HAWAII INCOME PATTERNS

Transcription

1 HAWAII INCOME PATTERNS INDIVIDUALS DEPARTMENT OF TAXATION - STATE OF HAWAII

2 STATE OF HAWAII Benjamin J. Cayetano, Governor DEPARTMENT OF TAXATION Ray K. Kamikawa, Director Susan K. Inouye, Deputy Director TAX RESEARCH & PLANNING OFFICE Robert Koike, Tax Research & Planning Officer PREPARED BY Gail Sasaki, Research Statistician

3 T A B L E O F C O N T E N T S HAWAII INCOME PATTERNS: INDIVIDUALS Page INTRODUCTION... 1 SUMMARY... 3 CONFORMITY TO THE INTERNAL REVENUE CODE... 4 LEGISLATION... 4 DATA SOURCE AND METHODOLOGY... 5 TYPES AND NUMBER OF RETURNS FILED... 6 STATISTICS OF INCOME, ADJUSTMENTS, DEDUCTIONS, EXEMPTIONS, AND TAX LIABILITY... 8 SOURCES OF INCOME INCOME ADJUSTMENTS AND ADJUSTED GROSS INCOME DEDUCTIONS PERSONAL EXEMPTIONS TAXABLE INCOME TAX LIABILITY ELDERLY RESIDENT TAXPAYERS BLIND, DEAF AND DISABLED RESIDENT TAXPAYERS DEPENDENT RESIDENT TAXPAYERS STATISTICAL TABLES TABLE 1. Percent Distribution of Selected Data on all Resident Returns by Adjusted Gross Income Class TABLE 2. Selected Data on all Returns Filed, by Type of Return Filed and by Adjusted Gross Income Class TABLE 3. Selected Data on Nonresident Returns Filed by Adjusted Gross Income Class... 26

4 Table of Contents (Continued) Page TABLE 4. Sources of Income and Statutory Adjustments on all Returns Filed by Adjusted Gross Income Class TABLE 5. Sources of Income Reported in Each District by Number of Returns and Amount TABLE 6. Types of Deductions, All Returns, by Adjusted Gross Income Class TABLE 7. Types of Deductions Claimed in Each Taxation District by Number of Returns and Dollar Amount Reported and Allowed TABLE 8. Number of Dependents, Number of Exemptions, Tax Withheld, Payments of Declaration, Balance Due, Refunds and Carried Forward Credits by Adjusted Gross Income Class TABLE 9. Number of Returns Filed, by Number of Exemptions Claimed and by Adjusted Gross Income Class TABLE 10. Average Tax Liability and Effective Tax Rates, Before and After Credits, by Adjusted Gross Income Class TABLE 11. Comparison of Number of Resident Returns, Before and After Credits, at Selected Tax Levels, AGI, and by Status TABLE 12. Type of Return Filed by Those with Adjusted Gross Income Under $50,000, Showing Number of Returns, Adjusted Gross Income, and Tax Liability by Status TABLE 13. Sources of Income, TABLE 14. Type and Amount of Deductions, TABLE 15. Type and Number of Returns Filed in Each Taxation District, APPENDIX: FACSIMILES OF INDIVIDUAL INCOME TAX RETURNS AND INSTRUCTIONS Form N-12 - (Long Form), Resident Individual Income Tax Return with Schedules Instructions for Form N Form N-13EZ and N-13 - (Short Form), Resident Individual Tax Return Instructions for Form N Form N-15 - Nonresident Individual Income Tax Return with Schedules Instructions for Form N

5 INTRODUCTION "Hawaii Income Patterns--Individuals 1994", the thirty-seventh annual edition, summarizes data collected from individual income tax returns filed by residents and nonresidents for the 1994 tax year. While all taxpayers are included in the total population as presented throughout this report, a brief section is presented for dependent taxpayers, blind, deaf or totally disabled taxpayers, and elderly taxpayers. Personal exemption amounts and standard deductions may differ for each of these taxpayers.

6 HAWAII INCOME PATTERNS INDIVIDUALS SUMMARY Returns filed and processed for tax year 1994 numbered 584,701 representing a 2.5% increase over the previous tax year. Nonresidents filed a total of 38,986 returns, representing 7% of the population. Figure 1 Comparison of Selected Items for All 1994 and 1993 Returns (Amounts in Thousands of Dollars) % Increase Item (Decrease) Number of Returns 584, , % Salaries and Wages $ 13,453,982 $ 12,938, % Adjusted Gross Income* $ 16,466,485 $ 15,780, % Itemized Deductions Allowed $ 3,155,757 $ 2,924, % Personal Exemptions $ 1,307,491 $ 1,272, % Taxable Income $ 11,980,123 $ 11,501, % Tax Liability Before Credits $ 949,753 $ 906, % Tax Liability After Credits $ 825,954 $ 798, % *Excludes losses. As the largest reported source of income, salaries and wages reported in tax year 1994 rose 4.0% to $13.5 billion. Along with this increase, adjusted gross income (AGI) and taxable income also grew approximately 4%. Itemized deductions allowed jumped nearly 8% over the previous year, to $3.2 billion. As the highest claimed deductions, interest and tax deductions increased 5.5% and 14.2%, respectively. Previously claimed as an itemized deduction, moving expenses is considered an income adjustment beginning with tax year

7 Individual Income CONFORMITY TO THE INTERNAL REVENUE CODE The Hawaii legislature has conformed Hawaii's income tax law to most of the changes in the Internal Revenue Code, since Several differences remain between state and federal income tax laws. Income sources taxed by the federal government include social security benefits, most pension distributions, and interest on U.S. saving bonds; these sources are not taxable under Hawaii tax laws. On the other hand, cost-of-living allowances of federal employees in Hawaii are taxable under Hawaii tax laws and not under federal tax laws. Also, the first $1,750 in Hawaii national guard duty or military reserve pay is not taxable under Hawaii tax laws. Unlike the federal government, the State allows an extra personal exemption to taxpayers at least 65 years of age. A taxpayer who is blind, deaf or totally disabled may claim an exemption of $7,000 (instead of the $1,040 amount), and an additional $7,000 for a spouse who is also blind, deaf or totally disabled. In place of the federal elderly tax credit and the earned income tax credit which benefit low income wage earners with dependent children, Hawaii offers the excise and low income renter's tax credits to qualified resident taxpayers with AGI below $30,000; the credit amounts are doubled for qualified elderly taxpayers. The various tax credits offered by the state are discussed in a separate report. 1 LEGISLATION The 1994 Hawaii legislature enacted four income tax-related bills applicable to individual and business taxpayers. Act 13 conforms Hawaii's net income tax law to changes in the provisions of the Internal Revenue Code, effective after December 31, It also provides relief from joint tax liability for innocent spouses when the other spouse omits or makes an erroneous deduction on a joint income tax return. Other measures pertaining to the individual income tax include Act 18, which deletes the provision prohibiting the filing of credit or refund claims after three years from the due date of the tax return. Act 49 allows depository financial services loan companies to act as trustees of individual housing accounts. It also provides that a trustee will now qualify if licensed under federal or state law. Finally, Act 85 provides a $1 general income tax credit for tax year 1994, satisfying the provisions of Article VII, section 6, of the Constitution of Hawaii. 1 Tokushige, Walter, "Tax Credits Claimed by Hawaii Residents--1994", Hawaii Department of Taxation, Tax Research & Planning Office, November,

8 Individual Income DATA SOURCE AND METHODOLOGY The state's computerized Comprehensive Net Income Tax (CNIT) system provided most of the data used for this report. Additional data was taken from the Internal Revenue Service's Individual Return Transactions File (IRTF), and collected manually from a sampling of Hawaii state individual returns filed by resident taxpayers. The CNIT system gathers aggregate amounts of schedule E activities. Detailed statistics of partnership, estate, and rental business activities are not available for nonresidents. Income or loss for these activities are classified as "other income" in the statistical tables. Figure 2 Number of Returns Filed by Population and Sample Size With and Without Schedules C, D, E, and/or F by Taxation District Returns with Returns without Taxation Schedules C, D, E and/or F Schedules C, D, E and/or F District N-12 N-15 N-12 N-13 N-15 Population: First 95,997 10, ,443 87,426 24,944 Second 12, ,455 10, Third 13, ,399 15, Fourth 5, ,206 5, STATE 127,949 12, , ,263 26,421 Sample: First 4.4% 100.0% 1.0% 1.9% 100.0% Second 7.4% 100.0% 2.5% 3.9% 100.0% Third 7.6% 100.0% 2.7% 4.2% 100.0% Fourth 7.1% 100.0% 2.5% 3.7% 100.0% STATE 5.1% 100.0% 1.4% 2.5% 100.0% A total of 13,691 N-12 and N-13 resident returns were randomly selected, representing a 2.5% sampling of the total population of 545,715 resident returns filed for tax year N-12 returns with Schedules C, D, E and/or F were sampled at a higher rate of 5.1% while returns without these schedules were sampled at 1.4%. N-13 returns do not include these schedules. 5

9 Individual Income Some statistics in this report are shown by the four taxation districts of the state of Hawaii. The first district includes the island of Oahu; second district, the islands of Maui, Molokai and Lanai; third district, the island of Hawaii; and fourth district, the islands of Kauai and Niihau. Oahu, or the first district, is represented by 74.2% of the state's total number of returns filed, followed by Hawaii with 11.2%, Maui with 9.8%, and Kauai with 4.8%. TYPES AND NUMBER OF RETURNS FILED An individual with gross income subject to Hawaii's income tax law must file an income tax return, except for those whose income is less than the standard deduction and personal exemption amounts. Regardless of net income amount, any person doing business in Hawaii must file a return. Many individuals without taxable income chose to file a return just to claim the tax credits offered. Dependent taxpayers whose unearned income is $500 or more, or whose gross income is greater than the applicable standard deduction amount must also file a return. If the dependent's income is derived solely from interest and dividends and is between $500 and $5,000, then the parent may file Form N-814, Parent's Election to Report Child's Interest and Dividends, for the dependent. Income may be reported on one of three income tax forms available: N-12 for residents who choose not to, or do not qualify to, use Form N-13. N-13 for Hawaii residents with taxable income below $100,000 and income sources include wages, salaries, tips, interest, ordinary dividends, and/or unemployment compensation. Single or joint resident filers with AGI under $30,000 may qualify for the shorter N-13EZ form. Taxpayers who itemize deductions or claim adjustments to income must use form N-12. N-15 for nonresidents with income from Hawaii sources. 6

10 Individual Income Figure 3 Comparison of Type of Return Filed in Each Taxation District in 1994 and 1993 Type of TAXATION DISTRICT Return State First Second Third Fourth All Returns , ,715 54,749 62,496 26, , ,373 52,707 61,185 25,925 % Change 2.5% 2.4% 3.9% 2.1% 3.1% Form N , ,440 42,863 46,202 20, , ,171 41,179 45,492 19,977 % Change 3.0% 3.0% 4.1% 1.6% 4.9% Form N ,263 87,426 10,408 15,228 5, ,714 87,591 10,114 14,724 5,285 % Change 0.5% -0.2% 2.9% 3.4% -1.6% Form N ,986 35,849 1,478 1, ,657 34,611 1, % Change 3.5% 3.6% 4.5% 10.0% -10.6% Statewide, the number of returns filed increased 2.5%, from 570,190 in 1993 to 584,701 returns in tax year As revealed in Figure 3, the total number of N-12 returns filed grew 3.0%, while N-13 returns grew a modest 0.5%. Over the past five years, the number of Form N-13s filed have dropped by 10.8%, while N-12s and N-15s have grown 10.1% and 11.9%, respectively. Resident Returns Hawaii resident returns filed increased by 2.5% to 545,715 returns in tax year Filers claiming single status made up approximately half of the total returns filed, followed by joint filers, heads of household, married filing separate and qualified widows or widowers. 7

