Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 235 - INCOME TAX LAW
Subchapter 6 - RETURNS AND PAYMENTS; ADMINISTRATION
Section 18-235-92 - Returns, who shall make

Universal Citation: HI Admin Rules 18-235-92

Current through August, 2024

(a) Individual returns.

(1) Who is required to file. Pursuant to section 235-92, HRS, for each taxable year, a return shall be filed by:
(A) Every individual doing business in the State during the taxable year, whether or not any taxable income is derived therefrom. As used in this paragraph, "doing business" includes all activities engaged in or caused to be engaged in with the object of gain or economic benefit, direct or indirect, with the exception of personal services performed as an employee under the direction and control of an employer. Every person receiving rent from property owned in the State is deemed to be doing business and shall file a return, whether or not taxable income is derived from the activity.

(B) Every individual receiving gross income in excess of the total amount of any personal exemptions which the taxpayer may claim and the standard deduction.

(C) Every individual claiming benefits available to individuals taking up residence in Hawaii after attaining the age of sixty-five years and before July 1, 1976. The return should be accompanied by a signed statement setting forth the date that the individual established residence in Hawaii and the individual's date of birth.

(D) Children receiving income during the taxable year who have not attained the age of fourteen years before the end of the taxable year. The income of a minor child is not included in the gross income of the parent for income tax purposes, except as provided in section 235-7.5, HRS. The minor child's income shall be reflected in the return filed by or for such child.

(2) Filing of returns though not required. Even though a taxpayer is not required to file a tax return for the taxable year under paragraph (1), a return must be filed in order to support a claim for a credit or refund. However, filing a return is not required in order to obtain a refund of tax withheld upon wages of an individual who files a Form HW-6 claiming nonresidency, notwithstanding any notice issued by the director regarding investigation of the individual's residence status.

(b) Forms N-12 and N-15. An individual taxpayer shall report taxable income on Form N-12 or N-15, except where a taxpayer qualifies for and elects to use Form N-13.

The taxpayer shall determine whether to use either Form N-12 or N-15 based on where the taxpayer's residence is located.

Whether Form N-12 or N-15 is used, there shall be attached to the return, Copy B of all HW-2 forms received by the taxpayer with respect to tax withheld during the calendar year in which the taxable year of the taxpayer began.

(c) Form N-13. In general, an eligible taxpayer may file Form N-13 in lieu of Form N-12. An eligible taxpayer who has received an extension to file a return pursuant to section 18-235-98, after December 31, 1993, also may file Form N-13 in lieu of Form N-12. Copy B of all HW-2 forms received by the taxpayer reporting taxes withheld during the taxable year shall be attached to the return filed with the department.

(1) Taxpayers eligible to file Form N-13. A taxpayer is eligible to file Form N-13 if:
(A) The taxpayer's taxable income is less than $50,000 for the taxable year;

(B) The taxpayer's gross income consists entirely of wages, salaries, tips, interest, ordinary dividends, and unemployment compensation;

(C) No interest or dividends are received by the taxpayer as a nominee for another individual;

(D) The taxpayer did not make any estimated tax payments;

(E) The taxpayer is a resident of the State;

(F) The taxpayer does not claim any itemized deductions;

(G) The taxpayer does not claim any adjustments to income, including any exclusion from income due to military reserve or Hawaii national guard duty pay;

(H) The taxpayer does not claim any credit for taxes paid to other jurisdictions under chapter 235, HRS, or for taxes with respect to any capital gains distribution;

(I) The taxpayer uses the cash accounting method and files returns on a calendar year basis;

(J) The taxpayer claims the special exemption for blindness, deafness, or total disability as set forth in section 235-54(c), HRS; and

(K) The taxpayer's spouse does not file separately and itemize deductions, except for those spouses which live apart (and abandoned spouses) who have dependent children.

(2) Joint returns. In general, joint returns shall be filed pursuant to section 235-93, HRS, and section 18-235-93. Joint returns filed on Form N-13 also shall be subject to the limitations set forth in paragraph (1). The aggregate taxable income for the taxable year of the spouses filing a joint return shall be less than $50,000. If either spouse does not qualify as a taxpayer eligible to file Form N-13, no joint return shall be filed on Form N-13. Additionally, both spouses shall sign any jointly filed Form N-13; similar to other joint returns filed pursuant to chapter 235, HRS, the liability is joint and several.

(3) Computing the tax. If a taxpayer completes a Form N-13 including the computation of taxable income, the taxpayer may file the Form N-13 and request the department of taxation to compute the amount of tax owed by the taxpayer. The department, however, shall not compute tax credits for the taxpayer. If the taxpayer chooses to claim tax credits, the taxpayer shall complete the tax credit portion of Form N-13 and all forms required to claim the tax credits; the required forms shall be submitted to the department with Form N-13. Upon receipt of Form N-13 and all forms required to claim tax credits, if any, the department of taxation will compute the tax owed by or refund owed to the taxpayer from the tax tables as provided in section 235-53, HRS. The department shall mail a notice of the amount of tax owed by or the amount of refund due to the taxpayer. Payment of any tax owed by the taxpayer shall be made within thirty days of the mailing of the notice. For purposes of determining delinquent taxes, penalties, and interest with respect to the payment of tax, the thirty day period after the mailing of the notice of the tax liability shall be deemed the time allowed by law for the payment of the tax.

(d) Consolidated returns.

(1) Who may file a consolidated return. Only an "affiliated group" of corporations, as defined by section 1504, IRC, (consolidated returns), may file a consolidated Hawaii income tax return. In addition to the federal requirements, each corporation included in the affiliated group must be organized under the laws of the State of Hawaii and for the taxable year, have gross income subject to tax under chapter 235, HRS.

Example 1: K owns eighty percent of the stock of M and N. N owns one hundred percent of the stock of O. As defined in section 1504, IRC, K, M, N, and O are all members of an affiliated group and may file a consolidated return.

Example 2: D owns eighty percent of E. E owns eighty percent of F. E and F each own forty percent of G. D, E, F, and G are all members of an affiliated group and may file a consolidated return.

(2) How to elect. Any corporation in an affiliated group, as set forth in paragraph (1), may elect to join in a consolidated return filing. Each corporation included in the consolidated return shall signify its consent by filing Form N-303. The consolidated return, with Form N-304 (affiliation schedule) attached, shall be filed not later than the last day prescribed by law (including extensions of time) for the filing of the common parent's return. The affiliated group may not withdraw its consolidated filing after the last day to file, but may switch to separate returns at any time prior to the due date.
(A) An affiliated group which files (or is required to file) a consolidated return for a tax year shall continue to file a consolidated return for the affiliated group until such time as the affiliated group receives permission to discontinue filing a consolidated return from the director of taxation.

(B) Form N-303 must be filed for each corporation in an affiliated group only in the first taxable year the affiliated group files a consolidated return. Thereafter, any additions to or deletions from the affiliated group shall be reported to the department on form N-303; the form must be attached to the consolidated return for the taxable year in which the corporation joins or withdraws from the affiliated group.

(3) Separate returns. Once an election to file a consolidated return has been made, the affiliated group shall continue to file consolidated returns until the director of taxation gives written permission to discontinue the filing of consolidated returns. An application to discontinue filing consolidated returns shall be submitted by the parent organization at least ninety days prior to the filing due date of the consolidated return, including extensions of time. The application shall state the reasons for discontinuing consolidated filing.

(4) If an affiliated group files a consolidated return, it must also file and pay estimated tax on a consolidated basis until permission to discontinue consolidated filing is received from the director of taxation or designee.

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