Federal civil servant Hawai’i COLA

[808hehiau]

I am Federal Civil Servant in Hawaii and I receive COLA.

Turbotax 2023 has a section in deductions, Other Income Taxes Paid in 2023, Deductions for Federal Employees in Hawaii. It asks, “Fill in the non taxable cost of living allowance (COLA) you received as a Federal Employee in 2023 that you paid Hawai’i Income Tax on?”

My COLA is part of my gross pay and Hawai’i state taxes are taken out of each paycheck before I revive my net pay.

So do I put the entire amount of COLA that I received in 2023?

This would be line 14 on my W-2.

Any help would be greatly appreciated.

[AmyC]

Your COLA comes into play twice on your state return. You need to check your W2 against the directions. HI 2023 tax forms state:

Line 8 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.

Line 21b Taxes

If you are a federal employee receiving a Cost Of Living Allowance (COLA), not all of your Hawaii income taxes are deductible for federal purposes. See IRS Revenue Ruling 74-140, 1974-1 C.B. 50, for more information. Enter on line 5a of Worksheet A-2 on page 32 the entire amount of state and local income taxes you paid in 2023, even if you reported a different amount on federal Form 1040, Schedule A.