Did You Know? Hawaii Tax Tips

Valuable information and the tools you need to prevent tax debt and assist you in making smart financial decisions. Plus answers on health insurance coverage requirements.

Click on a topic or question to discover the answer below.

PREVENT TAX DEBT

Unemployment benefits are considered taxable income. Taxes are not automatically withheld from unemployment benefits – you must elect to have taxes withheld. In order to avoid owing taxes when you file your tax return, request that taxes be withheld from your benefits. According to the State of Hawaii’s Unemployment Insurance Division, you can elect to withhold 10% for federal taxes and 5% for Hawaii state taxes from your benefits. After the end of the year, you will receive a Form 1099-G from the Unemployment Insurance Division which will show the total benefits paid and any federal or state income taxes withheld during the calendar year. You need to show this Form to your tax preparer. If you had to make any repayments of unemployment benefits because you were overpaid, you need to keep track of this on your own since the Unemployment Insurance Division does not make an adjustment on your Form 1099-G.
Unemployment benefits can also be seized by the Child Support Enforcement Agency (CSEA). If your child support payments were based on your income while you were fully employed, contact the Child Support Enforcement Agency to inform them about the change in your employment situation. Any request for modification of child support obligations should be submitted to the CSEA in writing and “set forth the reasons for the request, including describing the substantial and material change in circumstances. The CSEA then begins administrative proceedings to modify it.” Go here for more information: http://ag.hawaii.gov/ocsh/modification-of-a-child-support-obligation/

To contact CSEA by phone:

Oahu 808-692-8265
Neighbor Island and Out-of-State (toll-free) 1-888-317-9081
If you settled a debt owed to a creditor (credit card company, bank, etc.) or you owe a creditor money and stopped paying but the creditor decides not to pursue that debt, the amount of the “forgiven” debt is considered income to you and taxable.

If the amount of the forgiven debt is more than $600, you will receive a 1099-C from the creditor. This document is sent to the IRS by the creditor and you should present it to the tax return preparer.

Example: A person with $12,000 in credit card debt who negotiates to pay only $7,000 of the balance would have $5,000 in forgiven debt income. The $5,000 must be reported as “other income” on Line 21 of the 1040 tax form. Depending on the amount of the debt that is forgiven, the taxpayer’s other income, deductions and other such factors, the taxpayer could be facing a large tax bill at tax time.

There are five main exceptions to the taxability of this type of debt. The exceptions include:

  • A mortgage on a principal residence (this exception expired on December 31, 2014 and Congress has not decided whether this exception will be extended)
  • Bankruptcy
  • Insolvency
  • Farming activity debt and
  • Non-recourse loans (this is a debt that is secured by some sort of collateral and the creditor agrees that in the event of default, they will take thecollateral and sell it to pay off the debt but if the sale does not cover the entire amount owed, they will not seek payment from the person who owed the debt).
If an exception applies, Form 982 should be filed with the tax return to allow the taxpayer to report the 1099-C income as non-taxable income.

NOTE: Certain student loans can qualify for an exemption. If a student enters into an agreement with the lender to work in an approved occupation for a specified period of time and does so, this could result in a cancellation of the student loan debt. If cancellation occurs, the student will receive a 1099-C but can file Form 982 and claim the unpaid debt as non-taxable income.

Who MUST File A Return:

Table Below is for 2014. Check back for updated table.
If Your Filing Status Is AND at the end of 2014 you were: Then file a return if your gross income was at least
Single Under 65 $10,150
65 or Older $11,700
Married Filing Jointly Under 65 (both spouses) $20,300
65 or older (one spouse) $21,500
65 or older (both spouses) $22,700
Married Filing Separately Any Age $ 3,950
Head of Household Under 65 $13,050
65 or older $14,600
Qualifying Widow(er) with Dependent Child Under 65 $16,350
65 or older $17,550
YOU MUST ALSO FILE A TAX RETURN IF:
  • You are self-employed and your net profit was $400 or more.
  • You are a church employee and earned $108.28 or more.
  • You owe any special taxes such as the Alternative Minimum Tax, household employment taxes, Medicare and Social Security taxes on tips not reported to employer or on wages received from an employer who did not withhold these taxes.
  • You received the Premium Tax Credit under the Affordable Care Act
Who SHOULD File A Return:
  • Those who had income taxes withheld from their wages. Most individuals will receive a refund of those withheld taxes
  • Those who have earned income (a job or self-employment income) and who may be eligible for the earned income tax credit or additional child tax credit
  • Those who qualify for the premium tax credit for health care
  • Those who qualify for the American Opportunity Credit.
DIFFERENT RULES APPLY IF SOMEONE IS CLAIMING YOU OR CAN CLAIM YOU AS A DEPENDENT
If your parents (or someone else) can claim you as a dependent, use the table below to see if you must file a return.

