24,000 for Single, and Married Filing Separately; or $36,000 for Head of Household classifications) or under, do not use the Tax on Capital Gains Worksheet on page 39.

Some taxpayers will have Hawaii gain adjustments. Before filling in the worksheet, determine whether you have adjustments from the Hawaii Additions Worksheet on page 37, e (gain adjustment), or j (other adjustments); from the Hawaii Subtractions Worksheet on page 37, j (certain income from a qualified high technology business), l (section 235-7(a) (13), HRS, capital gain), or m (other adjustments); or from Form N-152 (lump sum distribution from a pension plan). If you do, separate the adjustments into long-term gain adjustments for assets held for more than a year, and short-term adjustments for assets held for a year or less.

Total Tax Liability

Use the Tax Computation Worksheet on page 39 to figure your total tax liability.

Refundable Credits

IMPORTANT! If the amount of payments plus these credits is at least $1 more than your tax, the difference will be refunded to you. It is very important that you carefully read the following instructions for each of these credits to ensure that you properly claim all the credits to which you are entitled.

Warning: Many of the following credits MUST be claimed on or before the end of the twelfth month following the end of the taxable year (December 31, 2014, for calendar year taxpayers). If you do not claim these credits within that period, the credits are waived and cannot be claimed later, even on an amended return.

Line 28 - Refundable Food/Excise Tax Credit

If your federal adjusted gross income was less than $50,000, you may qualify for this credit. See the instructions for Schedule X, Part I, on page 32. Figure the credit on Schedule X, Part I, and enter the amount of the credit here.

Note: Do not claim this credit if you are being claimed or eligible to be claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes.

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.

Line 29 - Credit for Low-Income Household Renters

If you occupy and pay rent for real property within the State as your residence, your Hawaii adjusted gross income was less than $30,000, and the rent you paid during 2013 was more than $1,000, you may qualify for this credit. To see if you qualify, see the instructions for Schedule X, Part II, on page 33. If you qualify, figure the credit on Schedule X, Part II, and enter the amount of the credit here.

Note: Do not claim this credit if you are being claimed or eligible to be claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes.

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.

Line 30 - Credit for Child and Dependent Care Expenses

Certain payments made for child and dependent care (including payments made to the State of Hawaii A+ Program) may be claimed as a credit against your tax due. To see if you qualify, see the instructions for Schedule X, Part III, on page 34. If you qualify, figure the credit on Schedule X, Part III, and enter the amount of the credit here.

Note: Do not claim this credit if you are being claimed or eligible to be claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes.

Line 31 - Credit for Child Passenger Restraint System

Each taxpayer who files an individual income tax return for the taxable year may claim a tax credit for 2013 for the purchase of one or more new child passenger restraint systems which comply with federal motor vehicle safety standards.

Note: This credit is $25 per return regardless of the cost or the number of restraint systems purchased.

To claim this credit. Enter $25 in line 31, and attach a copy of the sales invoice, which states the type of child restraint system purchased, to your return.

Your claim for this credit may be rejected if the invoice is not attached, or if 1) or 2) applies but no statement or explanation is attached.

  1. If the invoice doesn't have your name on it, you must attach a statement saying that you and nobody else is claiming the credit for the purchase described in the invoice.
  2. If the invoice has somebody else's name on it, you must attach an explanation.

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.

Line 32 - Total Refundable Tax Credits from Schedule CR

If you are claiming any of the following refundable tax credits, you must use Schedule CR, Schedule of Tax Credits, to summarize the total refundable tax credits claimed. Complete Part II of Schedule CR, and enter the amount from Schedule CR, line 23, on line 32. Attach Schedule CR directly behind Form N-11.

The following refundable tax credits are included on Schedule CR:

Capital Goods Excise Tax Credit

A 4% credit is available to Hawaii businesses that acquire qualifying business property and place it in service during the taxable year.

For more information, see the instructions for Form N-312; Tax Information Release No. 88-6, "Capital Goods Excise Tax Credit"; Tax Information Release No. 88-8, "Capital Goods Excise Tax Credit Recapture"; and Tax Information Release No. 89-4, "The Taxpayer Who Is Entitled To The Capital Goods Excise Tax Credit When the Parties Characterize a Transaction As A Sale-Leaseback".

To claim this credit. Complete Form N-312 and Schedule CR and attach them to your return.

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.

Fuel Tax Credit for Commercial Fishers

Each principal operator of a commercial fishing vessel who files an individual income tax return may claim an income tax credit for certain fuel taxes paid during the year.

To claim this credit. Complete Form N-163 and Schedule CR and attach them to your return.

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.

Ethanol Facility Tax Credit

A credit is allowable for the investment in a qualified ethanol facility that is in production on or before January 1, 2017.

To claim this credit. Complete Form N-324 and Schedule CR and attach them to your return.

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.

Motion Picture, Digital Media, and Film Production Income Tax Credit

Note: Act 89, Session Laws of Hawaii 2013, amends the motion picture, digital media, and film production income tax credit for taxable years beginning after December 31, 2012 by (1) extending the repeal date of the credit, (2) increasing the credit ceiling, and (3) increasing the credit amount.

For taxable years beginning after December 31, 2012, a taxpayer may claim an income tax credit of (1) 20% of the qualified production costs incurred before January 1, 2019, by a qualified production in the City and County of Honolulu, and (2) 25% of the qualified production costs incurred before January 1, 2019, by a qualified production in the Kauai, Maui, or Hawaii county. The total tax credits claimed per qualified production shall not exceed $15,000,000.

For more information, see Form N-340, Motion Picture, Digital Media, and Film Production Income Tax Credit.

To claim this credit. Complete Form N-340 and Schedule CR and attach them to your return.

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.

Refundable Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service on or After July 1, 2009)

See the instructions for Nonrefundable Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service on or After July 1, 2009). A taxpayer may elect to treat the tax credit as nonrefundable or refundable. A taxpayer may elect to treat the tax credit as refundable under the following circumstances:

  • For solar energy systems, a taxpayer may elect to reduce the eligible credit amount by 30%. If this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due will be refunded to the taxpayer.
  • For any renewable energy technology system, a taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer if (1) all of the taxpayer's income is exempt from taxation under section 235-7(a)(2), Hawaii Revised Statues (HRS), i.e., distributions from a public retirement plan or system, or section 235-7(a)(3), HRS, i.e., any compensation received in the form of a pension for past services; or (2) the taxpayer has Hawaii adjusted gross income of $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly).

A husband and wife who do not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.

Once an election is made to treat the tax credit as nonrefundable or refundable, the election cannot be revoked. An amended return cannot be filed to change the tax credit from nonrefundable to refundable or from refundable to nonrefundable.

