Question: Regarding the tax rebate we’re supposed to get from the state, will this money count as taxable income on our 2022 Hawaii income tax return? What about the federal tax return?
Answer: No. “The SB 514 refund would not be included as income on the federal or state return. Unlike an ordinary refund of state taxes that must be included in income, an SB 514 refund is not received as result of a deduction claimed for state taxes paid,” said Joshua Mapanao, a spokesperson for Hawaii’s Department of Taxation.
Gov. David Ige signed SB 514 into law Wednesday as Act 115, providing a refund of $300 per exemption for qualifying resident taxpayers who earn less than $100,000 a year (or couples learning less than $200,000) and $100 per exemption for those earning $100,000 or more a year (or couples earning $200,000 or more). So, for example, a family of four earning less than $200,000 would receive $1,200, because a couple filing jointly and two dependent children equal four exemptions at $300 each for that income level.
Here are answers to more reader questions on this topic:
Q: My husband and I usually file a joint return. We haven’t done our taxes yet. Should we file separately to maximize the rebate?
A: No, the law prohibits that, saying that “a married couple filing separate tax returns for the 2021 taxable year, for which a joint return could have been filed, shall only be eligible for the refund that they would have been eligible for had a joint return been filed.”
Q: My husband earns more than $100,000, but I earn less than that amount. We filed our taxes jointly. Will we receive a single rebate payment of $100? Or will we receive $100 for my husband and $300 for me?
A: Neither. The income on your joint return will be considered collectively and together you will receive the value of your exemptions for that income level. If you and your husband together earned less than $200,000, you would receive a total of $600 ($300 per exemption). If together you earned $200,000 or more, you would receive a total of $200 ($100 per exemption). This assumes you have no dependents. If you claimed dependents on your tax return, the applicable exemption amount would be paid for each of them as well.
Q: When will we get the money?
A: DOTAX says it expects to begin issuing refunds the last week of August.
Q: Do I have to do anything to get this money?
A: You must file a Hawaii individual income tax return (Form N-11) for the 2021 tax year by the end of 2022, according to DOTAX. Beyond that, the refund process should be automatic for qualifying resident taxpayers. See tax.hawaii.gov Opens in a new tab. The department is expected to release more information in the coming days.
Q: Are retirees eligible?
A: Yes, if they are qualifying resident taxpayers who file a Hawaii individual income tax return for tax year 2021 by the end of this year. Under the law, which you can read at 808ne.ws/ACT115 Opens in a new tab, “qualifying resident taxpayer” means an individual taxpayer who has been a Hawaii resident, as defined in Hawaii Revised Statutes 235-1, for at least nine months, regardless of whether they were physically in the state for nine months.
Q: What about senior citizens who are supported by family members?
A: Anyone who is claimed or who is eligible to be claimed as a dependent by another taxpayer for individual income tax purposes would not be a qualifying resident taxpayer eligible for their own direct refund, but they would count as an exemption in the total paid to the tax filer who claims them as a dependent. The amount per exemption is $100 or $300, based on the filer’s income. See the example in the first answer.
Q: Can inmates get this?
A: Not if they have been physically confined for the full taxable year.
