It depends. Rental income is taxed in the state where it is earned. Therefore, if you have a taxable amount of income from this rental, you would need to file a HI nonresident return for the rental income that is taxable.
There is a law that states that if you rent out a vacation home for 15 days or less, then you do not include the income at all. However, to be able to count the property as a vacation home, you need to be able to use it for at least 15 days yourself. Please see this IRS website with additional information on this: Topic No. 415 Renting Residential and Vacation Property | Internal ...
The general consensus is that since timeshares are held for typically held for less than 15 days, they do not qualify for this treatment. The best solution is to claim your rental on Schedule E, stating that the rental was for at least 15 days, and then claiming your expenses to determine the taxable amount. You can prepare the Hawaii return, and if you have a tax due for that income, then you will file and pay that amount. Otherwise, you will not need to file it.
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