Question: With private school tuition due in the next month and the change in the federal tax laws allowing up to $10,000 from a 529 plan to be used for private school tuition, I was unable to find out whether Hawaii was treating the withdrawal as the federal government (no tax) or whether state tax will be assessed on the 10K. Could you find out what the answer is?
Answer: Hawaii state income tax will be assessed as applicable on 529 plan withdrawals used to pay K-12 tuition, despite the federal government’s expansion in the allowable use of these popular education savings plans.
Hawaii income taxes will not apply to 529 withdrawals used to pay for college.
Federal income taxes won’t apply in either case, under changes in the U.S. tax code that took effect Jan. 1.
“Hawaii conforms to the federal provision where distributions from qualified tuition programs are not taxable if used to pay for qualified higher education expenses (e.g., college). However, pursuant to Act 27, Session Laws of Hawaii 2018, Hawaii did not adopt the federal provision that elementary and secondary school expenses of up to $10,000 per year are qualified expenses for qualified tuition programs. Therefore, distributions used to pay for elementary and secondary school expenses will be taxable for Hawaii income tax purposes,” said Lynne Kuroda, from the state Department of Taxation’s technical section.
About 15 percent of K-12 students in Hawaii attend private schools, higher than the national average. We received this or similar questions from several readers.
One benefit of investing in a 529 plan early in a child’s life is that earnings can grow over a long period, increasing the tax advantage when the money is withdrawn, the U.S. Securities and Exchange Commission explains on its website.
“However, if 529 account withdrawals are not used for qualified higher education expenses or tuition for elementary or secondary schools, they will be subject to state and federal income taxes and an additional 10 percent federal tax penalty on earnings,” the SEC cautions.
Q: Regarding the sunscreen (808ne.ws/620kline) I have some containing oxybenzone that I use on dry land. However, I do wash the sunscreen residue on my body down the drain when I take a shower at home. Does doing this still harm the reefs?
A: Yes, according to the bill passed by Hawaii’s Legislature last session, which, as of deadline, awaited gubernatorial action.
SB 2571, SD 2, HD 2, CD1 states that the Legislature “finds that environmental contamination of oxybenzone and octinoxate persists in Hawaii’s coastal waters, as the contamination is constantly refreshed and renewed every day by swimmers and beachgoers. Swimming and other water activities cause these chemicals to pollute Hawaii’s water unless they are actively mitigated. Sewage contamination of coastal waters is another source of oxybenzone and octinoxate environmental contamination, as these chemicals are not removed by the state’s wastewater treatment system. Oxybenzone and octinoxate are also discharged to the ground and surface waters from cesspools, leaking septic systems, and municipal wastewater collection and treatment systems.”
Sunscreen you shower off at home would enter the wastewater treatment system, although of course be diluted. It’s the collective impact, not that of any one person, that the proposed ban seeks to address.
Elevated levels of the chemicals have been detected throughout Hawaii, including at Waimea Bay, Hanauma Bay and Waikiki Beach on Oahu, the bill states.
Write to “Kokua Line” at Honolulu Star-Advertiser, 7 Waterfront Plaza, Suite 210, 500 Ala Moana Blvd., Honolulu 96813; call 529-4773; fax 529-4750; or email kokualine@staradvertiser.com.