In this table, EARNED INCOME includes salaries, wages, tips, and professional fees. It also includes taxable scholarship and fellowship grants.

UNEARNED INCOME includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust. GROSS INCOME is the total of your earned and unearned income.

Single dependents—Were you either age 65 or older or blind?

No You must file a return if ANY of the following applies to you:
  • Your unearned income was more than $1,000
  • Your earned income was more than $6,200
  • Your gross income (earned plus unearned) was more than the larger of $1,000 OR
  • Your earned income (up to %5,850) plus $350
Yes You must file a return if any of the following apply.
  • Your unearned income was more than $2,550 ($4,100 if 65 or older and blind).
  • Your earned income was more than $7,750 ($9,300 if 65 or older and blind).
  • Your gross income was more than the larger of:
  • $2,550 ($4,100 if 65 or older and blind), or
  • Your earned income (up to $5,850) plus $1,900 ($3,450 if 65 or older and blind).
Married dependents – see IRS Publication 17

HEALTH CARE REQUIREMENTS AND INFORMATION

The Affordable Care Act requires everyone to have minimum essential health care coverage unless they are exempt. If you did not have health insurance coverage in 2015 and you are not exempt, you’ll pay the higher of these two amounts:
  • 2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a Bronze plan.
  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.
EXEMPTIONS YOU CAN CLAIM WITH YOUR TAX RETURN: You may be exempt from the health care coverage requirement if:
  • Your income is below the level that requires you to file a tax return (see here)
  • The lowest-priced coverage available to you, through either a Marketplace or job-based plan, would cost more than 8.05% of your household income
  • You were uninsured for no more than 2 consecutive months of the year
  • You lived in a state that didn’t expand its Medicaid program but you would have qualified if it had (Hawaii DID expand its Medicaid program)
  • You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
  • You’re a member of a recognized health care sharing ministry.
  • You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
  • You’re incarcerated (in prison or jail)
  • You’re a U.S. citizen living abroad, a certain type of non-citizen, or not lawfully present in the United States
HARDSHIP EXEMPTIONS YOU MUST APPLY FOR. To claim a hardship exemption, you must fill out aPAPER application and mail it in to the Marketplace.

Hardships that may qualify you for exemptions include:

    • You were homeless
    • You were evicted in the past 6 months or were facing eviction or foreclosure
    • You received a shut-off notice from a utility company
    • You recently experienced domestic violence
    • You recently experienced the death of a close family member
    • You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property
    • You filed for bankruptcy in the last 6 months
    • You had medical expenses you couldn’t pay in the last 24 months that resulted in substantial debt
    • You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
    • You were determined to be ineligible for Medicaid because your state did not expand eligibility for Medicaid under the Affordable Care Act (Hawaii DID expandMedicaid eligibility)
    • As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on yourmonthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace
    • Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable
Go here: https://www.healthcare.gov/exemptions-tool/#/

Answer some questions, and the site will match you with exemptions you MAY qualify for.

Go here for the application to apply for a hardship exemption:

https://marketplace.cms.gov/applications-and-forms/hardship-exemption.pdf

If your parents (or someone else) can claim you as a dependent, use the table below to see if you must file a return.

In this table, EARNED INCOME includes salaries, wages, tips, and professional fees. It also includes taxable scholarship and fellowship grants.

UNEARNED INCOME includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust. GROSS INCOME is the total of your earned and unearned income.