11 Individual Income Figure 4 Number of Returns by Status of Taxpayer Residents Nonresidents All Returns No. of % of No. of % of No. of % of Status Returns Total Returns Total Returns Total Joint 205, % 21, % 227, % Single 282, % 11, % 293, % Married Filing Separate 13, % 4, % 18, % Head of Household 44, % % 45, % Qualified Widow(er) % % % TOTAL 545, % 38, % 584, % Nonresident Returns Nonresident returns filed numbered 38,986, up 3.5%, or 1,329 returns over the prior year. Almost 92% of these taxpayers filed their returns in the first taxation district. In contrast to resident taxpayers, more than half of the nonresidents claimed joint filing status, followed by single, married filing separate, head of household and qualified widow(er) taxpayers. STATISTICS OF INCOME, ADJUSTMENTS, DEDUCTIONS, EXEMPTIONS, AND TAX LIABILITY Chart 1 illustrates the major components of a resident return as filed for the 1994 tax year. 8

12 Individual Income Chart 1 COMPONENTS OF A RESIDENT RETURN (Dollars in Millions) INCOME FROM ALL SOURCES $15,974 'S' Corporations Interests Annuities Estates & Trust Dividends Capital Gains State Tax Refund Business Income Rents & Royalties Alimony Received Salaries and Wages Partnership Income Other Sources MINU S ADJUSTMENTS TO INCOME $164 TAXABLE Payments to IRA Plans Moving Expenses NONTAXABLE RETURNS Reservist/National Guard Wages** Alimony Paid RETURNS Payments to Self-Employed*** Forfeited Interest EQUALS Individual Housing Account EQUALS ADJUSTED GROSS INCOME* ADJUSTED GROSS INCOME* $15,719 $90 MINU S MINU S Sum of: Contributions, Interest, Taxes, TOTAL DEDUCTIONS Medical & Dental, Casualty, TOTAL DEDUCTIONS $3,147 and Misc. Deductions $387 OR Standard Deductions MINU S MINU S EXEMPTIONS PERSONAL, DEPENDENT and EXEMPTIONS $954 AGE EXEMPTIONS $261 EQUALS EQUALS TAXABLE INCOME TAXABLE INCOME $11,618 $0 TAX BEFORE CREDITS TAX CREDITS TAX BEFORE CREDITS $924 Food/Excise Credit $0 Energy Credit MINU S Renter's Credit MINU S Car Seat Credit TAX CREDITS General Tax Credit TAX CREDITS $95 Dependent Care Credit $29 Capital Good Excise Credit EQUALS Medical Services Excise Credit EQUALS Other State & Foreign Tax Credit TAX AFTER CREDIT Commercial Fishing Fuel Credit TAX AFTER CREDIT $829 Vocational Rehabilitation Credit $0 Other Tax Credits**** * Includes losses. ** Excludes first $1,750. *** Includes Keogh/SEP, self-employment tax, and health insurance deductions. **** Includes enterprise zone, low -income housing, regulated investment co. & foreign trust beneficiary tax credits. 9

13 Individual Income SOURCES OF INCOME All sources of income must be reported for income tax purposes, unless specifically exempt by law. Under Hawaii's tax laws, sources exempt from taxation include most pension distributions, social security benefits, public assistance benefits, and interest from federal, Hawaii state and Hawaii local government municipal bonds. Resident Returns Total income reported by resident taxpayers jumped 4.0% from $15.4 billion in 1993 to $16.0 billion in tax year Reflected by a 4% growth to $13.1 billion over the previous year, income reported from salaries and wages accounted for nearly 80% of the total. Reported interest, capital assets and unemployment compensation income totals dropped 1.0%, 5.3% and 4.3%, respectively. All other sources of income showed growth as shown in Figure 5. Figure 5 Comparison of Sources of Income Reported by Resident Taxpayers in 1994 and 1993 (In Thousands of Dollars) Percent Source of Income Change TOTAL $ 15,973,571 $ 15,359, % Salaries and Wages $ 13,148,321 $ 12,639, % Interest 512, , % Ordinary Dividends 305, , % Sole Proprietorships 661, , % Capital Assets/Other Property 444, , % Rents and Royalties 85,991 73, % Partnerships* 240, , % Estates and Trusts 88,137 71, % Unemployment Compensation 129, , % All Other Sources 357, , % * Includes small business corporations (SBC). Sole proprietors reported a smaller net profit increase in 1994 than In tax year 1994 net profits were up 2.7% over 1993, while 1993 profits were up 6.3% over

14 Individual Income Partnerships and landlords have reported a more profitable year as compared to Net profits were up 16.1% and 16.8%, respectively, while 1993 amounts dropped over the previous year. Interest income dropped a scant 1.0% over the previous year. The downward trend in interest rates over the past five years is reflected in the decline of reported interest income from $826 million in 1990 to $512 million in Nonresident Returns Total income as reported by nonresidents plummeted 27.4%, to $272.7 million. While most sources of income showed significant growth as shown in Figure 6, a sizable drop reported in other income sources resulted in a net decrease in total income. Figure 6 Sources of Income Reported by Nonresident Taxpayers in 1994 and 1993 (In Thousands of Dollars) Increase Source of Income (Decrease) TOTAL $ 272,695 $ 375,610 $ (102,915) Salaries and Wages $ 305,661 $ 298,822 6,839 Interest 16,482 8,550 7,932 Sole Proprietorships 7,619 2,916 4,703 Ordinary Dividends 1, Capital Assets/Other Property 91,255 88,354 2,901 Rents, Royalties, Partnerships, S Corp., Estates and Trusts 23,724 18,693 5,031 All other Sources (173,070) (42,716) (106,630) 11

15 Individual Income INCOME ADJUSTMENTS AND ADJUSTED GROSS INCOME A taxpayer may claim certain adjustments to be deducted from total income to obtain adjusted gross income (AGI). Allowable adjustments include contributions made to an Individual Retirement Arrangement (IRA), 50% of self-employment tax, 25% of selfemployed health insurance, contributions to a Keogh retirement plan or self employed plan (SEP), interest penalty on early withdrawal of savings, alimony paid, payments made to an Individual Housing Account (IHA), and the first $1,750 received for military reserve or Hawaii national guard duty pay. Under Act 13, effective with tax year 1994, moving expenses was converted from an itemized deduction to an adjustment to income. Resident Returns A total of 79,074 taxpayers claimed adjustments totaling $164.4 million, compared to 73,134 taxpayers claiming $148.8 million a year earlier. Nearly 52% of total adjustments were made up of self-employment adjustments, which include Keogh and SEP retirement plan contributions, and a portion of health insurance payments and federal selfemployment taxes paid. Moving expenses of $11.9 million had a significant role in the $15.6 million jump in adjustments. After deducting adjustments of $164.4 million from the reported total income of $16,583.9 million, total AGI including losses for all resident returns amounted to $15,809.2 million, 3.9% higher than the 1993 total of $15,210.8 million. 12

16 Individual Income Figure 7 Median Adjusted Gross Income by Status, Taxation District and Year (Resident Returns) Taxation All Returns Joint All Others** District All Resident Returns* Oahu $19,709 $18,949 $42,768 $42,390 $12,593 $12,291 Maui 19,386 20,149 37,286 38,574 13,835 14,424 Hawaii 13,313 14,399 30,933 29,737 7,383 8,543 Kauai 17,508 17,232 30,574 33,233 12,603 10,927 STATE $18,827 $18,504 $39,782 $39,838 $14,461 $11,913 Taxable Resident Returns Oahu $26,460 $24,804 $50,213 $48,324 $20,536 $17,414 Maui 23,719 24,020 42,638 42,973 19,293 18,348 Hawaii 22,075 21,651 37,791 37,923 16,566 15,567 Kauai 22,926 22,202 39,953 37,820 18,835 15,786 STATE $25,265 $24,196 $46,778 $46,222 $19,861 $17,296 *Includes returns with AGI losses. **Includes single, married filing separately, and qualifying surviving spouses. Although total AGI for all resident taxpayers rose 3.9%, the median AGI rose a slight 1.7% from $18,504 to $18,827. The median AGI for all resident taxpayers increased 0.7% for Oahu residents and 1.6% for Kauai residents. For Maui and Hawaii county residents, the median AGI fell 3.8% and 7.5%, respectively. The median AGI for joint taxpayers fell 0.1%, while single taxpayers experienced a 12.4% increase. Nonresident Returns Adjustments totaling $6.3 million were claimed by 2,856 nonresident taxpayers, almost doubling the $3.3 million, claimed in The total reported Hawaii AGI before losses amounted to $266.7 million, 28.4% below the 1993 total. 13

17 Individual Income DEDUCTIONS Certain itemized deductions may be subtracted from AGI to determine the taxable income amount. Itemized deductions consist of medical expenses above 7.5% of taxpayer's AGI, taxes, interest expenses, contributions, casualty losses, and other miscellaneous deductions above 2% of AGI. The taxpayer may choose instead to deduct the standard deduction amount allowed by filing status, as follows: Status Standard Deduction Single $1,500 Joint 1,900 Married Filing Separately 950 Head of Household 1,650 Qualified Widow(er) 1,900 Dependent 500 If the dependent's earned income is over $500 then the deduction amount is equal to the earned income amount, up to the allowable amount by filing status. Generally, the maximum amount for a dependent with earned income is $1,500, equivalent to the single taxpayer's amount. It would be to the taxpayer's benefit to claim the itemized deduction amount if that amount is greater than the corresponding standard deduction amount. Taxpayers whose AGI exceed $100,000, or $50,000 if married filing separately, are required to reduce their itemized deductions by 3% of the excess. This amount is the unallowed portion of itemized deductions. Medical expenses, investment interest, casualty losses and gambling losses are not subject to this reduction. Resident Returns Resident taxpayers were split on using the standard deduction and itemized deductions. Over 90% of standard deduction users had AGI under $30,000, while two-thirds of the itemizers had AGI of $30,000 or more. Standard deduction amount totaled $438.2 million, and total itemized deductions amounted to $3,140.5 million. Taxpayers with AGI over $100,000 ($50,000 for married filing separately) are required to reduce the allowable amount by 3% of the excess over the $100,000 ($50,000 for married filing separately). Allowable deductions totaled $3,095.4 million leaving an unallowed itemized deductions amount of $45.0 million. Altogether, the total allowable gross deductions of $3,533.7 million represent a 6.7% growth over the previous year's total of $3,309.8 million. 14

18 Individual Income Chart 2 Itemized Deductions Claimed Tax Years AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAInterestAAATaxes AA Contributions AAOthers* * Includes medical expenses, casualty losses, moving expenses (except in 1994) and miscellaneous. Of the 260,822 itemizers, 56% claimed interest deductions making up 44% of total itemized deductions claimed. The high amount is most likely due to large interest amounts paid for mortgage loans. Over 98% of itemizers claimed a deduction for taxes paid which totaled $1,115.4 million, 36% of total deductions. The second most commonly claimed deductions was contributions, which was claimed by 83.2% of those itemizing deductions. Contributions amounted to $279.2 million, 9% of total deductions. Because medical expenses and certain miscellaneous deductions were limited to amounts over 7.5% and 2% of AGI, respectively, many taxpayers were not able to claim these deductions. Nonresident Returns Of the 38,986 nonresident returns filed, only 13.8% itemized deductions. Total allowable and standard deductions claimed by nonresidents reached $115.5 million, 9.4% more than the $105.6 million claimed in Standard deductions grew slightly over 1993 by $0.5 million, while allowed itemized deductions rose by $9.4 million. Unallowable itemized deductions totaled $2.1 million. 15

