Nonresident Alien Hawaii Tax Returns Workshop

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Nonresident Alien Hawaii Tax Returns Workshop
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Major differences between Fed HI
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Similarities between Fed HI

• Nonresident Aliens pay tax on Hawaii source income

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Hawaii Resident for tax purpose

• Lived in Hawaii for more than 200 days in a
  calendar year. AND ( for NRAs)
• Established domicile in Hawaii. Domicile means
  the place where an individual has a true, fixed,
  permanent home and pricipal establishment. The
  place in which an individual has voluntarily
  fixed the habitation of himself or herself and
  family.

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Hawaii Resident for tax purpose (contd)

• To create new (Hawaii) domicile, 3 things are
  necessary ,
• a. Abandonment of old domicile
• b. Intent to establish new domicile
• c. Actual physical presence in the new
  domicile.

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Hawaii Residency Classification

• Domiciliary Resident
• U.S. citizen or resident who lived in Hawaii for
  more than 200 days during a year
• In Hawaii for other than a temporary or
  transitory purpose
• Non-Domiciliary Resident
• U.S. citizen or resident lived in Hawaii for less
  than 200 days in year. OR
• Foreign students on F visa.
• Anyone who can prove domicile is outside of
  Hawaii. Refer back to definition of domicile.
  (H,J, Q visas are usually presumed residents)

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Who must file (for Individual under 65)
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Who must file (contd)

• You should file Hawaii tax return even if your
  gross income is below the level for your marital
  status if there are Hawaii income taxes withheld.
  
• The reason is that you will get a refund of the
  state taxes withheld.

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Which form to use

• N-11 Full-year resident filing federal return.
• N-12 Full-year resident not filing federal
  return.
• N-15 Nonresident or part-year resident (Must
  attached completed copy of federal return)
  (Deductions and exemptions are limited)

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Differences in the tax forms

• N-11, N-12 report gross income worldwide , may
  allow exemptions for dependents, may qualify for
  low income credits.
• N-15 (Nonresident or part-year resident), must
  attach completed copy of federal return.
  Nonresident is taxed on Hawaii sourced income
  only. Nonresident may exclude most intangible
  income. Hawaii sourced deductions allowed in
  full. Other deductions are prorated. Personal
  exemption are prorated, personal exemption(s)
  are prorated. (part-year resident follows the
  rule for each period)

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Hawaii Income Tax Procedures

• For Form N-15
• Fill in amounts under Col. A-Total Income for
  each type and similarly for Col. B.
• Minus any adjustments (i.e. IRA contributions,
  moving expenses etc.)
• Calculate ratio of Hawaii AGI to Total AGI.
• Calculate itemized deductions.
• Use ratio to figure out prorated itemized
  deductions and personal exemptions.
• Calculate taxable income and use tax table to
  find out Hawaii tax.

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Hawaii Income Tax Procedures

• For Form N-11 or N-12
• Start with Federal Adjusted Gross Income (AGI)
• Add or subject any Hawaii adjustment to federal
  AGI.
• Figure out any itemized deduction or use standard
  deductions.
• Subtract itemized deduction or standard
  deductions from Hawaii AGI.
• Subtract personal exemption to arrive at Hawaii
  taxable income
• Look for tax amount in tax table that correspond
  to Hawii taxable income.
• Compare tax from tax table with state taxes paid
  or withheld to calculate refund or tax due.

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Tax Return Filing Deadline

• Due April 20, 2007

Where to File
For tax return with payment due, mail to
Hawaii Department of Taxation            
    Attn  Payment Section                P. O.
Box 1530                 Honolulu, HI 
96806-1530If no payment with tax return , then
mail to                Hawaii Department of
Taxation                P. O. Box
3559                Honolulu, HI 96811-3559
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Extension of Time to File

• Federal extension form is not acceptable-do not
  use
• First extension (4 months) is automatic, no form
  is filed unless making a payment, then Form
  N-101A and payment by due date, April 20.
• Second extension (2 months) requires Form N-101B,
  file during 1st extension, state valid reason,
  pay at least 90 of ultimate tax liability, and
  sign before end of first extension.

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Penalties Return filed by April 20

• Underpayment
• Imposed if tax is not paid 90 by withholding,
  and tax liability exceeds 500, and prior year
  had liability. Calculated on Form N-210 (8 per
  year, by days)
• Failure to pay
• Penalty on any tax payable more than 60 days
  after April 20 Up to 20 (full 20 imposed) plus
  interest at 8.

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Penalties Return after by April 20

• Underpayment failure to pay
• Same
• Failure to file penalty
• 5 per month on amounts not paid by April 20,
  maximum of 25 per year, interest at 8 (2/3 of
  1 per month) on tax and penalty , does not apply
  if extension rules are followed precisely.

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Samples of tax returns

• See attached examples.

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Final steps

• After completion, check your return to make sure
  it is correct. Check every line. Review your
  math. Check tax table to ensure correct tax is
  calculated.
• Sign and date your test return.
• Attach all required forms (I.e. W-2, 1042-S) and
  schedules.
• Due dates April 20, 2007 (unless got extension)
• Mail to See addresses in previous slide.

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Disclaimer

• This has been a service to provide you with
  general information on preparation of tax return.
• The University does not provide personal
  assistance in your individual tax return
  preparation.
• Please consult with your tax advisor if further
  assistance is needed.