Single dependents—Were you either age 65 or older or blind?

No
You must file a return if ANY of the following applies to you:
  • Your unearned income was more than $1,000
  • Your earned income was more than $6,200
  • Your gross income (earned plus unearned) was more than the larger of $1,000 OR
  • Your earned income (up to %5,850) plus $350
Yes
You must file a return if any of the following apply.
  • Your unearned income was more than $2,550 ($4,100 if 65 or older and blind).
  • Your earned income was more than $7,750 ($9,300 if 65 or older and blind).
  • Your gross income was more than the larger of:
  • $2,550 ($4,100 if 65 or older and blind), or
  • Your earned income (up to $5,850) plus $1,900 ($3,450 if 65 or older and blind).
Married dependents – see IRS Publication 17
The Affordable Care Act requires everyone to have minimum essential health care coverage unless they are exempt. If you did not have health insurance coverage in 2015 and you are not exempt, you’ll pay the higher of these two amounts:
  • 2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a Bronze plan.
  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.
EXEMPTIONS YOU CAN CLAIM WITH YOUR TAX RETURN: You may be exempt from the health care coverage requirement if:
  • Your income is below the level that requires you to file a tax return (see here)
  • The lowest-priced coverage available to you, through either a Marketplace or job-based plan, would cost more than 8.05% of your household income
  • You were uninsured for no more than 2 consecutive months of the year
  • You lived in a state that didn’t expand its Medicaid program but you would have qualified if it had (Hawaii DID expand its Medicaid program)
  • You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
  • You’re a member of a recognized health care sharing ministry.
  • You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
  • You’re incarcerated (in prison or jail)
  • You’re a U.S. citizen living abroad, a certain type of non-citizen, or not lawfully present in the United States
HARDSHIP EXEMPTIONS YOU MUST APPLY FOR. To claim a hardship exemption, you must fill out aPAPER application and mail it in to the Marketplace.

Hardships that may qualify you for exemptions include:

    • You were homeless
    • You were evicted in the past 6 months or were facing eviction or foreclosure
    • You received a shut-off notice from a utility company
    • You recently experienced domestic violence
    • You recently experienced the death of a close family member
    • You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property
    • You filed for bankruptcy in the last 6 months
    • You had medical expenses you couldn’t pay in the last 24 months that resulted in substantial debt
    • You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
    • You were determined to be ineligible for Medicaid because your state did not expand eligibility for Medicaid under the Affordable Care Act (Hawaii DID expandMedicaid eligibility)
    • As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on yourmonthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace
    • Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable
Go here: https://www.healthcare.gov/exemptions-tool/#/
Answer some questions, and the site will match you with exemptions you MAY qualify for.

Go here for the application to apply for a hardship exemption:
https://marketplace.cms.gov/applications-and-forms/hardship-exemption.pdf

Scholarships, fellowship grants, and other grants are tax-free if

(1) you use the funds to pay for tuition, fees required for enrollment, or for fees, books, supplies, and equipment required for courses AND

(2) you are a candidate for a degree at an educational institution that has a regular faculty and curriculum and enrolled body of students in attendance.

HOWEVER, if you use scholarship or grant funds to pay for other things (room and board, travel, other living expenses, optional equipment for school, non-mandatory fees, etc.), the amount used for this purpose is considered taxable income.

Your school should provide you with a Form 1098-T. If you are planning on having your tax returns prepared at one of our free tax preparation sites, you will need to bring that Form 1098-T AND a printout from your account at your school that shows the amount of scholarships and/or grants that you received and the amount of tuition and fees that you paid for the entire tax year (Spring semester and Fall semester). You cannot rely only on the Form 1098-T for all of the information that you need.

If you received a FORM 1095-A from Healthcare.gov or the Health Connector, you must file a federal tax return even if you had no income. If you do not file a tax return, the government will stop helping you pay for health insurance.

BASIC TAX EDUCATION

If you settled a debt owed to a creditor (credit card company, bank, etc.) or you owe a creditor money and stopped paying but the creditor decides not to pursue that debt, the amount of the “forgiven” debt is considered income to you and taxable.