19 Individual Income PERSONAL EXEMPTIONS Along with itemized or standard deductions, taxpayers are allowed to subtract a personal exemption amount of $1,040 for each taxpayer, the taxpayer's spouse, and qualified dependents, to determine taxable income. Each taxpayer and/or a spouse who is 65 years of age or older may claim an additional personal exemption. Dependents who file their own return and are claimed as a dependent by another taxpayer, may not claim a personal exemption. Blind, deaf or totally disabled taxpayers are allowed a special personal exemption of $7,000 in lieu of all personal exemptions, except those for the spouse and for the spouse's age. If the spouse is also disabled, the total allowable exemption amount is $14,000. Resident Returns Residents claimed $1,215.3 million in personal exemptions, 1.5% above the $1,197.4 million claimed in The number of dependents rose 2.1% to 295,100, while age exemptions jumped 5.3% to 131,668. Total exemptions of 1,140,042 represent a 2.6% increase over the last year. Nonresident Returns Nonresident exemptions totaled 88,435 for a total claim of $92.2 million, both representing a 1.3% increase over Dependent exemptions dropped by 1,154 exemptions, while age exemptions were up 600 exemptions. TAXABLE INCOME Taxable income is obtained by subtracting itemized or standard deductions and personal exemptions from AGI. The taxable income determines the taxpayer's tax liability. Resident Returns Seventy-nine percent of all resident returns had taxable income totaling $11.6 billion, advancing 3.9% from $11.2 billion in The average taxable income per return rose 3.3% from $26,067 to $26,937. As seen in Chart 3 the number of taxable returns in the under $30,000 AGI group continued to drop each year, while the higher AGI groups grew each year. 16

20 Individual Income Chart 3 Taxable Returns by Size of Adjusted Gross Income: AAA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA < $30 $30 < $50 $50 < $100 $100 & over AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA Nonresident Returns Nonresident taxpayers also experienced a 12.1% increase in taxable income from $323.0 million in 1993 to $362.1 million in As taxable returns dropped 2.1%, the average taxable income per return jumped 14.5% from $14,363 to $16,448. Approximately 56% of nonresidents had taxable income, compared to 60% in Taxpayers with AGI of $100,000 or more accounted for almost one-third of total nonresident taxable income. TAX LIABILITY Tax liability is determined by the amount of taxable income and the taxpayer's filing status. Tax rate schedules are divided into three categories by filing status: single and married filing separate; married filing jointly; and head of household. Some taxpayers may be subject to other additional miscellaneous taxes. Qualified taxpayers are entitled to several tax credits which may reduce the tax liability. 17

21 Individual Income Resident Returns As taxable income increased 3.9%, tax liability rose 4.4%, from $884.0 million to $923.6 million in The average tax liability per taxable return before credits was $2,141, and $1,925 after credits. This compared with $2,062 and $1,869 in 1993, a 3.8% and 3.0% increase, respectively. Based on taxable income, the effective tax rate rose slightly from 7.91% in 1993 to 7.95% in After tax credits were applied, the resulting effective tax rate of 7.1% remained approximately the same as the previous year. Based on AGI, the effective tax rate was identical to the previous year's rate of 5.8% before credits and 5.3% after credits. Nonresident Returns Nonresident taxpayers were responsible for $26.2 million in total tax liability, 16.9% more than the $22.4 million reported in The average tax rate was 7.2% based on taxable income and 5.4% based on AGI; rising from 6.9% and 5.0% in 1993, respectively. Tax credits to nonresidents are limited, as they may qualify for the capital goods and child passenger safety seat credits only. ELDERLY RESIDENT TAXPAYERS Of the 545,715 resident returns filed, 104,042, or 19.1% of the returns had claims of one or two age exemptions. This represents a 10.3% increase over the 94,342 returns filed in Total income of $1,328.4 million represents a 13.2% decrease from the $1,531.0 reported in The total income as reported by elderly taxpayers represent 8.6% of the total income reported by all resident taxpayers. The biggest source of income is salaries and wages, which makes up 41.5% of the total income for elderly taxpayers, up from the 32.4% reported in The second largest source of income is interest. In contrast, nonelderly taxpayers reported salaries and wages as the largest source at 89.7% followed by sole proprietors at 4.3%. Most elderly taxpayers receive pension and social security benefits which are, for the most part, not subject to taxation. 18

22 Individual Income Figure 8 Sources of Income Reported by the Elderly and All Other Residents (In Thousands of Dollars) Elderly Nonelderly Sources of Income Amount % of Total Amount % of Total TOTAL $1,328, % $ 14,045, % Salaries and Wages $ 551, % $ 12,596, % Taxable Dividends 176, % 129, % Interest 279, % 232, % Sole Proprietorships 60, % 608, % Capital Assets and 61, % 251, % Other Property Rents and Royalties 127, % (41,807) -0.3% Partnerships 35, % 205, % Estates and Trusts 43, % 44, % All Other Sources (7,205) (0.5%) 18, % Total adjustments of $17.3 million resulted in total AGI of $1,644.6 million before losses, rising 8.8% above last year's total of $1,512.0 million. Approximately one-third of the elderly taxpayers itemized deductions totaling a gross $415.4 million. Standard deductions claimed by the remaining two-thirds of elderly taxpayers, amounted to $96.0 million. Personal exemptions amounted to $312.5 million. Taxable income amounted to $1,062.5 million, 5.6% above the $1,005.8 million reported in Tax liability before tax credits totaled $81.7 million, and $70.4 million after credits. Effective tax rates based on taxable income are 7.7% before credits and 6.6% after credits. BLIND, DEAF AND DISABLED RESIDENT TAXPAYERS Blind, deaf or totally disabled (BDD) taxpayers may claim a special personal exemption of $7,000 in place of the $1,040 personal exemption for the taxpayer, age and any dependents. The spouse may claim the $1,040 exemption and an additional $1,040 for the age exemption, if applicable. If the spouse is also blind, deaf or totally disabled, the couple may claim a maximum of $14,000 in personal exemptions. 19

23 Individual Income BDD taxpayers filed a total of 5,707 returns, with a reported total income of $148.4 million. The largest source of income for BDD taxpayers was wages and salaries of $64.6 million, making up 43.5% of the total income reported. Net schedule E income of $22.1 million or 14.9% of the total was the second highest reported income source. While taxable income amounted to $76.1 million, tax liability before credits totaled $6.0 million. DEPENDENT RESIDENT TAXPAYERS Individuals who file their own returns, but are claimed as a dependent on another taxpayer's return are classified as dependent taxpayers. They may not claim the personal exemption of $1,040, and the allowable standard deduction amount is the greater of $500 or the amount of earned income up to the allowable amount per filing status. A total of 36,809 returns were filed by dependent taxpayers reporting total income of $139.3 million. The major source of income for dependent taxpayers was salaries and wages, making up 87.6% of total income. Interest income of $5.5 million continued to be the second highest source of income for dependents. The reported taxable income of $94.9 million resulted in a total tax liability of $4.7 million. 20

24 STATISTICAL TABLES

25 Individual Income TABLE 1 PERCENT DISTRIBUTION OF SELECTED DATA ON ALL RESIDENT RETURNS BY ADJUSTED GROSS INCOME CLASS ADJUSTED GROSS Number of Returns Adjusted Gross Income Taxable Income Tax Liability INCOME CLASS Number % Amount % Amount % Amount % TAXABLE RESIDENT RETURNS Under $ 5,000 32, % $ 100,855, % $ 40,510, % $ 1,025, % $ 5,000 " 10,000 48, % 357,862, % 202,989, % 9,103, % 10,000 " 20,000 89, % 1,333,159, % 942,232, % 58,579, % 20,000 " 30,000 78, % 1,937,613, % 1,469,126, % 106,002, % 30,000 " 40,000 49, % 1,735,880, % 1,304,791, % 99,601, % 40,000 " 50,000 35, % 1,587,486, % 1,155,941, % 90,333, % 50,000 " 75,000 55, % 3,335,212, % 2,422,434, % 195,697, % 75,000 " 100,000 22, % 1,913,490, % 1,391,810, % 118,524, % 100,000 " 150,000 12, % 1,502,960, % 1,126,682, % 100,253, % 150,000 " 200,000 2, % 476,367, % 369,395, % 33,482, % 200,000 and over 3, % 1,437,910, % 1,192,063, % 110,998, % TOTAL - TAXABLE RETURNS 431, % $ 15,718,798, % $ 11,617,977, % $ 923,601, % NONTAXABLE RESIDENT RETURNS Loss 5, % $ (142,524,488) $ 0 under $ 5,000 96, % 92,954, % N O T A P P L I C A B L E 5,000 " 10,000 7, % 51,926, % 10,000 and over 4, % 88,050, % 1 TOTAL - NONTAXABLE RETURNS 114, % $ 232,931, % 1 ALL RESIDENT RETURNS 545,715 $ 15,951,730,499 $ 11,617,977,964 $ 923,601,137 1 Exclusive of losses. 23

26 Individual Income TABLE 2 SELECTED DATA ON ALL RETURNS FILED, BY TYPE OF RETURN FILED AND BY ADJUSTED GROSS INCOME CLASS ADJUSTED GROSS N u m b e r o f R e t u r n s A d j u s t e d G r o s s I n c o m e INCOME CLASS Single Joint H/H Single Joint H/H TAXABLE RESIDENT RETURNS Under $ 5,000 31, $ 96,121,996 $ 2,160,754 $ 2,572,806 $ 5,000 " 10,000 37,110 7,732 3, ,214,856 59,636,114 26,011,955 10,000 " 20,000 59,657 18,520 11, ,328, ,406, ,424,022 20,000 " 30,000 46,448 23,189 9,042 1,137,215, ,600, ,796,366 30,000 " 40,000 22,107 21,754 6, ,270, ,605, ,004,999 40,000 " 50,000 11,781 20,417 3, ,404, ,192, ,888,596 50,000 " 75,000 8,977 44,247 1, ,729,465 2,704,401, ,081,590 75,000 " 100,000 1,750 20, ,195,460 1,731,811,517 32,483, ,000 " 150, , ,651,757 1,374,990,494 20,318, ,000 " 200, , ,000, ,255,465 12,112, ,000 and over 493 3, ,763,975 1,187,183,937 22,962,596 TOTAL - TAXABLE RETURNS 220, ,834 36,830 $ 4,731,897,713 $ 9,997,244,054 $ 989,656,883 NONTAXABLE RESIDENT RETURNS Loss 3,409 2, $ (40,872,905) $ (95,093,902) $ (6,557,681) $ 0 under $ 5,000 69,123 20,390 6,641 52,079,768 34,223,712 6,650,588 5,000 " 10,000 1,533 5, ,403,486 39,128,519 2,394,849 10,000 and over 1,013 3, ,795,990 62,452,869 5,802, TOTAL - NONTAXABLE RETURNS 75,078 31,798 7,539 $ 82,279,244 $ 135,805,100 $ 14,847, ALL RESIDENT RETURNS 295, ,632 44,369 $4,814,176,957 $ 10,133,049,154 $1,004,504, ALL NONRESIDENT RETURNS 16,448 21, $ 156,188,723 $ 347,169,117 $ 11,396, TOTAL - ALL RETURNS 312, ,277 45,262 $4,970,365,680 $ 10,480,218,271 $1,015,900,722 See end of table for footnotes. 24

