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anthony4
New Member

Hawaii form N11: out of state rental real estate income, stock dividends, us gov bond interest- subject to Hawaii Tax? Provide references.

Filling in Hawaii Form N-11.  Resident Other State and Foreign Tax Credit Worksheet.  Does "income earned in another state subject to Hawaii Tax" include rental real estate, stock dividends, us gov bond interest?  

1 Reply
Cindy0H
New Member

Hawaii form N11: out of state rental real estate income, stock dividends, us gov bond interest- subject to Hawaii Tax? Provide references.

Yes, those forms of income would be included on your federal return and flow to Hawaii. The government bond interest is not taxable by the states but the rental income and the dividends are taxable by the state.

https://www.irs.gov/taxtopics/tc403

This is from the Hawaii instructions:

If you have out-of-state income that is taxed by another state or foreign country and also by Hawaii, you may claim a credit against your Hawaii income for the net income tax you paid to the other state or foreign country if you meet the following conditions:
• The income was earned while you were a 
Hawaii resident (or you are married and filing a joint resident return) and was not exempt from Hawaii income tax;

• The income on which the state or foreign tax is imposed was derived or received from sources outside Hawaii;

• You were liable for and paid tax to the foreign jurisdiction (net amount of tax paid to a foreign jurisdiction after all credits, deductions, and refunds allowed or allowable by the laws of the foreign jurisdiction have been deducted);

• The tax paid to the other state or foreign country is an income-based tax that is imposed on both residents and nonresidents of the other state or foreign country, rather than a sales, gross receipts, withholding, or value-added tax (i.e., taxes withheld on dividends paid from foreign investments do not qualify);

• No credit is allowed if the foreign income is excluded on the federal return;

• No credit is allowed if the foreign tax credit is allowed on the federal return;

• The income must be taxed by the other state or foreign country for the same taxable year for which the Hawaii credit is claimed;

• No credit is allowed for penalties or interest paid to the other state or foreign country; and

• No credit is allowed for city or local income taxes paid to another state.

Full Hawaii instructions (page 25):

http://files.hawaii.gov/tax/forms/2018/n11ins.pdf

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