2014 Nonresident Alien Hawaii Tax Returns Workshop

1. 2014 Nonresident Alien Hawaii Tax Returns Workshop

2. Major differences between Fed & HI:

3. Similarities between Fed & HI: • Nonresident Aliens pay tax on Hawaii source income

4. Hawaii Resident for tax purpose: • Lived in Hawaii for more than 200 days in a calendar year. AND ( for NRAs) • Established “domicile” in Hawaii. Domicile means the place where an individual has a true, fixed, permanent home and principal establishment. The place in which an individual has voluntarily fixed the habitation of himself or herself and family.

5. Hawaii Resident for tax purpose: (cont’d) • To create new (Hawaii) domicile, 3 things are necessary , a. Abandonment of old domicile; b. Intent to establish new domicile; c. Actual physical presence in the new domicile.

6. Hawai’i Residency Classification Domiciliary Resident: • U.S. citizen or resident who lived in Hawaii for more than 200 days during a year • In Hawai’i for other than a temporary or transitory purpose Non-Domiciliary Resident: • U.S. citizen or resident lived in Hawaii for less than 200 days in year. OR • Foreign students on “F” visa. • Anyone who can prove domicile is outside of Hawaii. Refer back to definition of domicile. (H,J, Q visas may be considered residents)

7. Who must file: (for Individual under 65)

8. Who must file: (for NRA under 65) (see page 4 of instr.)

9. Who must file: (cont’d) • You should file Hawaii tax return even if your gross income is below the level for your marital status if there are Hawaii income taxes withheld. • The reason is that you will get a refund of the state taxes withheld.

10. Which form to use: • N-11 Full-year resident filing federal return. • N-13 Full-year resident having less than $100,000 taxable income and do not itemize or adjust income. • N-15 Nonresident or part-year resident (Must attached completed copy of federal return) (Deductions and exemptions are limited)

11. Differences in the tax forms: • N-11, N-13 report gross income worldwide , may allow exemptions for dependents, may qualify for low income credits. • N-15 (Nonresident or part-year resident), must attach completed copy of federal return. Nonresident is taxed on Hawaii sourced income only. Nonresident may exclude most intangible income. Hawaii sourced deductions allowed in full. Other deductions are prorated. Personal exemption are prorated, personal exemption(s) are prorated. (part-year resident follows the rule for each period)

12. Hawaii Income Tax Procedures For Form N-15 • Fill in amounts under Col. A-Total Income for each type and similarly for Col. B. • Minus any adjustments (i.e. IRA contributions, moving expenses etc.) • Calculate ratio of Hawaii AGI to Total AGI. • Calculate itemized deductions. • Use ratio to figure out prorated itemized deductions and personal exemptions. • Calculate taxable income and use tax table to find out Hawaii tax.

13. Hawaii Income Tax Procedures For Form N-11 • Start with Federal Adjusted Gross Income (AGI) • Add or subject any Hawaii adjustment to federal AGI. • Figure out any itemized deduction or use standard deductions. • Subtract itemized deduction or standard deductions from Hawaii AGI. • Subtract personal exemption to arrive at Hawaii taxable income • Look for tax amount in tax table that correspond to Hawii taxable income. • Compare tax from tax table with state taxes paid or withheld to calculate refund or tax due.

14. Tax Return Filing Deadline; Where to File: • Due April 20, 2014 For tax return with payment due, mail to: Hawaii Department of Taxation                Attn:  Payment Section                P. O. Box 1530                 Honolulu, HI  96806-1530If no payment with tax return , then mail to:Hawaii Department of Taxation                P. O. Box 3559                Honolulu, HI 96811-3559

15. Extension of Time to File • Federal extension form is not acceptable-do not use • First extension (4 months) is automatic, no form is filed unless making a payment, then Form N-101A and payment by due date, April 20. • Second extension (2 months) requires Form N-101B, file during 1st extension, state valid reason, pay at least 90% of ultimate tax liability, and sign before end of first extension.

16. Penalties: Return filed by April 20 • Underpayment • Imposed if tax is not paid 90% by withholding, and tax liability exceeds $500, and prior year had liability. Calculated on Form N-210 (8% per year, by days) • Failure to pay • Penalty on any tax payable more than 60 days after April 20 Up to 20% (full 20% imposed) plus interest at 8%.

17. Penalties: Return after by April 20 • Underpayment & failure to pay • Same • Failure to file penalty • 5% per month on amounts not paid by April 20, maximum of 25% per year, interest at 8% (2/3 of 1% per month) on tax and penalty , does not apply if extension rules are followed precisely.

18. Samples of tax returns: • See attached examples.

19. Final steps • After completion, check your return to make sure it is correct. Check every line. Review your math. Check tax table to ensure correct tax is calculated. • Sign and date your test return. • Attach all required forms (I.e. W-2, 1042-S) and schedules. • Due dates: April 20, 2014 (unless got extension) • Mail to: See addresses in previous slide.

20. Disclaimer: • This has been a service to provide you with general information on preparation of tax return. • The University does not provide personal assistance in your individual tax return preparation. • Please consult with your tax advisor if further assistance is needed.