27 Individual Income TABLE 2 (continued) SELECTED DATA ON ALL RETURNS FILED, BY TYPE OF RETURN FILED AND BY ADJUSTED GROSS INCOME CLASS ADJUSTED GROSS T a x a b l e I n c o m e T a x L i a b i l i t y INCOME CLASS Single Joint H/H Single Joint H/H TAXABLE RESIDENT RETURNS Under $ 5,000 $ 39,882,999 $ 190,654 $ 437,046 $ 1,011,891 $ 4,043 $ 9,245 $ 5,000 " 10, ,628,904 16,758,855 12,601,346 8,275, , ,337 10,000 " 20, ,467, ,628, ,135,863 45,522,805 6,445,229 6,611,064 20,000 " 30, ,416, ,929, ,779,901 72,468,067 22,812,815 10,722,104 30,000 " 40, ,395, ,860, ,536,295 52,231,638 35,583,687 11,786,065 40,000 " 50, ,260, ,201, ,480,046 35,528,982 45,438,495 9,365,997 50,000 " 75, ,359,643 1,929,252,223 85,822,655 36,287, ,246,457 7,162,746 75,000 " 100, ,126,941 1,251,154,803 25,528,399 10,548, ,684,495 2,291, ,000 " 150,000 85,220,457 1,026,931,450 14,530,631 7,830,461 91,113,406 1,309, ,000 " 200,000 43,728, ,330,741 9,336,266 4,058,781 28,559, , ,000 and over 189,634, ,058,071 19,371,628 17,438,868 91,853,870 1,705,538 TOTAL - TAXABLE RETURNS $ 3,705,121,813 $ 7,197,296,075 $ 715,560,076 $ 291,203,556 $ 580,133,560 $ 52,264,021 NONTAXABLE RESIDENT RETURNS Loss $ 0 under $ 5,000 5,000 " 10,000 N O T A P P L I C A B L E N O T A P P L I C A B L E 10,000 and over TOTAL - NONTAXABLE RETURNS ALL RESIDENT RETURNS $3,705,121,813 $7,197,296,075 $ 715,560,076 $ 291,203,556 $ 580,133,560 $ 52,264,021 ALL NONRESIDENT RETURNS $ 116,410,950 $ 237,932,516 $ 7,801,474 $ 8,787,767 $ 16,799,884 $ 564,428 TOTAL - ALL RETURNS $3,821,532,763 $7,435,228,591 $ 723,361,550 $ 299,991,323 $ 596,933,444 $ 52,828,449 1 Includes married filing separately. 2 Includes heads of household and qualifying surviving spouses. 3 Exclusive of losses. 25

28 Individual Income TABLE 3 SELECTED DATA ON NONRESIDENT RETURNS FILED BY ADJUSTED GROSS INCOME CLASS ADJUSTED GROSS Number of Haw aii Adjusted No. of Exemptions Itemized Taxable Tax INCOME CLASS Returns Gross Income Regular Age Deductions Income Liability TAXABLE NONRESIDENT RETURNS Under $ 5,000 3,272 $ 11,680,335 3, $ 115,862 $ 3,718,183 $ 103,047 $ 5,000 " 10,000 5,998 44,146,749 12, ,401 20,329, ,569 10,000 " 20,000 6,678 95,458,489 17, ,773,411 63,106,358 3,325,991 20,000 " 30,000 2,845 68,929,610 7, ,945,529 52,065,761 3,405,697 30,000 " 40,000 1,075 36,958,304 2, ,411,739 28,546,985 2,053,282 40,000 " 50, ,930,376 1, ,862,144 22,889,662 1,765,134 50,000 " 75, ,614,459 1, ,822,730 34,577,879 2,798,863 75,000 " 100, ,719, ,061,415 20,794,730 1,735, ,000 " 150, ,643, ,514,530 27,288,889 2,297, ,000 " 200, ,096, ,272,774 13,536,770 1,111, ,000 and over ,235, ,453,059 75,290,415 6,781,931 TOTAL - TAXABLE RETURNS 22,018 $ 487,413,494 48,413 1,733 $ 43,203,594 $ 362,144,940 $ 26,152,079 NONTAXABLE NONRESIDENT RETURNS Loss 4,616 $ (248,363,061) 9,130 1,178 3,391,067 $ 0 under $ 5,000 11,407 16,290,955 22,844 1,390 3,313,178 N O T 5,000 " 10, ,667,666 2, ,252,447 A P P L I C A B L E 10,000 and over 203 6,382, ,153,359 1 TOTAL - NONTAXABLE RETURNS 16,968 $ 27,340,680 35,513 2,776 $ 17,110,051 1 ALL NONRESIDENT RETURNS 38,986 $ 514,754,174 83,926 4,509 $ 60,313,645 $ 362,144,940 $ 26,152,079 1 Exclusive of losses. 26

29 Individual Income TABLE 4 SOURCES OF INCOME AND STATUTORY ADJUSTMENTS ON ALL RETURNS FILED BY ADJUSTED GROSS INCOME CLASS SALARIES AND WAGES DIVIDENDS INTEREST ADJUSTED GROSS Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5,000 25,086 $ 81,019,577 5,180 $ 3,355,970 16,355 $ 7,748,597 $ 5,000 " 10,000 37, ,104,828 7,181 10,787,612 25,218 32,570,321 10,000 " 20,000 78,429 1,097,292,300 12,100 21,239,629 52,746 60,464,535 20,000 " 30,000 74,149 1,747,458,121 11,484 23,152,339 53,272 41,269,420 30,000 " 40,000 47,971 1,573,569,558 11,551 18,371,184 39,186 33,421,636 40,000 " 50,000 34,119 1,427,703,191 9,147 20,864,153 30,197 33,191,471 50,000 " 75,000 53,209 2,988,917,997 18,213 28,323,774 50,490 65,299,842 75,000 " 100,000 21,271 1,658,884,288 10,644 30,579,613 21,598 41,269, ,000 " 150,000 11,916 1,224,369,101 7,403 22,319,147 12,523 27,505, ,000 " 200,000 2, ,126,152 1,942 12,026,083 2,698 12,290, ,000 and over 2, ,586,585 2,838 83,658,992 3,539 76,650,448 TOTAL - TAXABLE RETURNS 389,117 $ 13,027,031,698 97,683 $ 274,678, ,822 $ 431,682,485 NONTAXABLE RESIDENT RETURNS Loss 1,781 $ 20,259,355 1,999 $ 4,402,760 4,882 $ 8,701,809 $ 0 under $ 5,000 23,597 35,908,106 10,455 7,477,159 43,761 38,456,449 5,000 " 10,000 2,768 17,710,777 3,247 5,996,702 6,962 14,326,191 10,000 and over 2,474 47,410,725 2,226 13,377,743 4,498 19,189,407 TOTAL - NONTAXABLE RETURNS 30,620 $ 121,288,963 17,927 $ 31,254,364 60,103 $ 80,673,856 ALL RESIDENT RETURNS 419,737 $ 13,148,320, ,610 $ 305,932, ,925 $ 512,356,341 ALL NONRESIDENT RETURNS 24,189 $ 305,661, $ 1,023,914 7,648 $ 16,482,341 TOTAL - ALL RETURNS 443,926 $ 13,453,982, ,570 $ 306,956, ,573 $ 528,838,682 27

30 Individual Income TABLE 4 (continued) SOURCES OF INCOME AND STATUTORY ADJUSTMENTS ON ALL RETURNS FILED BY ADJUSTED GROSS INCOME CLASS BUSINESS AND PROFESSIONS SALE OF CAPITAL ASSETS & OTHER PROPERTY Profit Loss Profit Loss ADJUSTED GROSS Number of Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5,000 1,869 $ 5,015, $ 309,720 3,332 $ 2,471, $ 666,733 $ 5,000 " 10,000 4,404 23,159, ,639,974 3,679 7,848,207 1,053 1,864,682 10,000 " 20,000 8,139 62,287,170 2,017 15,707,907 6,849 22,564,355 2,302 4,006,369 20,000 " 30,000 6,947 60,965,207 2,590 10,297,930 6,115 16,339,748 1,731 2,986,491 30,000 " 40,000 5,358 48,901,658 2,801 10,157,331 5,538 15,286,776 1,954 3,154,795 40,000 " 50,000 4,613 62,472,872 2,083 7,625,080 4,576 16,734,152 1,733 3,455,679 50,000 " 75,000 7, ,475,602 3,511 10,194,442 10,445 49,896,737 2,673 4,726,952 75,000 " 100,000 3,551 82,527,517 1,607 4,604,739 5,893 38,030,699 1,710 2,989, ,000 " 150,000 2, ,259, ,835,031 4,291 48,174,231 1,342 2,409, ,000 " 200, ,288, ,587 1,359 43,072, , ,000 and over ,239, ,629,256 2, ,488, ,767,798 TOTAL - TAXABLE RETURNS 46,482 $ 734,592,376 16,898 $ 70,956,997 54,109 $ 466,907,215 16,164 $ 28,798,080 NONTAXABLE RESIDENT RETURNS Loss 624 $ 3,707,849 2,134 $ 25,423, $ 7,891,420 1,623 $ 3,998,798 $ 0 under $ 5,000 4,057 7,387, ,849,005 3,449 2,465,084 2,132 2,866,485 5,000 " 10,000 1,174 7,194, ,993 1,158 1,807, ,232,016 10,000 and over 1,163 13,161, ,487,116 1,097 4,838, ,941,693 TOTAL - NONTAXABLE RETURNS 7,018 $ 31,452,104 3,566 $ 33,722,273 6,428 $ 17,001,748 5,502 $ 11,038,992 ALL RESIDENT RETURNS 53,500 $ 766,044,480 20,464 $ 104,679,270 60,537 $ 483,908,963 21,666 $ 39,837,072 ALL NONRESIDENT RETURNS 1,366 $ 13,581, $ 5,963,490 2,487 $ 93,543, $ 2,288,414 TOTAL - ALL RETURNS 54,866 $ 779,626,474 21,141 $ 110,642,760 63,024 $ 577,452,154 22,289 $ 42,125,486 28

31 Individual Income TABLE 4 (continued) SOURCES OF INCOME AND STATUTORY ADJUSTMENTS ON ALL RETURNS FILED BY ADJUSTED GROSS INCOME CLASS RENTS AND ROYALTIES PARTNERSHIPS Profit Loss Profit Loss ADJUSTED GROSS Number of Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5, $ 823, $ 1,070, $ 526, $ 3,321 $ 5,000 " 10,000 1,275 5,093, ,384, ,100, ,803,346 10,000 " 20,000 4,284 25,297,706 2,071 10,106,562 1,358 7,680, ,703 20,000 " 30,000 3,001 20,832,163 2,905 19,152,693 1,175 10,403, ,154,525 30,000 " 40,000 2,859 24,578,485 3,242 23,057, ,740, ,252,640 40,000 " 50,000 2,036 10,596,334 2,493 14,361,028 1,020 7,804, ,046,872 50,000 " 75,000 4,881 28,686,085 6,038 38,735,352 2,635 30,911,076 1,624 8,499,645 75,000 " 100,000 3,396 32,686,960 3,156 19,227,252 1,445 22,726,596 1,057 3,025, ,000 " 150,000 2,037 28,969,837 2,437 14,093,636 1,556 45,110, ,778, ,000 " 200, ,459, ,466, ,086, ,086, ,000 and over 1,109 63,103, ,928,563 1, ,932, ,977,538 TOTAL - TAXABLE RETURNS 25,892 $ 257,126,641 24,066 $ 152,583,207 12,871 $ 332,021,866 7,344 $ 52,355,687 NONTAXABLE RESIDENT RETURNS Loss 353 $ 2,023,110 1,760 $ 20,866, $ 2,483, $ 30,251,225 $ 0 under $ 5,000 1,668 3,215, ,098, , ,494 5,000 " 10,000 1,428 5,491, ,516, , ,423,444 10,000 and over 830 5,574, ,376, ,817, ,170,761 TOTAL - NONTAXABLE RETURNS 4,279 $ 16,305,395 4,133 $ 34,857,686 1,401 $ 7,886,690 1,738 $ 47,314,924 ALL RESIDENT RETURNS 30,171 $ 273,432,036 28,199 $ 187,440,893 14,272 $ 339,908,556 9,082 $ 99,670, ALL NONRESIDENT RET URNS TOTAL - ALL RETURNS 30,171 $ 273,432,036 28,199 $ 187,440,893 14,272 $ 339,908,556 9,082 $ 99,670,611 See end of table for footnotes. 1 29