To claim this credit. Complete Form N-342 and Schedule CR and attach them to your return. Also, fill in the appropriate oval on Schedule CR to indicate the type of energy system.

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.

Important Agricultural Land Qualified Agricultural Cost Tax Credit

If you are claiming the important agricultural land qualified agricultural cost tax credit, see Form N-344 for information.

Tax Credit for Research Activities

Note: Act 270, Session Laws of Hawaii 2013, re-enacts the tax credit for qualified research activities, with certain modifications, for taxable years beginning after December 31, 2012.

For taxable years from 2013 to 2019, each qualified high technology business subject to Hawaii's income tax can claim an income tax credit for qualified research activities equal to the federal credit for increasing research activities provided by Internal Revenue Code (IRC) section 41, provided that in order to qualify for this tax credit, the qualified high technology business shall also claim a federal tax credit for the same qualified research activities under IRC section 41. Qualified research expenses shall not include research expenses incurred outside Hawaii.

To claim this credit. Complete Form N-346 and Schedule CR and attach them to your return. Form N-346A, which must be certified for research expenses incurred after December 31, 2012, also must be attached to your return.

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.

Other Credits

Pro Rata Share of Taxes Withheld and Paid by a Partnership, Estate, Trust, or S Corporation on the Sale of Hawaii Real Property Interests

If the tax was withheld by a partnership, estate, trust or S corporation, and you are taxable on a pro rata share of the entity's gain on the sale, include ONLY the amount of your pro rata share of any net income taxes withheld and paid by the partnership, estate, trust or S corporation on Schedule CR, line 22a, and attach a copy of the Schedule K-1 issued to you by the partnership, estate, trust, or S corporation.

Note: If the partnership, estate, trust or S corporation filed a Form N-288C, "Application for Tentative Refund of Withholding on Dispositions of Hawaii Real Property Interests", you may not claim this credit for your share of the amount being refunded to the entity.

Credit From a Regulated Investment Company

A shareholder of a regulated investment company is allowed a credit for the tax paid to the State by the company on the amount of capital gains which by section 852(b)(3)(D) of the Internal Revenue Code is required to be included in the shareholder's return. The regulated investment company will notify you of the undistributed capital gains amount and the tax paid, if any. If this credit applies to you, include the amount on Schedule CR, line 22b, and attach an explanation.

Line 34

Line 27 minus line 33. Enter the result on this line.

If line 34 is a negative number, shade the minus (-) in the box to the left of the amount boxes.

If line 34 is zero or less, the nonrefundable tax credits on line 35 may not be used. Even if you are not able to use the nonrefundable tax credits, complete the forms for any tax credits you qualify for, and attach the forms to your Form N-11. If the forms are not attached, no claim for the tax credit has been made, and you will lose the carryover of your unused tax credits.

Nonrefundable Credits

Line 35 - Total Nonrefundable Tax Credits

Note: If line 34 is zero or less, no tax credit may be used. Enter zero on line 35.

If you are claiming any nonrefundable tax credits, you must use Schedule CR, Schedule of Tax Credits, to summarize the total nonrefundable tax credits claimed. Complete Part I of Schedule CR, and enter the amount from Schedule CR, line 14, on line 35. Attach Schedule CR directly behind Form N-11. The following nonrefundable tax credits are included on Schedule CR:

Credit for Income Taxes Paid to Other States and Countries

If you have out-of-state income that is taxed by another state or foreign country and also by Hawaii, you may claim a credit against your Hawaii income for the net income tax you paid to the other state or foreign country if you meet the following conditions:

  • The income was earned while you were a Hawaii resident (or you are married and filing a joint resident return) and was not exempt from Hawaii income tax;
  • You did not file an Election Under Act 60, SLH 1976 (see page 5);
  • The income on which the state or foreign tax is imposed was derived or received from sources outside Hawaii;
  • You were liable for and paid tax to the foreign jurisdiction (net amount of tax paid to a foreign jurisdiction after all credits, reductions, and refunds allowed or allowable by the laws of the foreign jurisdiction have been deducted);
  • The tax paid to the other state or foreign country is an income-based tax that is imposed on both residents and nonresidents of the other state or foreign country, rather than a sales, gross receipts, withholding, or value added tax (i.e., taxes withheld on dividends paid from foreign investments do not qualify);
  • No credit is allowed if the foreign income is excluded on the federal return;
  • No credit is allowed if the foreign tax credit is allowed on the federal return;
  • The income must be taxed by the other state or foreign country for the same taxable year for which the Hawaii credit is claimed;
  • No credit is allowed for penalties or interest paid to the other state or foreign country; and
  • No credit is allowed for city or local income taxes paid to another state.

To figure the allowable amount of the credit, fill in the Other State and Foreign Tax Credit Worksheet on page 39. On line 5 of the worksheet, enter the net amount of tax paid to the other state after all credits, reductions, and refunds allowed or allowable by the laws of the other state have been deducted (net tax liability).

Required Attachments. If you entered any amount on line 5, you must attach a copy of the tax return(s) from the other state(s). If you entered any amount on line 6, you must attach a copy of all federal Form(s) 1116 that you are filing this year. If you are not required to file federal Form 1116, attach a copy of the payee statement (such as federal Form 1099DIV or 1099-INT) that you received for your foreign source income.

Out-of-State Tax Refund. If you claim this credit and you later receive a tax refund from the other state or foreign country, you MUST report this to the Department of Taxation. You may be subject to penalties if you fail to make this report.

For more information, see section 235-55, HRS, and section 18-235-55, Hawaii Administrative Rules.

Credit for Beneficiaries of Foreign Trusts

Any resident beneficiary of a trust with a situs in another State may claim a credit for income taxes paid by the trust to the other State on any income that is attributable to assets other than intangibles. This credit is not allowed for trusts that are resident in a foreign country (or in any territory or possession of the United States).

The trust will inform you of what your share of the trust's income is, and how much of it is long-term capital gains. Include these amounts on lines 3 and 4, respectively, of the Other State and Foreign Tax Credit Worksheet on page 39.

The trust will also tell you your share of the tax the trust paid to the other state. Find out how much of the trust's income was attributable to real property and tangible personal property (not including stocks, bonds, mortgages, and other intangibles). Divide that number by the total amount of the trust's income, and multiply your share of the outof- state tax by that percentage. Include this amount on line 5 of the Other State and Foreign Tax Credit Worksheet on page 39.

Credit for Shareholders of S Corporations

A shareholder of an S corporation shall be considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share of any net income tax paid by the S corporation to a state which does not measure the income of S corporation shareholders by the income of the S corporation. The term "net income tax" means any tax imposed on or measured by a corporation's net income.