If the amount of the forgiven debt is more than $600, you will receive a 1099-C from the creditor. This document is sent to the IRS by the creditor and you should present it to the tax return preparer.

Example: A person with $12,000 in credit card debt who negotiates to pay only $7,000 of the balance would have $5,000 in forgiven debt income. The $5,000 must be reported as “other income” on Line 21 of the 1040 tax form. Depending on the amount of the debt that is forgiven, the taxpayer’s other income, deductions and other such factors, the taxpayer could be facing a large tax bill at tax time.

There are five main exceptions to the taxability of this type of debt. The exceptions include:

  • A mortgage on a principal residence (this exception expired on December 31, 2014 and Congress has not decided whether this exception will be extended)
  • Bankruptcy
  • Insolvency
  • Farming activity debt and
  • Non-recourse loans (this is a debt that is secured by some sort of collateral and the creditor agrees that in the event of default, they will take thecollateral and sell it to pay off the debt but if the sale does not cover the entire amount owed, they will not seek payment from the person who owed the debt).
If an exception applies, Form 982 should be filed with the tax return to allow the taxpayer to report the 1099-C income as non-taxable income.

NOTE: Certain student loans can qualify for an exemption. If a student enters into an agreement with the lender to work in an approved occupation for a specified period of time and does so, this could result in a cancellation of the student loan debt. If cancellation occurs, the student will receive a 1099-C but can file Form 982 and claim the unpaid debt as non-taxable income.

Whenever you begin employment, you are required to fill out a Form W-4 for your employer on which you indicate how many exemptions you are claiming.

The more exemptions you claim, the less taxes are withheld from your pay. HOWEVER, you can be assessed a $500 penalty if both of the following apply:

  • You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld.
  • You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4.
  • A criminal penalty of a fine up to $1,000 or imprisonment for up to 1 year, or both, can also be imposed if you deliberately and knowingly supply false or fraudulent information on your Form W-4 or you deliberately fail to provide required information that would have increased the amount withheld. A simple error or an honest mistake will not result in one of these penalties.

The income tax system of the United States is a pay-as-you-go system, which means that you must pay tax as you earn or receive your income during the year. It is NOT enough to settle up with the IRS when you file your tax return. If you fail to pay your tax as it becomes due or you pay too little, you may have to pay a penalty for underpayment of estimated tax. There are exceptions to this rule. Generally, you do not have to pay an underpayment penalty if:

  • You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess social security and tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000 OR
  • You had no tax liability last year OR
  • You paid, through withholding or estimated tax payments, at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller
The law also allows the IRS to waive the penalty if:
  • You did not make a required payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
  • You retired (after reaching age 62) or became disabled during the tax year for which you should have made estimated payments or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.
There are special rules for farmers and fishermen, certain household employers and certain higher income taxpayers. Please refer to Publication 505, Tax Withholding and Estimated Tax, for more information.

Examples of Taxable Income

  • Wages, salaries, bonuses, commissions
  • Alimony
  • Annuities
  • Awards
  • Back Pay
  • Breach of contract payment
  • Business Income (Self-employment income)
  • Cash income
  • Compensation for personal services
  • Debts forgiven
  • Director’s fees
  • Disability benefits (employer-funded plan)
  • Discounts
  • Dividends
  • Employee awards
  • Employee bonuses
  • Estate and trust income
  • Farm income
  • Fees
  • Gains from sale of property or securities
  • Gambling winnings
  • Hobby income
  • Interest
  • Interest on life insurance dividends
  • IRA distributions
  • Jury duty fees
  • Military pay (not exempt from taxation)
  • Military pension
  • Nonemployee compensation
  • Notary fees
  • Partnership, Estate and S-Corporation income (Schedule K-1s, Taxpayer’s share)
  • Pensions
  • Prizes
  • Punitive damage award
  • Railroad retirement – Tier 1 (portion may be taxable)
  • Railroad retirement – Tier II
  • Recovery of prior year deducation (medical, property taxes, etc.)
  • Refunds of State and local income tax (if taxpayer itemized in year the taxes were paid and taxes were reduced because of deduction)
  • Rents (gross rent)
  • Rewards
  • Royalties
  • Severance pay
  • Self-employment (gross income)
  • Social security benefits – portion may be taxable
  • Supplemental unemployment benefits
  • Taxable scholarships and grants
  • Tips and gratuities
  • Tribal per capita payments
  • Unemployment compensation

Under the Passport Denial Program, states certify cases in which the non-custodial parent (NCP) owes more than $2,500 in past due child support.