32 Individual Income TABLE 4 (continued) SOURCES OF INCOME AND STATUTORY ADJUSTMENTS ON ALL RETURNS FILED BY ADJUSTED GROSS INCOME CLASS ESTATES AND TRUSTS ALL OTHER SOURCES Profit Loss Profit Loss ADJUSTED GROSS Number of Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5, $ 312, $ -- 3,692 $ 5,169, $ 324,872 $ 5,000 " 10, , ,097 10,898 31,852,745 1,674 8,496,238 10,000 " 20, ,299, ,183 97,932,452 2,814 2,731,558 20,000 " 30, ,317, ,428 34,012 92,670,298 2,231 7,009,377 30,000 " 40, ,253, ,979 29,408 79,824,565 1,488 5,890,736 40,000 " 50, , ,293 23,781 64,822,807 1,091 10,039,772 50,000 " 75, ,861, ,214 41, ,829,085 2,295 17,575,967 75,000 " 100, ,683, ,380 16,955 96,030,187 1,612 7,781, ,000 " 150, ,955, ,226 9, ,231, ,080, ,000 " 200, ,723, ,084 71,188, ,876, ,000 and over ,432, ,816 2, ,548, ,901,158 TOTAL - TAXABLE RETURNS 2,874 $ 86,425, $ 294, ,420 $1,230,099,773 15,320 $ 105,708,376 NONTAXABLE RESIDENT RETURNS Loss 36 $ 88,957 5 $ 85 1,094 $ 3,453,453 2,081 $ 167,360,715 $ 0 under $ 5, , ,627 12,024,235 1,358 2,026,897 5,000 " 10, , ,920 3,389 10,221, ,743,612 10,000 and over 235 1,742, ,180 3,129 20,585, ,903,350 TOTAL - NONTAXABLE RETURNS 414 $ 2,134, $ 128,185 19,239 $ 46,284,033 4,365 $ 203,034, ALL RESIDENT RETURNS 3,288 $ 88,559, $ 422, ,659 $1,276,383,806 19,685 $ 308,742, ALL NONRESIDENT RETURNS ,739 $ 115,502,905 5,370 $ 264,848,709 TOTAL - ALL RETURNS 3,288 $ 88,559, $ 422, ,398 $1,391,886,711 25,055 $ 573,591,659 See end of table for footnotes. 30

33 Individual Income TABLE 4 (continued) SOURCES OF INCOME AND STATUTORY ADJUSTMENTS ON ALL RETURNS FILED BY ADJUSTED GROSS INCOME CLASS TOTAL INCOME FROM AL L SO UR CE S STATUTORY ADJUSTMENTS TO INCOME ADJUSTED GROSS Number of Number of INCOME CLASS Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5,000 32,210 $ 103,021,509 3,003 $ 2,165,953 $ 5,000 " 10,000 48, ,842,069 6,425 6,979,144 10,000 " 20,000 89,759 1,348,872,458 12,943 15,713,351 20,000 " 30,000 78,679 1,957,304,974 12,937 19,691,825 30,000 " 40,000 49,992 1,751,457,499 9,159 15,576,899 40,000 " 50,000 35,712 1,598,463,571 5,844 10,977,554 50,000 " 75,000 55,168 3,358,603,146 9,594 23,391,068 75,000 " 100,000 22,446 1,927,384,923 5,004 13,894, ,000 " 150,000 12,781 1,520,960,636 3,388 18,000, ,000 " 200,000 2, ,108, ,740, ,000 and over 3,582 1,453,516,925 1,576 15,606,417 TOTAL - TAXABLE RETURNS 431,300 $ 15,870,536,425 70,856 $ 151,737,775 NONTAXABLE RESIDENT RETURNS Loss 5,886 $ (139,352,905) 1,203 $ 3,171,583 $ 0 under $ 5,000 63,370 95,850,649 3,770 2,896,581 5,000 " 10,000 7,568 54,128,724 1,684 2,201,870 10,000 and over 4,798 92,408,112 1,561 4,357,185 TOTAL - NONTAXABLE RETURNS 81,622 $ 103,034,580 8,218 $ 12,627,219 ALL RESIDENT RETURNS 512,922 $ 15,973,571,005 79,074 $ 164,364,994 ALL NONRESIDENT RETURNS 36,556 $ 272,695,085 2,856 $ 6,303,972 TOTAL - ALL RETURNS 549,478 $ 16,246,266,090 81,930 $ 170,668,966 1 Includes small business corporations (SBC). 2 Included in other sources, profit or loss. 3 Includes annuities, state tax refunds, alimony received, unemployment compensation, farm and all other miscellaneous sources. 4 Includes above mentioned (in #3) plus rents and royalties, partnerships, S corporations, estates and trusts. 5 Comprised of payments to qualified retirement and housing accounts, moving expenses, interest penalty for premature withdrawal, alimony payments, military reserve or Hawaii national guard duty pay, and self-employment deductions. 5 31

34 Individual Income TABLE 5 SOURCES OF INCOME REPORTED IN EACH DISTRICT BY NUMBER OF RETURNS AND AMOUNT T A X A T I O N D I S T R I C T FIRST SECOND T HIRD FOURT H SOURCES OF INCOME Number Amount Number Amount Number Amount Number Amount Salaries and Wages 313,140 $ 10,322,482,328 42,779 $ 1,189,962,282 43,562 $1,103,425,173 20,256 $ 532,450,878 Taxable Dividends 89, ,348,512 9,976 26,248,750 11,227 23,790,289 4,450 12,538,269 Interest 275, ,139,346 35,319 42,895,240 38,503 52,716,656 18,981 24,605,099 Business and Professions Net Profit 36, ,299,256 6,175 83,330,930 7,935 82,446,963 2,616 37,967,331 Net Loss 12,871 66,189,695 2,453 11,055,982 3,572 18,643,950 1,568 8,789,643 Sale of Capital Assets Net Gain 47, ,829,821 5,204 48,461,723 5,679 50,558,300 2,411 23,059,119 Net Loss 17,091 31,237,857 1,904 3,218,576 1,818 3,691, ,689,208 Rents and Royalties Net Profit 22, ,238,360 2,897 22,841,253 3,232 19,610,698 1,615 18,741,725 Net Loss 21, ,867,966 3,188 21,036,320 2,350 13,861,287 1,243 7,675,320 Partnerships Net Profit 11, ,017,800 1,103 22,579,098 1,415 26,264, ,046,686 Net Loss 7,236 77,545, ,196, ,990, ,938,412 Estates and Trusts (Income Less Loss) 2,720 71,559, ,917, ,212, ,446,964 1 All Other Sources Net Income 200,038 1,485,472,810 22, ,736,662 27, ,141,429 12,208 66,692,389 Net Loss 10, ,228,912 1,325 17,252,829 1,920 23,222,348 1,002 18,502,478 Total Income 381,082 13,407,317,827 51,412 1,524,213,914 55,406 1,460,757,622 25, ,953,399 2 Less Adjustments to Income 57, ,866,997 8,279 15,192,635 10,081 17,271,925 3,282 7,033,437 3 Adjusted Gross Income 404,866 13,282,450,830 53,271 1,509,021,279 61,430 1,443,485,697 26, ,919,962 1 Includes annuities, state tax refunds, alimony received, unemployment compensation, farm and all other miscellaneous sources. 2 Comprised of payments to qualified retirement and housing accounts, interest penalty for premature withdrawal, alimony payments, military reserve or Hawaii national guard duty pay, and self-employment deductions. 3 Includes losses. 32

35 Individual Income TABLE 6 TYPES OF DEDUCTIONS, ALL RETURNS, BY ADJUSTED GROSS INCOME CLASS CONTRIBUTIONS INTEREST MEDICAL & DENTAL CASUALTY LOSS ADJUSTED GROSS Number of Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5, $ 45, $ 12, $ 193, $ -- $ 5,000 " 10,000 3,719 2,353,231 1,519 2,853,817 3,439 6,341, ,000 " 20,000 20,254 20,725,098 8,700 30,849,821 11,044 20,424, ,760 20,000 " 30,000 33,840 25,324,251 14,743 91,039,916 9,499 16,093, ,524 30,000 " 40,000 31,505 23,708,186 17, ,872,741 5,440 10,901, ,028 40,000 " 50,000 27,633 31,467,535 17, ,454,891 4,244 9,406, ,976 50,000 " 75,000 46,887 54,425,029 38, ,230,381 4,050 12,577, ,290,731 75,000 " 100,000 20,785 30,798,262 18, ,543, ,427, , ,000 " 150,000 11,932 24,259,225 11, ,914, ,352, , ,000 " 200,000 2,579 8,436,752 2,357 44,467, ,137, ,000 and over 3,278 39,074,696 2,850 79,065, , TOTAL - TAXABLE RETURNS 202,571 $ 260,617, ,388 $1,284,304,515 39,201 $ 82,493, $ 2,296,235 NONTAXABLE RESIDENT RETURNS Loss 502 $ 654,282 1,670 $ 16,345,147 1,921 $ 7,394, $ 7,701,225 $ 0 under $ 5,000 5,915 4,944,624 3,809 16,940,227 6,430 13,967, ,000 " 10,000 4,402 4,692,598 3,366 19,120,129 3,806 18,241, ,305 10,000 and over 3,488 8,273,209 3,620 55,938,138 2,919 26,029, ,595 TOTAL - NONTAXABLE RETURNS 14,307 $ 18,564,713 12,465 $ 108,343,641 15,076 $ 65,632, $ 8,189,125 ALL RESIDENT RETURNS 216,878 $ 279,182, ,853 $1,392,648,156 54,277 $ 148,126, $ 10,485,360 ALL NONRESIDENT RETURNS 3,422 $ 8,132,092 1,340 $ 15,015, $ 2,143, $ 561,294 TOTAL - ALL RETURNS 220,300 $ 287,314, ,193 $1,407,663,546 54,956 $ 150,269, $ 11,046,654 33