The S corporation will inform you of what your share of its income is, and how much of it is long-term capital gains. Include these amounts on lines 3 and 4, respectively, of the Other State and Foreign Tax Credit Worksheet on page 39.

The S corporation will also tell you your share of the tax paid to the other state. Include this amount on line 5 of the Other State and Foreign Tax Credit Worksheet on page 39.

Carryover of the Energy Conservation Tax Credit

Note: The energy conservation tax credit expired on June 30, 2003. This credit may be claimed only if the individual has a carryover of the tax credit from a prior year.

Each individual resident taxpayer who files an individual income tax return and who has unused credits for energy conservation from the prior year may claim a tax credit against its individual income tax liability. Tax credits that exceed the individual's income tax liability are not refunded but may be used as a credit against the individual's income tax liability in subsequent years until exhausted.

For more information, see Form N-323, Carryover of Tax Credits.

To claim the carryover of this credit. Complete Form N-323 and Schedule CR and attach them to your return.

See the discussion for the Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service on or After July 1, 2009), for the credit available for current system installations.

Enterprise Zone Tax Credit

A qualified enterprise zone business may claim a credit for a percentage of net income tax due the State attributable to the conduct of business within a zone and a percentage of the amount of unemployment insurance premiums paid based on the payroll of employees employed at the business firm establishments in the zone. The applicable percentage is 80% the first year; 70% the second year; 60% the third year; 50% the fourth year; 40% the fifth year; 30% the sixth year; and 20% the seventh year. This credit is not refundable and any unused credit may NOT be carried forward.

For more information, see Form N-756, Enterprise Zone Tax Credit.

To claim this credit. Complete Form N-756 and Schedule CR and attach them to your return.

Low-Income Housing Tax Credit

Note: Do not confuse this credit with the credit for low-income household renters.

Hawaii's low-income housing tax credit is equal to 50% of the tax credit allocated by the Housing and Community Development Corporation of Hawaii for qualified buildings located within the State of Hawaii.

Contact the Housing and Community Development Corporation of Hawaii for qualifying requirements and further information.

To claim this credit. Complete Form N-586 and Schedule CR and attach them to your return.

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 Employment of Vocational Rehabilitation Referrals

The amount of the tax credit for the taxable year is equal to 20% of the qualified first-year wages for that year. The amount of the qualified first-year wages which may be taken into account with respect to any individual shall not exceed $6,000.

"Qualified wages" means the wages paid or incurred by the employer during the taxable year to an individual who is a vocational rehabilitation referral and more than one-half of the wages paid or incurred for such an individual is for services performed in a trade or business of the employer.

"Qualified first-year wages" means, with respect to any vocational rehabilitation referral, qualified wages attributable to service rendered during the one-year period beginning with the day the individual begins work for the employer.

The credit allowed shall be claimed against net income tax liability for the taxable year. A tax credit which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

For more information, see Form N-884, Credit for Employment of Vocational Rehabilitation Referrals.

To claim this credit. Complete Form N-884 and Schedule CR and attach them to your return.

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.

High Technology Business Investment Tax Credit

Note: The high technology business investment tax credit is not available for investments made after December 31, 2010.

The credit is 35% of the investment in the year the investment is made, 25% for the first year following the year the investment was made, 20% for the second year following the investment, and 10% for each of the third and fourth years following the investment. The credit is subject to limitations and recapture requirements.

For investments made on or after May 1, 2009 and on or before December 31, 2010, the amount of tax credit available for investments in a high technology business is limited by: (1) limiting claims of the tax credit to 80% of tax liability, (2) allowing only a one-to-one tax credit allocation ratio, and (3) eliminating carryovers. Also, for investments made on or after May 1, 2009, the partner distributive share tax incentive is removed.

The credit allowed shall be claimed against net income tax liability for the taxable year. A tax credit which exceeds the taxpayer's income tax liability for any of the five years that the credit is taken may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

For more information, see Form N-318, High Technology Business Investment Tax Credit.

To claim this credit. Complete Form N-318 and Schedule CR and attach them to your return. Form N-318A, which must be certified for investments made on or after July 1, 2004, also must be attached to your return.

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.

Carryover of the Individual Development Account Contribution Tax Credit

Note: The individual development account contribution tax credit is not available for taxable years beginning after December 31, 2004. This credit may be claimed only if the individual has a carryover of the tax credit from a prior year.

Each individual taxpayer who files an individual income tax return and who has unused credits for contributions of matching funds to an individual development account from the prior year may claim a tax credit against its individual income tax liability. Tax credits that exceed the individual's income tax liability are not refunded but may be used as a credit against the individual's income tax liability in subsequent years until exhausted.

For more information, see Form N-323, Carryover of Tax Credits.

To claim the carryover of this credit. Complete Form N-323 and Schedule CR and attach them to your return.

Carryover of the Technology Infrastructure Renovation Tax Credit

Note: The technology infrastructure renovation tax credit is not available for taxable years beginning after December 31, 2010. This credit may be claimed only if the individual has a carryover of the tax credit from a prior year.

Each individual taxpayer who files an individual income tax return and who has unused credits from the prior year for renovation costs to provide a commercial building with technology enabled infrastructure may claim a tax credit against its individual income tax liability. Tax credits that exceed the individual's income tax liability are not refunded but may be used as a credit against the individual's income tax liability in subsequent years until exhausted.

For more information, see Form N-323, Carryover of Tax Credits.

To claim the carryover of this credit. Complete Form N-323 and Schedule CR and attach them to your return.

Credit for School Repair and Maintenance

Licensed contractors, pest control operators, and professional engineers, architects, surveyors and landscape architects who are subject to Hawaii's income tax may claim an income tax credit for contributions of in-kind services for the repair and maintenance of public schools. The credit shall be an amount equal to 10% of the value of the services contributed. Certain other limitations and restrictions apply.

The credit allowed shall be claimed against net income tax liability for the taxable year. A tax credit which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

For more information, see Form N-330, Credit for School Repair and Maintenance.

To claim this credit. Complete Form N-330 and Schedule CR and attach them to your return.

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.

Carryover of the Hotel Construction and Remodeling Tax Credit

Note: The 10% nonrefundable hotel construction and remodeling tax credit may not be claimed for qualified construction or renovation costs incurred after June 30, 2003. This credit may be claimed only if the individual has a carryover of the tax credit from a prior year.

Each individual taxpayer who files an individual income tax return and who has unused credits for qualified construction or renovation costs from the prior year may claim a tax credit against its individual income tax liability. Tax credits that exceed the individual's income tax liability are not refunded but may be used as a credit against the individual's income tax liability in subsequent years until exhausted.

For more information, see Form N-323, Carryover of Tax Credits, and Tax Information Release No. 2000-2, "Hotel Construction and Remodeling Tax Credit".

