TAX FACTS NO. 95-2
A brand new form will soon be here! It's Form N-11, Hawaii's new, one-page income tax return designed for individuals who file federal tax returns. This issue of TaxFacts is devoted to answering questions about the new form.
Most taxpayers who file Hawaii tax returns also file a federal return (Form 1040). Tax professionals have told us that because the Hawaii and federal income tax laws are similar, people generally put many of the same numbers on both returns. So, they suggested, why not a state tax form that starts with a total taken from the federal return?
We thought the idea was a good one. With the one-page form, many people will do less math and send in less paperwork. That means less work for you and savings to us in processing time, costs of printing, and postage.
No. Most of the information on Schedules A through F is the same as on the federal schedules. We get the federal information from the IRS on computer tape under an agreement with the IRS to exchange information.
Some of the information on Schedules A and D must be computed separately for Hawaii. Those calculations are done on worksheets in the instruction booklet.
We do require that you attach a copy of the first page (just the front is enough) of your federal return.
Schedule X, also introduced this year, replaces all four of these forms. You can file Schedule X with Form N-11, N-12, or N-13 to claim any or all of those credits.
Because of changes in tax laws made by the Legislature in 1995, the food tax credit has been reduced from $55 to $27 per qualified exemption, and the excise tax portion of the food/excise tax credit was repealed. The 4% portion of the medical services excise tax credit is no longer available, but the 6% nursing facility tax portion of the medical services excise tax credit still may be claimed. These changes are reflected in Schedule X.
Yes, you must file Form N-11 if you are a Hawaii resident for all of 1995 and you file a federal return for calendar year 1995.
However, you must file Form N-12, rather than N-11, if:
Also, if you qualify to file Form N-13, you may use Form N-13. (See question and answer #7.)
We will be sending a packet containing both forms to everyone who filed Form N-12 last year (except for people who checked the box that told us to mail them only a postcard with a pre-addressed mailing label on it).
Most people who receive this package must file Form N-11. If you don't file a federal return, you probably have to file Form N-12. (See question and answer #4.)
You should receive your N-11/N-12 packet, or your postcard with the pre- addressed mailing label, in the mail by mid-January 1996. If you don't receive it by the end of January, please call our Forms Hotline at the number listed at the end of this issue.
Form N-11 also will be available on our Internet web site,
Yes. You may file the N-13 short form, whether or not you are filing
a federal return, if:
Because the various forms used to claim tax credits have now been consolidated on the new Schedule X, filing Form N-13 is now not that much different from filing Form N-13EZ. Accordingly, we discontinued Form N-13EZ. If you filed on Form N-13EZ last year, you might want to file on Form N-13 this year.
First, you fill out your federal return. (Remember, you must attach a copy of the first page of your federal return to Form N-11.)
Then, you start Form N-11 by entering your federal adjusted gross income, instead of listing the same income items and adjustments to income that appear on your federal return. We then focus on the differences between federal and Hawaii law to add to, or subtract from, that number.
The additions and subtractions bring you to Hawaii adjusted gross income. From that point forward, the N-11 is almost the same as the old Form N-12.
Examples of these additions and subtractions are listed in the next few questions and answers.
That depends. You need to compare the "federal wages" and "state wages" boxes of your Form W-2. They might be different if:
You also may need to make other adjustments that are described in the next few questions and answers.
If you included Social Security benefits or qualifying pension income as part of your federal adjusted gross income, you may deduct these amounts on the appropriate lines on Form N-11.
Please follow the instructions carefully, however. Not all pension income may be deducted.
Interest from municipal bonds or bond funds, although exempt from federal income tax, is not exempt from Hawaii income tax (unless a Hawaii state or county agency issued the bonds). If you received this kind of income, you need to make an adjustment on the appropriate line of Form N-11.
Interest from federal securities (for example, U.S. Savings Bonds, Treasury bills, or Treasury notes) is not exempt from federal income tax, but is exempt from Hawaii income tax. If you received this kind of income, you need to make a subtraction on the appropriate line of Form N-11.
However, if you cashed in Series E savings bonds to pay for higher education tuition and fees, you probably filed federal Form 8815 because the federal government does not tax all of the interest. If that happened, you can only subtract the amount reported as taxable on your federal return.
That depends on what you did on your 1994 federal return.
If you did not itemize deductions on your 1994 federal return (or if you filed Form 1040A or 1040EZ), then the refund is not reported as income on your federal return. Because you itemized deductions on your state return, however, the refund is reportable on your Hawaii return. The instruction booklet contains a worksheet to figure the taxable part of the refund.
If you itemized deductions on your 1994 federal return, you reported your state refund as income on your federal return. Hawaii does not tax that part of your refund that is from Hawaii refundable credits (such as the food tax credit or the general income tax credit). Thus, for many taxpayers Hawaii will tax a smaller part of the state tax refund than the federal government will. You may deduct the difference on the appropriate line of Form N-11. The instruction booklet contains a worksheet to calculate this amount.
No, you don't need to file your worksheets. Usually we won't need them because we can verify your math by computer.
But please keep the worksheets that you use! If we have a question on something that you put down, we might ask you for the worksheets so you can show us what you did.
You can correct a mistake by filing an amended return. You can do this by picking up a blank 1994 Form N-12, writing "AMENDED" in the upper left corner, and filling it out correctly. More detailed instructions appear in the instruction booklet. You also can correct a mistake by filing Form N-188X.