36 Individual Income TABLE 6 (continued) TYPES OF DEDUCTIONS, ALL RETURNS, BY ADJUSTED GROSS INCOME CLASS MISCELLANEOUS TOTAL ALLOWABLE TAXES DEDUCTIONS ITEMIZED DEDUCTIONS ADJUSTED GROSS Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5, $ 142, $ 387, $ 781,618 $ 5,000 " 10,000 4,257 3,838,880 2,171 1,485,101 4,971 16,872,130 10,000 " 20,000 23,540 29,835,921 9,188 13,428,476 24, ,387,090 20,000 " 30,000 44,608 88,635,642 16,303 29,990,242 44, ,468,650 30,000 " 40,000 39, ,349,007 12,552 17,925,540 40, ,115,019 40,000 " 50,000 31, ,406,512 12,703 27,502,183 31, ,314,424 50,000 " 75,000 52, ,812,735 17,185 37,311,323 52, ,627,297 75,000 " 100,000 22, ,331,981 7,134 22,200,224 22, ,221, ,000 " 150,000 12, ,573,995 4,160 14,359,712 12, ,953, ,000 " 200,000 2,748 43,870, ,683,546 2,782 97,696, ,000 and over 3, ,726,406 1,153 8,693,159 3, ,107,331 TOTAL - TAXABLE RETURNS 237,844 $1,087,524,241 83,760 $ 178,967, ,212 $2,851,545,504 NONTAXABLE RESIDENT RETURNS Loss 2,246 $ 4,095,465 1,717 $ 1,805,399 2,595 $ 37,995,675 $ 0 under $ 5,000 6,262 5,090,087 5,006 1,660,118 8,023 42,602,198 5,000 " 10,000 5,198 6,113,767 2,006 1,502,894 5,482 49,716,017 10,000 and over 4,154 12,561,375 1,964 10,351,076 4, ,584,183 TOTAL - NONTAXABLE RETURNS 17,860 $ 27,860,694 10,693 $ 15,319,487 20,610 $ 243,898,073 ALL RESIDENT RETURNS 255,704 $1,115,384,935 94,453 $ 194,286, ,822 $3,095,443,577 ALL NONRESIDENT RETURNS 4,968 $ 25,173,293 2,099 $ 11,397,254 5,371 $ 60,313,645 TOTAL - ALL RETURNS 260,672 $1,140,558,228 96,552 $ 205,683, ,193 $3,155,757,222 34

37 Individual Income TABLE 6 (continued) TYPES OF DEDUCTIONS, ALL RETURNS, BY ADJUSTED GROSS INCOME CLASS TOTAL ALLOWABLE & UNALLOWED STANDARD DEDUCTIONS STANDARD DEDUCTIONS ITEMIZED DEDUCTIONS ADJUSTED GROSS Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5,000 31,803 $ 42,570,679 32,210 $ 43,352, $ -- $ 5,000 " 10,000 43,218 66,550,250 48,189 83,422, ,000 " 20,000 65, ,627,293 89, ,014, ,000 " 30,000 33,877 55,159,400 78, ,628, ,000 " 40,000 9,930 16,559,100 49, ,674, ,000 " 50,000 4,168 7,177,400 35, ,491, ,000 " 75,000 2,479 4,443,500 55, ,070,797 1,811 20,904 75,000 " 100, ,800 22, ,448, , ,000 " 150, , ,953,540 12,596 6,775, ,000 " 200, ,782 97,696,893 2,748 5,956, ,000 and over , ,107,331 3,543 32,147,791 TOTAL - TAXABLE RETURNS 191,129 $ 295,314, ,300 $ 3,146,859,926 21,063 $ 45,021,885 NONTAXABLE RESIDENT RETURNS Loss 3,310 $ 4,847,659 5,895 $ 42,843, $ -- $ 0 under $ 5,000 88, ,606,696 96, ,208, ,000 " 10,000 2,086 3,930,600 7,568 53,646, ,000 and over ,200 4, ,131, ,720 TOTAL - NONTAXABLE RETURNS 94,175 $ 142,932, ,415 $ 386,830,228 2 $ 11,720 ALL RESIDENT RETURNS 285,304 $ 438,246, ,715 $ 3,533,690,154 21,065 $ 45,033,605 ALL NONRESIDENT RETURNS 33,615 $ 55,177,266 38,986 $ 115,490, $ 2,109,079 TOTAL - ALL RETURNS 318,919 $ 493,423, ,701 $3,649,181,065 21,504 $ 47,142,684 35

38 AAA Individual Income TABLE 7 TYPES OF DEDUCTIONS CLAIM ED IN EACH TAXATION DISTRICT BY NUM BER OF RETURNS AND DOLLAR AM OUNT REPORTED AND ALLOWED (Resident Returns) T A X A T I O N D I S T R I C T FIRST SECOND T HIRD FO URT H TYPE OF DEDUCTION Num ber Am ount Num ber Am ount Num ber Am ount Num ber Am ount Item ized Contributions 165,964 $ 218,147,145 20,611 $ 26,335,473 19,278 $ 23,378,207 11,025 $ 11,321,667 Interest 111,362 1,110,828,772 13, ,705,886 15, ,365,875 6,357 45,747,623 M edical and Dental 39, ,652,367 5,259 12,547,518 6,264 15,847,222 3,318 6,078,933 Casualty Loss 600 9,547, , , ,470 Taxes 193, ,321,347 24,925 91,997,120 24,902 88,123,026 12,294 42,943,442 Other Item ized Deductions 71, ,315,723 9,357 17,255,795 7,659 13,963,644 5,498 12,751,541 Total Item ized Deductions 197,744 $ 2,494,813,207 25,234 $ 275,624,505 25,284 $ 250,824,298 12,549 $ 118,851,676 Less: Unallow ed Item ized Deductions 17,695 37,829,686 1,491 2,499,911 1,268 2,913, ,426,596 Net Allow ed Item ized Deductions 196,447 $ 2,456,983,521 8,314 $ 273,124,594 25,290 $ 247,910,405 12,554 $ 117,425,080 TAXABLE RETURNS FIRST SECOND T HIRD FO URT H TYPE OF DEDUCTION Num ber Am ount Num ber Am ount Num ber Am ount Num ber Am ount Item ized Contributions 155,578 $ 203,961,157 19,239 $ 24,976,232 17,622 $ 21,051,751 10,132 $ 10,628,639 Interest 102,440 1,035,908,796 12, ,672,024 13,426 93,925,918 5,670 40,797,777 M edical and Dental 28,187 60,996,108 3,865 8,673,417 4,747 9,137,512 2,402 3,686,801 Casualty Loss 511 1,384, , , ,570 Taxes 180, ,122,125 23,174 89,615,117 22,816 85,118,425 11,245 41,668,574 Other Item ized Deductions 63, ,622,771 8,314 15,731,690 6,606 13,328,939 4,935 12,283,816 Total Item ized Deductions 182,491 $ 2,310,995,303 23,333 $ 253,432,075 22,991 $ 222,707,269 11,386 $ 109,069,177 Less: Unallow ed Item ized Deductions 17,695 37,829,686 1,448 2,494,791 1,263 2,907, ,426,596 Net Allow ed Item ized Deductions 182,491 $ 2,273,165,617 23,333 $ 250,937,284 22,997 $ 219,800,022 11,391 $ 107,642,581 AAA AAA AAA AAA AAA AAA NONTAXABLE RETURNS FIRST SECOND T HIRD FO URT H TYPE OF DEDUCTION Num ber Am ount Num ber Am ount Num ber Am ount Num ber Am ount Item ized Contributions 10,386 $ 14,185,988 1,372 $ 1,359,241 1,656 $ 2,326, $ 693,028 Interest 8,922 74,919,976 1,129 13,033,862 1,727 15,439, ,949,846 M edical and Dental 11,249 52,656,259 1,394 3,874,101 1,517 6,709, ,392,132 Casualty Loss 89 8,163, , , ,900 Taxes 12,974 21,199,222 1,751 2,382,003 2,086 3,004,601 1,049 1,274,868 Other Item ized Deductions 8,034 12,692,952 1,043 1,524,105 1, , ,725 Total Item ized Deductions 15,253 $ 183,817,904 1,901 $ 22,192,430 2,293 $ 28,117,029 1,163 $ 9,782,499 Less: Unallow ed Item ized Deductions , , Net Allow ed Item ized Deductions 13,956 $ 149,164,704 1,901 $ 22,187,310 2,293 $ 28,110,383 1,163 $ 9,782,520 36

39 Individual Income TABLE 8 NUMBER OF DEPENDENTS, NUMBER OF EXEMPTIONS, TAX WITHHELD, PAYMENTS OF DECLARATION, BALANCE DUE, REFUNDS AND CARRIED FORWARD CREDITS BY ADJUSTED GROSS INCOME CLASS DEPENDENTS EXEMPTIONS TAX WITHHELD ADJUSTED GROSS Number of Number of Number of Number of Number of INCOME CLASS Returns Dependents Returns Exemptions Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5, ,892 16,339 $ 16,992,560 24,508 $ 3,909,060 $ 5,000 " 10,000 7,149 9,791 39,976 68,021 71,451,440 36,338 13,856,396 10,000 " 20,000 19,581 34,533 88, , ,912,720 77,870 68,888,833 20,000 " 30,000 22,954 41,692 78, , ,858,600 73, ,792,641 30,000 " 40,000 18,874 36,097 49, , ,414,600 47, ,146,733 40,000 " 50,000 17,919 33,217 35,712 93,125 97,052,640 33, ,781,301 50,000 " 75,000 31,382 63,346 55, , ,706,760 52, ,301,537 75,000 " 100,000 13,797 26,754 22,425 71,311 76,231,680 21, ,731, ,000 " 150,000 7,884 14,595 12,781 40,540 42,324,520 11,871 97,284, ,000 " 200,000 1,575 2,974 2,782 8,808 9,275,840 2,393 25,360, ,000 and over 1,723 3,349 3,582 11,057 11,739,400 2,857 58,410,586 TOTAL - TAXABLE RETURNS 143, , , ,622 $ 953,960, ,675 $ 946,463,795 NONTAXABLE RESIDENT RETURNS Loss 1,120 1,948 5,698 12,249 $ 13,103,320 1,615 $ 1,151,239 $ 0 under $ 5,000 10,807 19,324 87, , ,446,760 21,732 1,595,130 5,000 " 10,000 1,727 3,994 7,568 25,180 31,235,960 2, ,720 10,000 and over 1,554 2,796 4,798 14,924 18,504,720 2,487 2,803,410 TOTAL - NONTAXABLE RETURNS 15,208 28, , ,420 $ 261,290,760 28,402 $ 6,356,499 ALL RESIDENT RETURNS 158, , ,906 1,140,042 $1,215,251, ,077 $ 952,820,294 ALL NONRESIDENT RETURNS 13,169 24,659 37,590 88,435 $ 92,239,960 23,996 $ 20,713,256 TOTAL - ALL RETURNS 171, , ,496 1,228,477 $1,307,491, ,073 $ 973,533,550 See end of table for footnotes. 37

40 Individual Income TABLE 8 (continued) NUMBER OF DEPENDENTS, NUMBER OF EXEMPTIONS, TAX WITHHELD, PAYMENTS OF DECLARATION, BALANCE DUE, REFUNDS AND CARRIED FORWARD CREDITS BY ADJUSTED GROSS INCOME CLASS PAYMENTS OF DECLARATION BALANCE DUE REFUNDS & AMOUNT CREDITED ADJUSTED GROSS Number of Number of Number of INCOME CLASS Returns Amount Returns Amount Returns Amount TAXABLE RESIDENT RETURNS Under $ 5, $ 117,273 4,599 $ 92,306 27,538 $ 4,811,978 $ 5,000 " 10,000 2,319 1,116,097 4, ,939 44,018 13,262,978 10,000 " 20,000 6,498 4,551,478 10,793 2,745,073 78,886 33,067,311 20,000 " 30,000 4,396 5,227,880 7,790 3,091,200 70,889 38,622,897 30,000 " 40,000 3,324 5,129,420 7,520 3,320,118 42,567 31,305,206 40,000 " 50,000 3,154 5,550,368 4,924 3,060,300 30,636 29,271,731 50,000 " 75,000 6,046 11,697,491 5,643 6,647,521 49,505 54,780,069 75,000 " 100,000 3,946 13,040,653 1,987 2,937,497 20,459 30,715, ,000 " 150,000 3,129 15,018,029 1,949 4,709,137 10,824 21,274, ,000 " 200,000 1,354 10,483, ,016,544 2,236 5,666, ,000 and over 2,306 54,461, ,778,356 2,659 16,234,439 TOTAL - TAXABLE RETURNS 37, ,393,846 50,754 $ 35,873, ,217 $ 279,011,869 NONTAXABLE RESIDENT RETURNS Loss , $ -- 5,481 $ 3,091,343 $ 0 under $ 5, , ,654 24,128,179 5,000 " 10, , ,385 3,823,887 10,000 and over 649 1,322, ,798 6,460,274 TOTAL - NONTAXABLE RETURNS 1,957 $ 2,227, $ ,318 $ 37,503,683 ALL RESIDENT RETURNS 39,013 $ 128,621,215 50,754 $ 35,873, ,535 $ 316,515,552 ALL NONRESIDENT RETURNS 3,641 $ 19,623,195 3,674 $ 3,004,888 26,047 $ 17,653,058 TOTAL - ALL RETURNS 42,654 $ 148,244,410 54,428 $ 38,878, ,582 $ 334,168,610 1 Excludes returns filed by dependents who can be claimed by another taxpayer. 2 Includes estimated tax payments, extension payments, and prior year carryover credtis. 38