To claim the carryover of this credit. Complete Form N-323 and Schedule CR and attach them to your return.

Carryover of the Residential Construction and Remodeling Tax Credit

Note: The residential construction and remodeling tax credit may not be claimed for construction or renovation costs incurred after June 30, 2003. This credit may be claimed only if the individual has a carryover of the tax credit from a prior year.

Each individual taxpayer who files an individual income tax return and who has unused credits for qualified construction or renovation costs from the prior year may claim a tax credit against its individual income tax liability. Tax credits that exceed the individual's income tax liability are not refunded but may be used as a credit against the individual's income tax liability in subsequent years until exhausted.

For more information, see Form N-323, Carryover of Tax Credits, and Tax Information Release No. 2002-3, "Residential Construction and Remodeling Tax Credit".

To claim the carryover of this credit. Complete Form N-323 and Schedule CR and attach them to your return.

Carryover of the Nonrefundable Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service Before July 1, 2009)

Note: This credit may be claimed only if the individual has a carryover of the nonrefundable renewable energy technologies income tax credit for systems installed and placed in service before July 1, 2009.

Each taxpayer who files an individual income tax return and who has unused renewable energy technologies income tax credits for systems installed and placed in service before July 1, 2009, may claim a tax credit against its individual income tax liability. A tax credit which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

For more information, see Form N-323, Carryover of Tax Credits.

To claim this credit. Complete Form N-323 and Schedule CR and attach them to your return.

See the discussion for the Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service on or After July 1, 2009), for the credit available for current system installations.

Nonrefundable Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service on or After July 1, 2009)

Each taxpayer who files an individual income tax return for 2013 may claim a tax credit against his or her individual income tax liability for an eligible renewable energy technology system installed and placed in service in Hawaii. The tax credit shall apply only to the actual cost of the solar or wind-powered energy system, including accessories and installation, and shall not include the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system (such as "free gifts", offers to pay electricity bills, or rebates) and costs for which another credit is claimed. The dollar amount of any utility rebate shall be deducted from the cost of the qualifying system and its installation before determining the State credit. A taxpayer may elect to treat the tax credit as nonrefundable or refundable. If a taxpayer elects to treat the tax credit as nonrefundable, the tax credit allowed shall be claimed against net income tax liability for the taxable year. A tax credit which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. For information on electing to treat the credit as refundable, see the instructions for Refundable Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed in Service on or After July 1, 2009).

Once an election is made to treat the tax credit as nonrefundable or refundable, the election cannot be revoked. An amended return cannot be filed to change the tax credit from nonrefundable to refundable or from refundable to nonrefundable.

The tax credit may be claimed for the following renewable energy technology systems installed and placed in service in Hawaii on or after July 1, 2009:

Type of Renewable Energy Technology System

Tax Credit Rate
1. Solar energy systems - Primary purpose is to use energy from the sun to heat water for household use
a. Single-family residential property. The lesser of 35% of the actual cost of the system or $2,250.
b. Multi-family residential property. Per unit: The lesser of 35% of each unit's actual cost of the system or $350.
c. Commercial property. The lesser of 35% of the actual cost of the system or $250,000.
Solar energy systems - All other solar energy systems
a. Single-family residential property. The lesser of 35% of the actual cost of the system or $5,000.

b. Multi-family residential property.

Per unit: The lesser of 35% of each unit's actual cost of the system or $350.
c. Commercial property. The lesser of 35% of the actual cost of the system or $500,000.
2. Wind-powered energy systems
a. Single-family residential property. The lesser of 20% of the actual cost of the system or $1,500.
b. Multi-family residential property. Per unit: The lesser of 20% of each unit's actual cost of the system or $200.

c. Commercial property.

The lesser of 20% of the actual cost of the system or $500,000.

The Department of Taxation has issued temporary administrative rules that focus on the calculation of the renewable energy technologies income tax credit for "other solar energy systems", including photovoltaic systems, installed and placed in service on or after January 1, 2013. "Total output capacity" is now the key factor in what determines a system on which a credit can be claimed.

For more information, see Form N-342, Tax Information Release No. 2007-02, "Relating to the Renewable Energy Technologies Income Tax Credit", Tax Information Release No. 2010-10, "Common Income Tax & General Excise Tax Issues Associated with the Renewable Energy Technologies Income Tax Credit, HRS §235-12.5", and Tax Information Release No. 2012-01, "Temporary Administrative Rules Relating to the Renewable Energy Technologies Income Tax Credit".

To claim this credit. Complete Form N-342 and Schedule CR and attach them to your return. Also, fill in the appropriate oval on Schedule CR to indicate the type of energy system.

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.

Line 36

Line 34 minus line 35. Enter the result on this line.

If line 36 is a negative number, shade the minus (-) in the box to the left of the amount boxes.

Tax Already Paid

Line 37 - Total Hawaii Income Tax Withheld

Add the Hawaii income tax withheld as shown on federal Form(s) W-2 and 1099-G (unemployment compensation), State Form N-2, and any other forms that show Hawaii income tax withheld. Enter the total on this line. Attach a copy of federal Form(s) W-2 and 1099-G, and Form N-2 showing the withholding. If not attached, the withholding may be disallowed.

Note: If taxes were withheld on the sale of Hawaii real property, report this amount on line 38, "2013 Estimated Tax Payments".

Line 38 - 2013 Estimated Tax Payments

Enter on this line your estimated Hawaii income tax payments made on Form N-1 for 2013. Do not include your 2012 overpayment you requested to have applied to your 2013 estimated tax (this amount is to be reported on line 39).

Also include on this line the amount of taxes withheld on the sale of Hawaii real property computed as follows:

1. Amount of taxes withheld as shown on Form(s) N-288A, "Statement of Withholding on Dispositions by Nonresident Persons of Hawaii Real Property Interests" _____
2. Amount of refund you already applied for on Form(s) N-288C, "Application for Tentative Refund of Withholding on Dispositions of Hawaii Real Property Interests" _____
3. Line 1 minus line 2. Include this amount on Form N-11, line 38. _____

Note: Attach a copy of the Form(s) N-288A showing the withholding.

If the tax was withheld for you through a partnership, estate, trust, or S corporation, see the Instructions for Pro Rata Share of Taxes Withheld and Paid by a Partnership, Estate, Trust, or S Corporation on the Sale of Hawaii Real Property Interests on page 24.

If you and your spouse paid joint estimated tax but are now filing separate income tax returns, one of you can claim all of the amount paid, or you can each claim a part of it. Please be sure to show both social security numbers on the separate returns. If you or your spouse paid separate estimated tax, but you are now filing a joint income tax return, add the amounts you each paid.

