I received a 1099 MISC for rental of a timeshare in Hawaii. Do I have to file a state return for Hawaii?

[pramrine]

I live in the state of Washington that has no income tax but would like to know if the 1099-MISC of 2800.00 forces me to file a Hawaii state income tax? The 1099-MISC is for a timeshare week that I rented instead of using this year.

[DanielV01 · Accepted solution]

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.

[Rich80104]

Thanks for clear direction and IRS references.  Please advise if one does meet Federal exemption requirements, how does one handle the 1099 entry into Turbo Tax and then the "forgetting" of this income due to special rule?

Secondly, given the answer to Federal question, and if 1099 is totally forgotten Federally, does 1099 get entered into State return only?  In this case HI?

Thanks!

[Carl]

Actually, you need to file a HI state non-resident tax return for the rental income. This is because that income is subject to the HI state GET tax (General Excise Tax) and/or the TAT tax (Transient Accommodation Tax.)

Please read the brochure on this at https://files.hawaii.gov/tax/legal/brochures/Res_RP_brochure.pdf