41 Individual Income TABLE 9 NUMBER OF RETURNS FILED, BY NUMBER OF EXEMPTIONS CLAIMED AND BY ADJUSTED GROSS INCOME CLASS NUMBER OF REGULAR EXEMTPIONS CLAIMED AGE EXEMPTIONS ADJUSTED GROSS Six CLAIMED INCOME CLASS One Tw o Three Four Five or more One Tw o RESIDENT RETURNS Under $ 5,000 75,633 24,124 4,295 2, ,190 12,980 $ 5,000 " 10,000 29,649 12,126 3,542 1, ,456 5,469 10,000 " 20,000 57,258 21,355 7,460 2,886 1,595 1,097 9,955 6,503 20,000 " 30,000 45,391 16,334 9,057 4,333 2,443 1,693 4,769 2,537 30,000 " 40,000 22,298 12,254 7,223 4,803 2,284 1,493 2,357 1,721 40,000 " 50,000 11,515 8,821 5,782 6,429 2,187 1,018 2, ,000 " 75,000 9,105 15,901 9,496 12,668 5,995 2,037 1, ,000 " 100,000 1,487 7,552 4,425 5,928 2, ,000 " 150, ,096 2,955 3,506 1, ,000 " 200, ,000 and over 484 1, TOTAL - RESIDENT RETURNS 253, ,975 55,375 45,347 20,093 9,100 65,106 32,781 TOTAL - NONRESIDENT RETURNS 14,260 11,145 4,802 4,878 1, ,809 1,350 TOTAL - ALL RETURNS 268, ,120 60,177 50,225 21,947 9,751 66,915 34,131 NOTE: Excludes returns filed by dependents who may be claimed by another taxpayer. 39

42 Individual Income TABLE 10 AVERAGE TAX LIABILITY AND EFFECTIVE TAX RATES, BEFORE AND AFTER CREDITS, BY ADJUSTED GROSS INCOME CLASS (Resident Returns) EFFECTIVE TAX RATES BASED ON BASED ON ADJ. INCOME TAX LIABILITY TAXABLE INCOME GROSS INCOME ADJUSTED GROSS Before Credits After Credits Before After Before After INCOME CLASS Total Average Total Average Credit Credit Credit Credit TAXABLE RESIDENT RETURNS Under $ 5,000 $ 1,025,179 $ 32 $ (696,707) $ (22) 2.53% -1.72% 1.02% -0.69% $ 5,000 " 10,000 9,103, ,113, % 1.04% 2.54% 0.59% 10,000 " 20,000 58,579, ,015, % 4.57% 4.39% 3.23% 20,000 " 30, ,002,986 1,347 90,472,258 1, % 6.16% 5.47% 4.67% 30,000 " 40,000 99,601,390 1,992 90,199,751 1, % 6.91% 5.74% 5.20% 40,000 " 50,000 90,333,474 2,529 81,898,318 2, % 7.08% 5.69% 5.16% 50,000 " 75, ,697,041 3, ,861,198 3, % 7.42% 5.87% 5.39% 75,000 " 100, ,524,287 5, ,994,909 4, % 7.97% 6.19% 5.80% 100,000 " 150, ,253,303 7,844 95,725,070 7, % 8.50% 6.67% 6.37% 150,000 " 200,000 33,482,143 12,035 32,194,167 11, % 8.72% 7.03% 6.76% 200,000 and over 110,998,276 30, ,315,297 28, % 8.67% 7.72% 7.19% TOTAL - TAXABLE RETURNS $ 923,601,137 $ 2,141 $ 829,093,404 $ 1, % 7.14% 5.88% 5.27% NONTAXABLE RESIDENT RETURNS Loss (1,625,650) (307) $ 0 under $ 5, (22,434,413) (269) 5,000 " 10, (2,757,062) (376) 10,000 and over (2,333,909) (486) TOTAL - NONTAXABLE RETURNS $ -- $ -- $ (29,151,034) $ (289) TOTAL RESIDENT RETURNS $ 923,601,137 $ 2,141 $ 799,942,370 $ 1,636 40

43 Individual Income TABLE 11 COMPARISON OF NUMBER OF RESIDENT RETURNS, BEFORE AND AFTER CREDITS, AT SELECTED TAX LEVELS, AGI, AND BY STATUS ADJUSTED GROSS No Tax $1 - $99 $100 - $499 $500 - $999 $1,000 and over INCOME CLASS Before After Before After Before After Before After Before After SINGLE/MARRIED FILING SEPARATE RETURNS Loss 3,409 3, $ 0 under $ 5,000 69,123 78,814 29,640 19,949 1,467 1, ,000 " 20,000 2,262 12,020 5,170 7,545 42,424 37,837 35,385 31,743 13,788 9,884 20,000 and over ,719 4,345 88,894 86,846 TOTAL 75,078 95,093 35,209 27,833 44,641 39,970 38,104 36, ,682 96,730 JOINT RETURNS Loss 2,177 2, $ 0 under $ 5,000 20,390 20, ,000 " 20,000 8,324 23,802 9,275 3,206 12,159 5,600 4,818 1, ,000 and over 907 5,444 1,258 1,080 3,262 5,543 11,184 14, , ,446 TOTAL 31,798 52,226 11,028 4,368 15,421 11,143 16,002 16, , ,446 1 HEAD OF HOUSEHOLD RETURNS Loss $ 0 under $ 5,000 6,641 7, ,000 " 20, ,327 1,718 1,755 6,393 5,473 5,996 2, ,000 and over ,554 1,898 3,819 18,706 15,348 TOTAL 7,539 13,216 2,389 2,094 7,019 7,027 7,894 6,684 19,528 15,348 ALL RETURNS Loss 5,895 5, $ 0 under $ 5,000 96, ,866 30,743 20,031 1,467 1, ,000 " 20,000 11,077 41,149 16,163 12,506 60,976 48,910 46,199 36,576 14,610 9,884 20,000 and over 1,289 6,625 1,720 1,758 4,638 7,763 15,801 22, , ,640 TOTAL 114, ,535 48,626 34,295 67,081 58,140 62,000 59, , ,524 1 Includes qualifying surving spouses. 41

44 Individual Income TABLE 12 TYPE OF RETURN FILED BY THOSE WITH ADJUSTED GROSS INCOME UNDER $50,000, SHOWING NUMBER OF RETURNS, ADJUSTED GROSS INCOME, AND TAX LIABILITY BY STATUS (All Resident Returns) LONG FORM (N-12) RETURNS SHORT FORM (N-13) RETURNS Tax Liability Tax Liability ADJUSTED GROSS Number of Adjusted Number of Number of Adjusted Number of INCOME CLASS Returns 1 1 Gross Income Returns Amount Returns Gross Income Returns Amount ALL RETURNS Under $ 1,000 33,852 $ 9,552,658 1,997 $ 9,775 37,028 $ 4,993,747 1,046 $ 3,206 $ 1,000 " 2,000 12,108 17,956,090 1,859 20,320 7,107 10,260,796 1,467 8,231 2,000 " 3,000 10,069 25,343,812 2,523 53,457 5,083 12,657,958 3,085 48,904 3,000 " 4,000 11,887 41,254,573 7, ,009 4,932 17,177,123 4, ,880 4,000 " 5,000 8,624 38,723,114 5, ,472 3,569 15,889,753 3, ,925 5,000 " 6,000 8,641 47,516,753 5, ,268 3,999 21,890,359 3, ,693 6,000 " 8,000 16, ,298,713 14,148 2,094,208 6,652 46,326,996 6,601 1,280,159 8,000 " 10,000 13, ,936,733 11,832 2,740,275 6,063 54,820,225 6,063 2,008,357 10,000 " 15,000 35, ,415,875 33,557 14,839,799 13, ,941,172 13,681 7,756,848 15,000 " 20,000 32, ,330,459 31,544 25,270,469 10, ,768,345 10,977 10,711,982 20,000 " 30,000 66,755 1,654,306,168 65,973 86,155,828 12, ,552,547 12,706 19,847,158 30,000 " 40,000 46,146 1,603,523,880 45,749 89,022,090 4, ,751,391 4,243 10,579,300 40,000 " 50,000 34,163 1,519,694,674 34,123 85,127,741 1,589 69,599,063 1,589 5,205,733 TOTAL 331,257 $6,217,853, ,885 $ 306,413, ,629 $ 1,062,629,475 72,656 $ 58,232,376 See end of table for footnotes. 42

45 Individual Income TABLE 12 (continued) TYPE OF RETURN FILED BY THOSE WITH ADJUSTED GROSS INCOME UNDER $50,000, SHOWING NUMBER OF RETURNS, ADJUSTED GROSS INCOME, AND TAX LIABILITY BY STATUS (All Resident Returns) LONG FORM (N-12) RETURNS SHORT FORM (N-13) RETURNS Tax Liability Tax Liability ADJUSTED GROSS Number of Adjusted Number of Number of Adjusted Number of 1 1 INCOME CLASS Returns Gross Income Returns Amount Returns Gross Income Returns Amount 2 SINGLE RETURNS Under $ 1,000 v $ 6,882,785 1,997 $ 9,775 30,342 $ 4,359,639 1,046 $ 3,206 $ 1,000 " 2,000 7,931 11,655,315 1,859 20,320 5,988 8,577,448 1,467 8,231 2,000 " 3,000 7,394 18,585,537 2,523 53,457 4,502 11,264,389 3,085 48,904 3,000 " 4,000 9,761 33,956,936 7, ,107 4,270 14,909,938 4, ,472 4,000 " 5,000 5,516 24,763,914 4, ,654 2,988 13,245,863 2, ,765 5,000 " 6,000 5,291 28,795,227 4, ,550 3,593 19,661,637 3, ,129 6,000 " 8,000 10,393 72,312,299 9,778 1,877,098 5,916 41,258,856 5,916 1,249,220 8,000 " 10,000 8,409 74,998,213 8,044 2,341,639 5,041 45,592,110 5,041 1,855,816 10,000 " 15,000 21, ,117,139 20,668 11,399,082 11, ,647,625 11,005 6,841,290 15,000 " 20,000 19, ,055,503 19,653 18,451,438 8, ,531,805 8,331 8,830,995 20,000 " 30,000 36, ,391,256 36,771 56,387,521 9, ,013,800 9,677 16,080,546 30,000 " 40,000 19, ,394,525 19,367 44,769,408 2,740 94,220,970 2,740 7,462,230 40,000 " 50,000 11, ,447,425 11,009 32,703, ,788, ,825,890 TOTAL 163,141 $2,956,356, ,509 $ 169,063,141 95,165 $ 798,072,247 59,701 $ 45,975,694 See end of table for footnotes. 43