Follow the above instructions even if your spouse died during the year.

Line 39 - 2012 Overpayment Applied to 2013 Estimated Tax

Enter on this line any overpayment from your 2012 return that you applied to your 2013 estimated tax.

Line 40 - Amount Paid with Extension

If you made a payment with Form N-101A, enter the amount you paid on this line.

Line 41 - Total Payments

Add lines 37 through 40. Enter the amount on this line.

Refund or Balance Due

Line 42 - Amount Overpaid

If line 41 is larger than line 36, and line 36 is zero or more, subtract line 36 from line 41 and show the difference on line 42. This is the amount overpaid.

However, if line 36 is less than zero, complete the following worksheet:

1. Amount from line 36 (enter as a positive number) _____
2. Amount from line 41. _____
3. Add line 1 and line 2 _____

Enter the amount from line 3 of the worksheet on line 42. This is the amount overpaid.

The Hawaii School-Level Minor Repairs and Maintenance Special Fund provides moneys for school-level minor repairs and maintenance. If you have an overpayment of at least $2 ($4 if married and filing a joint return), you can choose to contribute to the Hawaii School- Level Minor Repairs and Maintenance Special Fund (line 43a).

The Hawaii Public Libraries Special Fund provides moneys to support the operations of the library system. If you have an overpayment of at least $2 ($4 if married and filing a joint return), you can choose to contribute to the Hawaii Public Libraries Special Fund (line 43b).

The Hawaii Children's Trust Fund provides moneys for the award of grants for primary and secondary prevention activities to prevent child abuse and neglect. The Domestic Violence and Sexual Assault Special Fund provides moneys for programs and grants or purchases of service that support or provide domestic violence and sexual assault intervention or prevention. The Spouse and Child Abuse Special Accounts provide moneys for staff programs, and grants or purchases of service that support or provide spouse or child abuse intervention or prevention. If you have an overpayment of at least $5 ($10 if married and filing a joint return), you can choose to contribute to these funds (line 43c).

Line 43a - Contribution to the Hawaii Schools Repairs and Maintenance Fund

If you want to contribute $2 to the Hawaii School-Level Minor Repairs and Maintenance Special Fund (or $4 if your spouse also wants to contribute and you are filing jointly), fill in the appropriate oval(s). No other amounts can be accepted. Your contribution will reduce your refund. Once made, the contribution cannot be revoked.

Line 43b - Contribution to the Hawaii Public Libraries Fund

If you want to contribute $2 to the Hawaii Public Libraries Special Fund (or $4 if your spouse also wants to contribute and you are filing jointly), fill in the appropriate oval(s). No other amounts can be accepted. Your contribution will reduce your refund. Once made, the contribution cannot be revoked.

Line 43c - Contribution to the Domestic and Sexual Violence / Child Abuse and Neglect Funds

If you want to contribute $5 to the Hawaii Children's Trust Fund, the Domestic Violence and Sexual Assault Special Fund, and the Spouse and Child Abuse Special Accounts (or $10 if your spouse also wants to contribute and you are filing jointly), fill in the appropriate oval(s). No other amounts can be accepted. Your contribution will reduce your refund. Once made, the contribution cannot be revoked.

Line 46 - Applied to 2014 Estimated Tax

Enter the amount from line 45 that you want applied to your estimated tax for 2014.

We will apply amounts to your account unless you attach a request to apply it to your spouse's account. The request should include your spouse's social security number and full name.

Line 47a - Refund

Line 45 minus line 46. This is the amount that will be refunded to you.

Note: Check the box under line 47a if the ultimate destination of your refund is to a foreign (non-U.S.) bank account. Do not complete lines 47b through 47d. Due to new rules for international ACH transactions that went into effect on September 18, 2009, the direct deposit of your refund into a foreign (non-U.S.) bank account will not be available. A check will be sent to you instead.

Note: If you are filing a Hawaii income tax return for the first time, you will not be allowed to have your refund directly deposited into your checking or savings account. Do not complete lines 47b through 47d. A check will be sent to you instead.

Note: If you are filing your return after the prescribed due date, the refund shown may be limited or disallowed due to the statute of limitations. In general, a claim for refund or credit for overpaid income taxes must be filed within three years after the return is filed for the taxable year, within three years of the due date for filing the return, or within two years from when the tax is paid, whichever is later. For purposes of determining whether a refund or credit is allowed, taxes paid on or before the due date of the return (e.g. taxes withheld from an employee's pay, or estimated tax payments) are considered paid on the due date of the return, without considering an extension of time to file the return.

Lines 47b Through 47d - Direct Deposit of Refund

Complete lines 47b through 47d if you want the Department of Taxation to directly deposit the amount shown on line 47a into your checking or savings account at a bank or other financial institution (such as a mutual fund, brokerage firm, or credit union) instead of sending you a check.

Note: If the ultimate destination of your refund is to a foreign (non-U.S.) bank account, do not complete lines 47b through 47d. See the instructions for line 47a.

Note: If you are filing a Hawaii income tax return for the first time, do not complete lines 47b through 47d. See the instructions for line 47a.

Note: If you owe certain past-due debt, such as child support, and all or part of the overpayment on line 42 is used (offset) to pay the past-due amount, you will not be allowed to have your refund directly deposited into your checking or savings account. A check will be sent to you instead.

Why Use Direct Deposit?

  • You get your refund fast - even faster if you e-file!
  • Payment is more secure - there is no check to get lost.
  • More convenient. No trip to the bank to deposit your check.
  • Saves tax dollars. A refund by direct deposit costs less than a check.

You can check with your financial institution to make sure your deposit will be accepted and to get the correct routing and account numbers. The Department is not responsible for a lost refund if you enter the wrong account information.

If you file a joint return and fill in lines 47b through 47d, you are appointing your spouse as an agent to receive the refund. This appointment cannot be changed later.

Some financial institutions will not allow a joint refund to be deposited into an individual account. If the direct deposit is rejected, a check will be sent instead. The Department is not responsible if a financial institution rejects a direct deposit.

Routing Number

The routing number must be nine digits. The first two digits must be 01 through 12 or 21 through 32. Otherwise, the direct deposit will be rejected and a check sent instead.

Your check may state that it is payable through a financial institution different from the one at which you have your checking account. If so, do not use the routing number on that check. Instead, contact your financial institution for the correct routing number to enter on line 47b.

Type of Account

On line 47c, check the applicable box to indicate whether you want your refund deposited into your checking or savings account.

Account Number

Contact your financial institution for the correct account number to enter on line 47d. The account number can be up to 17 characters (both numbers and letters). Omit spaces, hyphens, and special symbols. Enter the number from left to right and leave any unused boxes blank. Be sure not to include the check number.

