Hawaii Additions to Income
Difference Between State and Federal Wages
If the amount in Form W-2, Box 16 (State wages) is larger than Form W-2, Box 1 (Federal wages), subtract the federal wages from the state wages and enter the difference here. If you receive more than one Form W-2, add the differences from all of the forms.
For example, federal employees getting Cost of Living Allowance (COLA) or Living Quarter Allowance (LQA) may see a difference that must be reported here. If you received COLA or LQA and do not see a difference between state and federal wages, enter the amount of COLA or LQA reported on your Form W-2. State or County employees who are in the contributory or hybrid plan of the Employees Retirement System also will see a difference that must be reported here.
Interest on Out-of-State Bonds, Including Municipal Bonds
If you received interest from bonds issued by another State, or a county, city or political subdivision of another State (including interest distributions from a mutual fund investing in these bonds), enter the interest. Do not include interest from bonds issued by the Governments of Puerto Rico, U.S. Virgin Islands, Guam, and American Samoa, or any of their political subdivisions. Also, do not include distributions of short-term or long-terms gains because these amounts are included in federal AGI.
Taxable Amount of Individual Housing Accounts
If you purchased a principal residence with an Individual Housing Account (IHA) or you are notified by an IHA trustee that you have received a taxable distribution, report the taxable amount. For additional information, please click here.
Peace Corps Compensation
If you received compensation for working with the Peace Corps, include the amount of that compensation.
Depreciation and Gain Adjustments
Note: Hawaii did not adopt the federal provisions for bonus depreciation, increased IRC section 179 deduction (Hawaii limit is $25,000), and inclusion of off-the-shelf computer software as property qualifying for the IRC section 179 deduction. For further information please Click here
If you claimed the capital goods excise tax credit, hotel construction and remodeling tax credit, technology infrastructure renovation tax credit, or drought mitigating water storage facility income tax credit, and did not include the amount of the credit as income in the year in which it is properly recognized under your method of accounting, then your adjusted basis in the assets was decreased by the amount of the credit claimed.
- If you are claiming a depreciation deductionfor any such asset, multiply the depreciation percentage for this taxable year by the amount of the applicable income tax credit. Add the results for all of your assets for which the applicable income tax credit. Add the results for all of your assets for which the applicable income tax credit was claimed.
- If you sold or otherwise disposed of any such asset, your gain or loss will be different from that reported on your federal return. The difference will be the amount of the applicable income tax credit that has not already been recovered through depreciation deductions and enter this amount under Income Tax Credit Gain Adjustment.
Excluded Income Earned Outside U.S.
If, while you were a Hawaii resident, you worked outside the United States and you filed federal Form 2555 or 2555-EZ to exclude some of your earned income, you need to add back the amounts here because Hawaii does not have this exclusion.
- The amount on Form 2555-EZ, line 18; or
- The sum of Form 2555, line 43, and Form 2555, line 48.
Other adjustments to Federal AGI include the following:
- Hawaii has not adopted the federal provisions relating to:
— the deduction for capital costs incurred in complying with environmental protection agency sulfur regulations,
— the election for qualifying film and television productions to deduct certain production expenditures in the year the expenditure is incurred,
— the deduction for U.S. production activities, and
— the exclusion from income of benefits under a dependent care assistance program that increases the amount of income that is treated as having been earned by a spouse who is either a full-time student or not able to care for himself or herself.
- The special federal election for capital assets acquired in tax years beginning before January 1, 2001 (election under section 311 of the Taxpayer Relief Act of 1997) is not available for Hawaii income tax purposes.
- Taxpayers who took up residence in Hawaii after attaining the age of 65 years and before July 1, 1976, and who elect to be taxed only on Hawaii source income, may have to make an adjustment here since only Hawaii source income and adjustments are included in the Hawaii adjusted gross income.
Note: There may be other adjustments to federal AGI that are not discussed in these instructions. Such adjustments arise, for example, if a taxpayer makes an election for federal tax purposes (such as an IRC section 179 election) but does not make the same election for Hawaii tax purposes. If you believe that an additional adjustment is needed to arrive at Hawaii adjusted gross income, enter the amount of the adjustment.
For additional information, please see Form N-11 Instructions.