Hawaii State Tax Returns

State Income Tax - Hawaii Revised Statutes (HRS) 235-9 does not provide a state income tax filing exemption for associations in Hawaii. Accordingly, Hawaii associations are required by HRS 235-92 to file Form N-30 for their state income tax return. Hawaii state taxable income on Form N-30 is governed by HRS 235-2.4(gg) for associations that file Form 1120-H for their federal income tax return. The Hawaii state income tax rate is between 4.4% - 6.4% depending upon the amount of taxable income for the year. Capital gains have a unique application of the state income tax rates in determining the related state income tax on capital gain income. Lastly, if your association has a Federal tax exemption under 501(a), then your association is automatically exempt from having to file Form N-30 as a state income tax return. However, if such an association has UBI and is required to file Form 990-T for federal income tax purposes, then the association would have to file Form N-70NP for Hawaii income tax purposes to report the UBI.

General Excise Tax - Hawaii associations are subject to the General Excise Tax (GET) that taxes gross income not exempt from GET. HRS 237-24.3(2) provides that amounts received by the association in reimbursement of sums paid for common expenses are exempt from GET. Income received by the association from income sources such as parking, interest income, commissions, vending machines, laundry facilities, and other miscellaneous income are taxable for GET purposes at a base excise tax rate of 4% plus a county surcharge rate that varies by county. Associations with a 501(c)(3), 501(c)(4), or 501(c)(12) federal tax exemption may apply for exemption from GET—note that the GET exemption for such entities is not automatic like the state income tax exemption and also note that 501(c)(7) federally exempt entities may not apply for a GET exemption. The GET tax returns that must be filed are the periodic Form G-45 and the annual Form G-49. The periodic Form G-45 filing requirement will vary depending on whether your association is subject to monthly, quarterly or semi-annually filings. Our firm can prepare both the state income tax return and the general excise tax returns for your association.