Line 48 - Balance Due

If line 36 is larger than line 41, the difference is your balance due. Use Form N-200V, Individual Income Tax Payment Voucher, to send your payment to the Department of Taxation.

Attach your check or money order and Form N-200V to the front of Form N-11. Write your social security number, daytime phone number, and "2013 Form N-11" on your check or money order.

Note: If you include penalty and/or interest for the late filing of your return with your payment, identify and enter these amounts on a separate sheet of paper and attach to Form N-11. Do not include the penalty and/or interest amounts for the late filing of your return in the Balance Due on line 48.

Note: If you cannot pay the full amount you owe, you can enter a payment agreement by requesting for a payment agreement after you receive the billing notice. Please be aware that penalty and interest continue to accrue on the unpaid tax amount even though you have not received the billing notice. Payments will be accepted and applied to your tax liability; however, to ensure your payments are applied correctly, your check or money order must have: (1) your name clearly printed on the check as it is printed on the tax return (if filing a joint return, also print your spouse's name), (2) your social security number (if filing a joint return, also write your spouse's social security number), (3) your daytime phone number, and (4) the tax year and form number you filed (e.g., 2013 N-11).

Line 49 - Underpayment of Estimated Tax Penalty

See the instructions for Penalties and Interest on page 31 and Form N-210, Underpayment of Estimated Tax by Individuals and Fiduciaries, to see if you owe a penalty for the underpayment of estimated taxes. If you owe a penalty, enter the penalty amount on Form N-11, line 49. Do not include the penalty amount on line 42 or line 48. If you have any taxes due, include the amount of the penalty on Form N-200V. If you have an overpayment, your overpayment will be reduced automatically by the amount of the penalty.

Fill in the oval at line 49 if Form N-210 is attached.

Note: If you are a farmer or fisherman and receive a penalty notice, do not ignore it, even if you think it is in error. You may get a penalty notice even though you filed your return on time, attached Form N-210, and met the gross income from farming or fishing requirement. If you receive a penalty notice for underpaying estimated tax and you think it is in error, write to the address on the notice and explain why you think the notice is in error. Include a computation showing that you met the gross income from farming or fishing requirement.

Amended Returns

If you are filing an amended return, fill in the amended return oval at the top of Form N-11. Complete your amended return using corrected amounts through line 49. Attach Schedule AMD, Explanation of Changes on Amended Return, to the income tax return Form N-11. Also attach all schedules, forms, and attachments required to file a complete return. If you are filing an amended return due to a net operating loss carryback, also fill in the NOL Carryback oval and attach a copy of your original federal income tax return for the loss year. See page 32 of the instructions for more information.

If you contributed to the Hawaii Schools Repairs and Maintenance Fund, Hawaii Public Libraries Fund, and/or Domestic and Sexual Violence/Child Abuse and Neglect Funds on your original return, your contribution(s) cannot be revoked, and you must make the same designation(s) on your amended return.

If you did not contribute to the Hawaii Schools Repairs and Maintenance Fund, Hawaii Public Libraries Fund, and/or Domestic and Sexual Violence / Child Abuse and Neglect Funds on your original return, you may contribute to these funds on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. Once made, the contribution cannot be revoked.

Line 50 - Amount Paid (Overpaid) on Original Return

Enter on line 50 the amount paid on your original 2013 Form N-11, line 48 (plus the amount of estimated tax penalty on line 49, if any); or the amount overpaid on your original 2013 Form N-11, line 42 (less the amount of estimated tax penalty on line 49, if any). If the amount is an overpayment, shade the minus (-) in the box to the left of the amount boxes.

Attach Schedule AMD, Explanation of Changes on Amended Return. Also attach all schedules, forms, and attachments required to file a complete return.

Line 51 - Balance Due (Refund) With Amended Return

If no amount was entered on line 50, enter on line 51 the amount, if any, from line 47a (less the amount of estimated tax penalty on line 49, if any) or line 48 (plus the amount of estimated tax penalty on line 49, if any) of the amended return.

If there is an amount on line 50, complete one of the worksheets below. When completing the worksheet, enter all amounts as positive numbers.

If there is an amount on line 50 and that amount is:

a. A payment and there is an amount on line 42, complete the following worksheet:

1. Amount from line 42 (less the amount of estimated tax penalty on line 49, if any) _____
2. Amount from line 50 _____
3. Add line 1 and line 2 _____

Enter the amount from line 3 of the worksheet on line 51. This is the amount of your overpayment on your amended return. Shade the minus (-) in the box to the left of the amount boxes.

b. A payment and there is an amount on line 48, complete the following worksheet:

1. Amount from line 48 (plus the amount of estimated tax penalty on line 49, if any) _____
2. Amount from line 50 _____
3. Line 1 minus line 2 _____

Enter the amount from line 3 of the worksheet on line 51.

If the amount on line 1 of the worksheet is larger than the amount on line 2 of the worksheet, this is the amount you owe on your amended return.

If the amount on line 2 of the worksheet is larger than the amount on line 1 of the worksheet, this is the amount of your overpayment on your amended return. Shade the minus (-) in the box to the left of the amount boxes.

c. An overpayment and there is an amount on line 42, complete the following worksheet:

1. Amount from line 42 (less the amount of estimated tax penalty on line 49, if any) _____
2. Amount from line 50 _____
3. Line 1 minus line 2 _____

Enter the amount from line 3 of the worksheet on line 51.

If the amount on line 1 of the worksheet is larger than the amount on line 2 of the worksheet, this is the amount of your overpayment on your amended return. Shade the minus (-) in the box to the left of the amount boxes.

If the amount on line 2 of the worksheet is larger than the amount on line 1 of the worksheet, this is the amount you owe on your amended return.

d. An overpayment and there is an amount on line 48, complete the following worksheet:

1. Amount from line 48 (plus the amount of estimated tax penalty on line 49, if any) _____
2. Amount from line 50 _____
3. Line 1 minus line 2 _____

Enter the amount from line 3 of the worksheet on line 51. This is the amount you owe on your amended return.

If you have an overpayment on your amended return, you may contribute to the (1) Hawaii Schools Repairs and Maintenance Fund (line 43a) if line 43a on your original return was blank, (2) Hawaii Public Libraries Fund (line 43b) if line 43b on your original return was blank, and/or (3) Domestic and Sexual Violence/Child Abuse and Neglect Funds (line 43c) if line 43c on your original return was blank.

Subtract the amount contributed to the above funds from the amount of overpayment available and enter the difference on line 51. Shade the minus (-) in the box to the left of the amount boxes. Be sure that the sum of the amounts entered on lines 43a, 43b, 43c, and 51 is not more than the overpayment available.

