AmyC
Expert Alumni

State tax filing

1. Yes. Hawaii taxes residents on all federally taxable income. Hawaii does have a capital gains tax vs ordinary tax much like the federal. Since the property was out of state, you can get a credit for any income being double taxed by Hawaii.

 

If you are a Hawaii nonresident and sold there, you will file a HI return for the sale and receive a credit in your resident state.

 

2. I am going to assume you are a HI resident and sold property in CA. When you sold the property, they withheld a standard amount as required. You file a tax return and could have a refund or owe depending on the rest of your income. CA does have some credits that are refundable . If you are a nonresident and your only income was sale of property, it does not seem likely that you would get back more than you paid in. That does not sound right.

 

3.The income also goes on your HI return along with a nonrefundable tax credit, so your situation sounds correct for that part.

 

Your resident state taxes all income but gives a credit for income taxed by another state.  Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.

 

  1. First, prepare your non-resident CA return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
  2. Then prepare your resident state HI return and it will generate a credit for your income already being taxed in the non-resident state. 
  3. The credit will be the lower of the state tax liabilities on the same taxable income. You may owe your resident state,  if they have a higher tax rate along with differences in how the taxable income is calculated.

 

It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.

 

4. Without being able to see your CA return, I can't begin to guess at what credits you may have showing or why. Please review your return and reply back with any questions. We are glad to help.

Reference:  HI Instructions  &  2023 Instructions for Schedule CA (540NR) 

@aneridgway 

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