The Federal Office of Child Support Enforcement (OCSE) transmits the information to the Department of State so that a U.S. passport will not be issued or renewed to someone who is not supporting his or her children.

The Hawaii Child Support Enforcement Agency (CSEA) has a policy that requires a $0 balance before allowing passport issuance to an individual who was previously in arrears.

The IRS is entitled to assess a penalty if you fail to file a tax return, fail to pay taxes due, or both. You can get an extension of time to file a tax return but this extension applies only to the filing of the return, not the payment of taxes due. Taxes must still be paid by the deadline to file your tax return. Failure to file:

  • The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
  • If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
Failure to pay:
If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.

THINGS TO NOTE:

The IRS can assess interest as well on any unpaid tax from the time that the payment of tax was due until the date the tax is paid. Interest rates are set by the IRS every three months.
If you request an extension of time to file by the tax deadline and you paid at least 90 percent of your actual tax liability by the original due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date.

If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty.

However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Since the penalties are calculated based on the amount of taxes due, if you do not owe any taxes, there will be no penalty.

The IRS is entitled to assess a penalty if you fail to file a tax return, fail to pay taxes due, or both. You can get an extension of time to file a tax return but this extension applies only to the filing of the return, not the payment of taxes due. Taxes must still be paid by the deadline to file your tax return.

Failure to file:
  • The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
  • If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
Failure to pay:
If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.

THINGS TO NOTE:

The IRS can assess interest as well on any unpaid tax from the time that the payment of tax was due until the date the tax is paid. Interest rates are set by the IRS every three months.
If you request an extension of time to file by the tax deadline and you paid at least 90 percent of your actual tax liability by the original due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date.

If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty.

However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Since the penalties are calculated based on the amount of taxes due, if you do not owe any taxes, there will be no penalty.

TAX CREDITS

Using the Married Filing Separately filing status will disqualify you from claiming the following tax credits (this is not an all-inclusive list)

  • Earned Income Tax Credit (especially valuable if you have dependent children).
  • Education Credits (You will also lose the deduction for student loan interest and the tuition and fees deduction – may be discontinued for 2015).
  • Premium Tax Credit (to help pay for insurance coverage).
  • Credit for child and dependent care expenses.
  • Credit for adoption expenses.
  • Credit for the elderly and disabled.
IF YOU WORK AND YOUR SPOUSE OWES BACK CHILD SUPPORT, YOU CAN STILL FILE MARRIED FILING JOINTLY AND CLAIM ALL TAX CREDITS FOR WHICH YOU ARE ELIGIBLE BY FILING AN INJURED SPOUSE FORM. (FORM 8379)

When you file an injured spouse form, the IRS will calculate the portion of the refund attributable to you and the portion attributable to your spouse. The IRS will then withhold only the portion of the refund that is deemed to be due to your spouse.

In completing Form 8379, be aware that Hawaii is NOT a community property state.

For Hawaii: Withholding for delinquent child support can only be made against the person responsible for the payment of the support. The non-debtor spouse (NDS) may request a refund of his/her portion of the tax refund by writing to the Child Support Enforcement Agency at one of the branch locations. Since the agency will calculate the non-debtor spouse’s portion of the tax refund, a copy of the filed Hawaii income tax return must be included with the request.