If you have an amount due on your amended return, use Form N-200V, Individual Income Tax Payment Voucher, to send your payment to the Department of Taxation. Attach your check or money order and Form N-200V to the front of Form N-11. Write your social security number, daytime phone number, and "2013 Amended Form N-11" on your check or money order.

Attach Schedule AMD, Explanation of Changes on Amended Return. Also attach all schedules, forms, and attachments required to file a complete return.

Taxpayer Questionnaire

All taxpayers MUST complete lines 52, 53, and 54.

Line 52

Schedule C

If you filled in Schedule C or Schedule C-EZ for federal Form 1040 (for taxpayers receiving income from operating a business or practicing a profession as a sole proprietorship), check "Yes". If you checked "No", go on to line 53.

Hawaii Gross Receipts - Enter your Hawaii gross receipts or sales, net of returns and allowances. This will be the Hawaii amount from Schedule C, line 3; or Schedule C-EZ, line 1. If you do not have any Hawaii gross receipts or sales, enter zero (0).

If you filed more than one Schedule C, enter the total of your Hawaii gross receipts.

Main Business Activity and Product - Report the business activity that accounted for the most gross income included here. Also, enter the business product or service. For example, business activity: wholesale, business product: groceries; or business activity: retail, business product: hardware.

Hawaii Tax Identification Number - Enter your Hawaii Tax Identification Number for this activity. If you do not have an identification number, leave the boxes blank.

If more than one identification number applies, enter the identification number that accounted for the most gross income included here. On a separate sheet, list the other identification number(s), along with the Hawaii gross receipts, main business activity, and main business product relating to that identification number(s).

Line 53

Rents on Schedule E

If you received rental income and reported it on Schedule E, federal Form 1040, check "Yes". If you checked "No", go on to line 54.

Hawaii Gross Receipts - Enter your Hawaii gross rents. In most cases, this will be the Hawaii amount from Schedule E, line 3. If you do not have any Hawaii gross rents, enter zero (0).

If you filed more than one Schedule E, enter the total of your Hawaii gross rents.

Hawaii Tax Identification Number - Enter your Hawaii Tax Identification Number for this activity, even if you wrote the same number down on line 52. If you do not have an identification number, leave the boxes blank.

If more than one identification number applies, enter the identification number that accounted for the most gross rents included here. On a separate sheet, list the other identification number(s), along with the Hawaii gross rents relating to that identification number(s).

Line 54

Schedule F

If you completed Schedule F for federal Form 1040 (for those receiving farming income), check "Yes". If you checked "No", go to Step 6 on this page.

Hawaii Gross Receipts - Enter your Hawaii gross receipts or sales, net of returns and allowances. This will be the Hawaii amount from Schedule F, line 9. If you do not have any Hawaii gross receipts or sales, enter zero (0).

Main Business Activity and Product - Report the business activity that accounted for the most gross income included here. Also, enter the business product or service. For example, business activity: ranching, business product: cattle.

Hawaii Tax Identification Number - Enter your Hawaii Tax Identification Number for this activity, even if you wrote the same number down on line 52 or 53. If you do not have an identification number, leave the boxes blank.

If more than one identification number applies, enter the identification number that accounted for the most gross income included here. On a separate sheet, list the other identification number(s), along with the Hawaii gross receipts, main business activity, and main business product relating to that identification number(s).

Now continue with Step 6 below.

Step 6

Check your return to make sure it is correct.

Step 7

Third Party Designee

If you want to authorize the Department of Taxation to discuss your tax return with a person that you designate, enter the name of your third party designee, telephone number, and identification number. You are authorizing the Department to call your third party designee to answer any questions that may arise during the processing of your tax return.

Note: This designation is not a full power of attorney and does not replace Form N-848.

Step 8

Hawaii Election Campaign Fund

This fund helps to provide accountability, transparency, integrity and a level playing field for State and County candidates in Hawaii elections. If you have a tax liability of at least $3 ($6 if married and filing a joint return), you can choose to contribute to the Hawaii Election Campaign Fund.

If you want $3 to go to the fund, fill in the "Yes" oval. If you are filing a joint return, and your spouse wants $3 to go to the fund, fill in the "Yes" oval.

If you fill in the "Yes" oval, your tax liability or refund due will not change.

Once made, the designation cannot be revoked.

Step 9

Sign and date your return.

Form N-11 is not considered a valid return unless you sign it. If you are unable to sign the return (due to disease or injury, etc.), you can appoint an agent to sign your return. A return signed by an agent must have a power of attorney attached that authorizes the agent to sign for you. You can use Form N-848, Power of Attorney.

Be sure to date your return. If you have someone else prepare your return, you are still responsible for the correctness of the return.

Joint Return. Your spouse must also sign Form N-11 if it is a joint return. If your spouse cannot sign because of disease or injury and tells you to sign, you can sign your spouse's name in the proper space on the return followed by the words "By (your name), Husband (or Wife)." Be sure to also sign in the space provided for your signature. Attach a dated statement, signed by you, to the return. The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and that your spouse has agreed to your signing for him or her.

If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian.

If your spouse is unable to sign the return because he or she is serving in a combat zone, and you do not have a power of attorney or other statement, you can sign for your spouse. Attach a signed statement to your return that explains that your spouse is serving in a combat zone.

If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney. Attach the power of attorney to your tax return.

If you are filing a joint return as the surviving spouse, see Death of Taxpayer on page 6.

Child's Return. If your child cannot sign the return, sign your child's name in the space provided. Then, add "By (your signature), parent for minor child."

Occupation. Write your occupation in the space provided. If married and filing a joint return, also write your spouse's occupation in the space provided.

Step 10

Did you have someone else prepare your return?

If you fill in your own return, the Paid Preparer's space should remain blank. If someone prepares your return and does not charge you, that person should not sign your return.

Generally, anyone who is paid to prepare your tax return must sign your return and fill in the other blanks in the Paid Preparer's Information area of your return. The preparer may furnish his or her alternative identifying number for income tax return preparers (PTIN) instead of his or her social security number.

If you have questions about whether a preparer is required to sign your return, please contact our Taxpayer Services staff.

The preparer required to sign your return MUST complete the required preparer information and:

  • Sign it in the space provided for the preparer's signature.
  • Give you a copy of your return in addition to the copy to be filed with the Department of Taxation.

Hawaii conforms to Internal Revenue Service Notice 2004-54 which authorizes paid tax return preparers to sign tax returns by means other than by hand.

For more information, see Department of Taxation Announcement No. 2009-33, Conformity to Internal Revenue Service Notice 200454, Relating to Alternative Methods of Signatures for Paid Tax Return Preparers.

Step 11

Attachments

Reminder: Federal Schedules C, E, and F are not required to be attached to Form N-11. However, keep these schedules with your records until the statute of limitations runs out for that return.

