Why is turbotax creating a form N-158 for my Hawaii return? I do not have a form N-158. I didn't have one in 2018 and my tax situation has not changed in 2019.

[MarilynG1]

If you did not have any interest or dividend income to report, you can Delete Form N-158 from your return.

Click this link for instructions on how to Delete a Form in TurboTax Online. 

[bakersdozen]

Which form corresponds to the N158? It's not explicit; maybe "Tax on Capital Gains Worksheet"

[bakersdozen]

It looks like turbotax is including interest from savings accounts in worksheet A3 which require the N158. This is not how it worked last year. Is this an error? or a change in tax laws?

Edit: The N-158 states:

"Exception. You do not have to file Form N-158 if all of the following apply.

• Your investment income from interest and ordinary dividends is more than your investment interest expense.

• You do not have any other deductible investment expenses.

• You do not have any carryover of disallowed investment interest expense from 2018."

I think this implies that a savings account which earns interest doesn't apply, unless the last two are also true.

[aldpal]

Hi Marilyn,

What Tax Situation from Federal Return triggers creation of Form N-158, Hawaii Tax Return?  Since my Itemized Deduction is lower than Standard Deduction, standard deduction is considered.  With that said, there should no interest expense to transfer to Hawaii Tax Return.  As a result HI State e-filing is not allowed.  In fact, I physically deleted investment expense entered Federal Return.  Your input will be much appreciated.  Thanks.

Regards,

Al

[JohnW152]

Form N-158, Rev. 2021, Investment Interest Expense Deduction will be generated when you’ve input investment interest expense information in the federal portion of your return, and your investment interest expenses are less than your net investment income.

To remove investment interest expenses in TurboTax Online:

1. If you’re on the Hi TurboTax Client, let's keep working on your taxes! screen, select Deductions & Credits.  Otherwise, select Federal in the left pane, and then select Deductions & Credits in the banner
2. Scroll down and click Show more to the right of Retirement and Investments
3. Select Revisit to the right of Investment Interest Expenses
4. Remove any unwanted information on the subsequent screens

@aldpal

[aldpal]

Hi JohnW152,

I figured out why form N-158 is required in HI Tax is because of the Investment Interest Expense reported in Schedule K-1 entered in Form 1040 under Deductions and Credits, Line Retirement and Investments.  Having said that, TT should be creating and filling up form N-158 to be able to e-file HI, N-11 tax return.  Necessary information to fill up N-158 is entered in Form 1040 gathered from Schedule K-1.  This will enable e-file.  Meanwhile, thank you for your response.

Best regards,

Al