Using the Married Filing Separately filing status will disqualify you from claiming the following tax credits (this is not an all-inclusive list)
  • Earned Income Tax Credit (especially valuable if you have dependent children).
  • Education Credits (You will also lose the deduction for student loan interest and the tuition and fees deduction – may be discontinued for 2015).
  • Premium Tax Credit (to help pay for insurance coverage).
  • Credit for child and dependent care expenses.
  • Credit for adoption expenses.
  • Credit for the elderly and disabled.
IF YOU WORK AND YOUR SPOUSE OWES BACK CHILD SUPPORT, YOU CAN STILL FILE MARRIED FILING JOINTLY AND CLAIM ALL TAX CREDITS FOR WHICH YOU ARE ELIGIBLE BY FILING AN INJURED SPOUSE FORM. (FORM 8379)

When you file an injured spouse form, the IRS will calculate the portion of the refund attributable to you and the portion attributable to your spouse. The IRS will then withhold only the portion of the refund that is deemed to be due to your spouse.

In completing Form 8379, be aware that Hawaii is NOT a community property state.

For Hawaii: Withholding for delinquent child support can only be made against the person responsible for the payment of the support. The non-debtor spouse (NDS) may request a refund of his/her portion of the tax refund by writing to the Child Support Enforcement Agency at one of the branch locations. Since the agency will calculate the non-debtor spouse’s portion of the tax refund, a copy of the filed Hawaii income tax return must be included with the request.

Scholarships, fellowship grants, and other grants are tax-free if

(1) you use the funds to pay for tuition, fees required for enrollment, or for fees, books, supplies, and equipment required for courses AND

(2) you are a candidate for a degree at an educational institution that has a regular faculty and curriculum and enrolled body of students in attendance.

HOWEVER, if you use scholarship or grant funds to pay for other things (room and board, travel, other living expenses, optional equipment for school, non-mandatory fees, etc.), the amount used for this purpose is considered taxable income.

Your school should provide you with a Form 1098-T. If you are planning on having your tax returns prepared at one of our free tax preparation sites, you will need to bring that Form 1098-T AND a printout from your account at your school that shows the amount of scholarships and/or grants that you received and the amount of tuition and fees that you paid for the entire tax year (Spring semester and Fall semester). You cannot rely only on the Form 1098-T for all of the information that you need.

Scholarships, fellowship grants, and other grants are tax-free if

(1) you use the funds to pay for tuition, fees required for enrollment, or for fees, books, supplies, and equipment required for courses AND

(2) you are a candidate for a degree at an educational institution that has a regular faculty and curriculum and enrolled body of students in attendance.

HOWEVER, if you use scholarship or grant funds to pay for other things (room and board, travel, other living expenses, optional equipment for school, non-mandatory fees, etc.), the amount used for this purpose is considered taxable income.

Your school should provide you with a Form 1098-T. If you are planning on having your tax returns prepared at one of our free tax preparation sites, you will need to bring that Form 1098-T AND a printout from your account at your school that shows the amount of scholarships and/or grants that you received and the amount of tuition and fees that you paid for the entire tax year (Spring semester and Fall semester). You cannot rely only on the Form 1098-T for all of the information that you need.

FREE TAX ASSISTANCE AND MYFREETAXES.com

MYFREETAXES is a free self-preparation tool for taxpayers whose household income is less than $62,000. It is NOT to be used by individuals who charge for their services. MyFreeTaxes is a good alternative for taxpayers who:

  • Prefer to do their own taxes on their own time. The website is available 24/7 during the tax season Who have used self-preparation tax software before. Usually, even “free” file sites will charge for the preparation of your State tax return. MyFreeTaxes allows eligible taxpayers to prepare and e-file both their federal and state tax returns for free.
  • Have returns that will not qualify them for free tax services at VITA sites. Volunteer Income Tax Assistance (VITA) sites prepare and e-file both federal and Hawaii state tax returns for taxpayers whose household income does not exceed $54,000. If your household income is more than the VITA limit but less than $62,000 or you have a tax situation that is considered out-of-scope for VITA, MyFreeTaxes is a good alternative to use to save money on tax preparation.
To access MyFreeTaxes, go to www.myfreetaxes.com You will need a valid e-mail address in order to be notified in the event that the IRS rejects your tax return for any reason AND all documents necessary to prepare a return.

Help in using MyFreeTaxes: 3 options available

MyFreeTaxes is operated by United Way Worldwide through a partnership with H&R Block.

My Free Taxes