Attach a copy of your Form(s) HW-2 and N-2, or federal Form(s) W-2 and 1099-G (unemployment compensation), to the front of Form N-11 in the area designated. To the back of your return attach, in the following order:

  • Schedule CR.
  • Any other schedules, in alphabetical order.
  • Other Hawaii - series forms, in numerical order.
  • Any other federal forms, in numerical order, used as a substitute for state forms (see Related Federal/Hawaii Tax Forms on page 3).
  • Any other required attachments.

A return without the required schedules, forms, and attachments is incomplete. You must file a complete return on time to avoid paying penalties and interest for late filing.

If you need more space on forms or schedules, attach separate sheets and use the same arrangement as the printed forms. But show your totals on the printed forms. Please use sheets that are the same size as the forms and schedules. Be sure to put your name and social security number on these separate sheets.

If you owe tax, be sure to use Form N-200V to send your payment to the Department of Taxation. Attach your check or money order and Form N-200V to the front of Form N-11.

Reminders

Processing of Your Tax Return

In general, refunds due to you are issued within 8 weeks from the date your return is filed with the Department of Taxation. However, it may take additional time if you filed your return close to the April 20 filing deadline, if errors were made in completing your return, or you moved and did not change your address in writing with the Department of Taxation.

You may call our Taxpayer Services Branch to obtain automated information about your individual income tax refunds 24 hours a day, 7 days a week. Automated refund information should be available 4 to 6 weeks after your return is filed with the Department of Taxation. You may also check your refund status through the Department of Taxation's website. See page 6 for the Department's telephone numbers and website address.

Penalties and Interest

Late Filing of Return. The penalty for failure to file a return on time is assessed on the tax due at a rate of 5% per month, or part of a month, up to a maximum of 25%.

Extensions. If you are unable to file your Hawaii tax return by April 20, 2014, you are automatically granted a 6-month extension without the need to file anything with the Department unless an additional tax payment must be made. As long as the following conditions are met, you are deemed to have made an application for the 6-month extension to file an income tax return on the prescribed due date:

  1. On or before April 20, 2014, 100% of the properly estimated tax liability is paid;
  2. The tax return is filed on or before the expiration of the 6-month extension period;
  3. The tax return is accompanied by full payment of any tax not already paid; and
  4. You are not bound by a court order to file a tax return on or before the prescribed due date.

If you must make an additional payment of tax on or before April 20, 2014 in order to meet the condition requiring payment of 100% of the properly estimated tax liability, you must file Form N-101A with your payment. Federal Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, may not be used in lieu of Form N-101A.

Interest. Interest at the rate of 2/3 of 1% per month or part of a month shall be assessed on unpaid taxes and penalties beginning with the first calendar day after the date prescribed for payment, whether or not that first calendar day falls on a Saturday, Sunday, or legal holiday.

Failure to pay tax after filing timely returns. The penalty for failure to pay the tax after filing a timely return is 20% of the tax unpaid within 60 days of the prescribed due date. The 60-day period is calculated beginning with the prescribed due date even if the prescribed due date falls on a Saturday, Sunday, or legal holiday.

Underpayment of estimated taxes. You may be subject to a penalty for not paying enough estimated tax if your tax payments, including withholding, do not total the smallest of:

  1. 60% of the 2013 tax liability; or
  2. 100% of the tax shown on the 2012 return.

There are special rules for farmers and fishermen.

For more information, see Form N-210, Underpayment of Estimated Tax by Individuals and Fiduciaries.

Change of Address

If your mailing address changes after you file your return, you must notify the Department in writing of the change in addition to notifying the post office serving your former address. Failure to do so may prevent any refund due to you from being delivered (the U.S. Postal Service is not permitted to forward your State refund check), and delay important notices or correspondence to you regarding your return. Be sure to include your name(s) and social security number(s) as printed on your return in any correspondence with the Department.

How Long Should Records Be Kept?

Keep records of income, deductions, and credits shown on your tax return, as well as any worksheets you used, until the statute of limitations runs out for that return. Usually this is three years from the date the return was due or filed, whichever is later. Also keep copies of your filed tax returns and any Forms W-2 or 1099 you received as part of your records. You should keep some records longer. For example, property records (including those on your home) should be kept as long as they are needed to figure the basis of the original or replacement property. For more details, see federal Publication 552, Recordkeeping for Individuals.

Amended Return

If you file your income tax return and later become aware of any changes you must make to income, deductions, or credits, you may file an amended return on Form N-11 to change the Form N-11 you already filed. Use the Form N-11 for the year you are amending. (You cannot file a 2012 amended return on a 2013 Form N-11.) Fill in the amended return oval at the top of Form N-11, and fill in the return with all of the correct information. Attach Schedule AMD, Explanation of Changes on Amended Return, to Form N-11. Also attach all schedules, forms, and attachments required to file a complete return. If you are filing an amended return due to a net operating loss carryback, also fill in the NOL Carryback oval and attach a copy of your original federal income tax return for the loss year.

See the instructions for Form N-11, lines 50 and 51.

For information on the statute of limitation periods within which you may file an amended return to claim a refund or credit of overpaid taxes, see the instructions for Form N-11, line 47a (Refund) on page 28.

You can get prior year forms from our website, by calling our Taxpayer Services Branch, and at any district tax office. See page 6 for the Department's website address and for the phone number to request the forms you need.

If your amended return is a different form from your original return filed, file an amended return on that different form. (If you filed an original return on Form N-11 and should have filed Form N-15, file an amended return on Form N-15.)

Change in Federal Taxable Income

In general, a change to your federal return, whether it is made by you (on federal Form 1040X) or by the Internal Revenue Service, must be reported to the State of Hawaii.

  1. Section 235-101(b), HRS, requires a report (an amended return) to the Director of Taxation if the amount of IRC taxable income is changed, corrected, adjusted or recomputed as stated in (3).
  2. This report must be made:
    1. Within 90 days after a change, correction, adjustment or recomputation is finally determined.
    2. Within 90 days after an amended return is filed.
     
  3. A report within the time set out in (2) is required if:
    1. The amount of taxable income as returned to the United States is changed, corrected, or adjusted by an officer of the United States or other competent authority.
    2. A change in taxable income results from a renegotiation of a contract with the United States or a subcontract thereunder.
    3. A recomputation of the income tax imposed by the United States under the Internal Revenue Code results from any cause.
    4. An amended income tax return is made to the United States.
     
  4. The statutory period for the assessment of any deficiency or the determination of any refund attributable to the report shall not expire before the expiration of one year from the date the Department is notified by the taxpayer or the Internal Revenue Service, whichever is earlier, of such a report in writing.