46 Individual Income TABLE 12 (continued) TYPE OF RETURN FILED BY THOSE WITH ADJUSTED GROSS INCOME UNDER $50,000, SHOWING NUMBER OF RETURNS, ADJUSTED GROSS INCOME, AND TAX LIABILITY BY STATUS (All Resident Returns) LONG FORM (N-12) RETURNS SHORT FORM (N-13) RETURNS Tax Liability Tax Liability ADJUSTED GROSS Number of Adjusted Number of Number of Adjusted Number of 1 1 INCOME CLASS Returns Gross Income Returns Amount Returns Gross Income Returns Amount JOINT RETURNS Under $ 1,000 7,093 $ 2,224, $ -- 4,110 $ 419, $ -- $ 1,000 " 2,000 3,339 5,001, ,255, ,000 " 3,000 2,251 5,628, , ,000 " 4,000 1,567 5,397, ,558, ,000 " 5,000 2,870 12,901, , ,280, ,000 " 6,000 3,136 17,526, , ,529, ,520 6,000 " 8,000 5,062 35,693,172 3,069 87, ,686, ,190 8,000 " 10,000 4,008 36,136,601 2, , ,191, ,726 10,000 " 15,000 10, ,168,528 8,486 1,906,816 1,222 15,241,953 1, ,217 15,000 " 20,000 8, ,228,333 7,391 3,300,292 1,421 24,590,633 1, ,904 20,000 " 30,000 22, ,497,751 21,539 20,911,459 1,650 39,807,784 1,650 1,901,356 30,000 " 40,000 20, ,567,088 20,431 32,921,977 1,323 45,087,689 1,323 2,661,710 40,000 " 50,000 19, ,358,653 19,600 43,058, ,810, ,379,843 TOTAL 110,223 $ 2,545,329,868 84,479 $ 102,420,402 13,647 $ 175,178,539 7,628 $ 8,255,038 See end of table for footnotes. 44

47 Individual Income TABLE 12 (continued) TYPE OF RETURN FILED BY THOSE WITH ADJUSTED GROSS INCOME UNDER $50,000, SHOWING NUMBER OF RETURNS, ADJUSTED GROSS INCOME, AND TAX LIABILITY BY STATUS (All Resident Returns) LONG FORM (N-12) RETURNS SHORT FORM (N-13) RETURNS Tax Liability Tax Liability ADJUSTED GROSS Number of Adjusted Number of Number of Adjusted Number of 1 1 INCOME CLASS Returns Gross Income Returns Amount Returns Gross Income Returns Amount 3 HEAD OF HOUSEHOLD RETURNS Under $ 1,000 1,812 $ 445, $ -- 2,576 $ 214, $ -- $ 1,000 " 2, ,299, , ,000 " 3, ,130, , ,000 " 4, ,899, , ,000 " 5, ,057, , ,363, ,612 5,000 " 6, ,194, , , ,044 6,000 " 8,000 1,321 9,293,242 1, , ,381, ,749 8,000 " 10,000 1,209 10,801, , ,036, ,815 10,000 " 15,000 4,424 55,130,208 4,403 1,533,901 1,454 18,051,594 1, ,341 15,000 " 20,000 4,681 83,046,623 4,500 3,518,739 1,225 21,645,907 1, ,083 20,000 " 30,000 7, ,417,161 7,663 8,856,848 1,379 32,730,963 1,379 1,865,256 30,000 " 40,000 5, ,562,267 5,951 11,330, ,442, ,360 40,000 " 50,000 3, ,888,596 3,514 9,365, TOTAL 32,946 $ 716,167,560 28,897 $ 34,930,168 8,817 $ 89,378,689 5,327 $ 4,001,644 1 Excludes losses. 2 Includes married filing separately. 3 Includes qualifying surviving spouses. 45

48 Individual Income TABLE 13 SOURCES OF INCOME All Returns (In Millions of Dollars) SOURCES OF INCOME Salaries and Wages $ 6,992 $ 7,236 $ 8,322 $ 9,207 $ 10,372 $ 11,106 $ 12,056 $ 12,757 $ 12,938 $ 13,454 Taxable Dividends Interest Business and Professions Net Profit Net Loss Sale of Capital Assets 3 3 Net Gain , Net Loss Rents and Royalties 3 3 Net Profit Net Loss Partnerships 3 3 Net Profit Net Loss Estates and Trusts 3 3 (Income Less Loss) All Other Sources (Income Less Loss) Total Income $ 8,384 $ 8,713 $ 10,421 $ 11,858 $ 13,475 $ 14,649 $ 15,161 $ 15,739 $ 15,735 $ 16,727 1 Includes annuities, small business corporations, refunds, alimony, and all other miscellaneous sources from resident returns. For 1987, also includes rents, royalties, partnerships, estates, and trusts from nonresident returns. 2 Income before statutory adjustments. 3 Data available for residents only. 4 Total does not add up due to unavailability of certain nonresident data. 46

49 Individual Income TABLE 14 TYPE AND AMOUNT OF DEDUCTIONS All Returns (In Millions of Dollars) TYPE OF DEDUCTIONS Itemized Deductions: Contributions $ 143 $ 160 $ 175 $ 190 $ 223 $ 222 $ 253 $ 278 $ 289 $ 287 Interest ,053 1,131 1,260 1,354 1,335 1,408 Taxes ,141 Medical and Dental Casualty Losses Moving Expenses n/a n/a n/a Other Deductions Total Reported $ 1,865 $ 1,968 $ 1,922 $ 2,043 $ 2,306 $ 2,458 $ 2,699 $ 2,981 $ 2,967 $ 3,203 2 Unallow ed Deductions Total Allow ed $ 1,865 $ 1,968 $ 1,922 $ 2,043 $ 2,306 $ 2,458 $ 2,656 $ 2,936 $ 2,924 $ 3,155 1 Beginning in 1987, moving expenses became an itemized deduction. In 1994, moving expenses became an adjustment to income. 2 In 1991, itemized deductions limited for taxpayers with adjusted gross income more than $100,000 or $50,000 if married filing separately. 47

50 Individual Income TABLE 15 TYPE AND NUMBER OF RETURNS FILED IN EACH TAXATION DISTRICT, TYPE OF RETURN First Taxation District Form N , , , , , , , , , ,440 Form N-13 89,969 83,050 92,659 95, ,702 99,533 95,086 90,378 87,591 87,426 Form N-15 18,332 18,364 22,442 26,069 26,261 31,368 34,301 34,956 34,611 35,849 TOTAL - FIRST DISTRICT 345, , , , , , , , , ,715 Second Taxation District Form N-12 28,000 28,664 31,683 32,615 35,077 37,428 39,188 40,255 41,179 42,863 Form N-13 9,299 9,352 10,038 10,185 10,723 10,656 10,833 10,732 10,114 10,408 Form N ,001 1,961 1,494 1,662 1,414 1,478 TOTAL - SECOND DISTRICT 38,085 38,751 42,517 43,718 46,801 50,045 51,515 52,649 52,707 54,749 Third Taxation District Form N-12 31,858 31,881 35,087 36,640 38,910 41,503 43,525 45,029 45,492 46,202 Form N-13 12,000 11,986 13,225 14,326 15,382 16,002 15,518 15,137 14,724 15,228 Form N , ,066 TOTAL - THIRD DISTRICT 44,308 44,298 48,847 51,588 54,997 58,486 59,984 61,244 61,185 62,496 Fourth Taxation District Form N-12 13,812 13,854 15,787 16,538 17,774 18,675 19,521 20,045 19,977 20,947 Form N-13 5,049 5,208 5,846 5,833 6,275 6,360 6,069 5,290 5,285 5,201 Form N TOTAL - FOURTH DISTRICT 19,054 19,282 21,879 22,704 24,417 25,567 26,046 25,948 25,925 26,741 All Taxation Districts Form N , , , , , , , , , ,452 Form N , , , , , , , , , ,263 Form N-15 19,761 19,750 24,019 27,942 28,335 34,842 37,192 38,309 37,657 38,986 TOTAL - ALL RETURNS 447, , , , , , , , , ,701 1 excludes the blind, deaf and disabled; and dependents with unearned income of $1,040 or more, who may be claimed on another taxpayer's return. 48

51 APPENDIX FACSIMILES OF INDIVIDUAL INCOME TAX RETURNS AND INSTRUCTIONS

52 FORM STATE OF HAWAII DEPARTMENT OF TAXATION DO NOT WRITE OR STAPLE IN THIS SPACE N-12 Individual Income Tax Return 1994 (REV. 1994) RESIDENT Calendar Year 1994 or other tax year beginning, 1994 and ending, 19 Name (If joint return, give first names and initials of both) Last Name Your social security number USE STATE LABEL OTHERWISE PRINT OR TYPE C/O Present mailing or home address (Number and street, including apartment number or rural route) City, town or post office, State and ZIP code HAWAII ELECTION Do you want $2 to go to the Hawaii Election Campaign Fund?... Yes No CAMPAIGN FUND If joint return, does your spouse want $2 to go to the fund?... Yes No ATTACH CHECK OR MONEY ORDER HERE ATTACH COPY B OF FORM HW-2 HERE ADJUSTMENTS INCOME EXEMPTIONS FILING TO INCOME STATUS AGI 1 Single (Check only ONE box) 2 Married filing joint return (even if only one had income). 3 Married filing separate return. Enter spouse s social security no. above and full name here. 4 Head of household (with qualifying person). If the qualifying person is your child but not your dependent, enter this child s name here. 5 Qualifying widow(er) with dependent child (Year spouse died 19 ). Caution: If you can be claimed as a dependent on another person s tax return (such as your parents ), do not check box 6a, but be sure to check the box below line 32. 6a Yourself... Age 65 or over... } 6b Spouse... Age 65 or over... 6c and 6d Dependents: If more than 4 2. Check 5. No. of months dependents, use if under 3. If age 1 or older, dependent s 4. Relationship lived in your 1. First and last name attachment. age 1. social security number home in e Total number of exemptions claimed... 7 Wages, salaries, tips, etc. (attach Form HW-2; if unavailable, see Step 1 on page 6 of Instructions) Interest income (also attach Schedule B if over $400) Dividends (also attach Schedule B if over $400) State income tax refunds (does not apply if refund is for year you did not itemize deductions see page 9 of Instructions) Alimony received 11 Enter name and address of payer 12 Business income or (loss) (attach Schedule C) a Capital gain or (loss) (attach Schedule D). Enter amount from Schedule D, line 18 or a 13b Enter amount, if any, from Schedule D, line b 14 Supplemental gains or (losses) (attach Schedule D-1) a Total IRA distributions... 15a,15b Taxable amount (see Instructions)... 15b 16a Total pensions and annuities 16a,16b Taxable amount (see Instructions) (attach Sch.J)... 16b 17 Rents, royalties, partnerships, estates, trusts, etc. (attach Schedule E) Farm income or (loss) (attach Schedule F) Unemployment compensation (insurance) Other income (state nature and source see page 10 of Instructions) Add amounts in far right column for lines 7 through Total Income 21 22a Your IRA deduction... 22a 22b Spouse s IRA deduction... 22b 23 Moving expenses (attach Form N-139) Deductions for self-employment tax Keogh retirement plan and self-employed SEP deduction Interest penalty on early withdrawal of savings (see page 11 of Instructions) Alimony paid 27 Enter name and social security number of recipient 28 Payments to an individual housing account AMD UNP 008 PNT INT 29 First $1,750 of military reserve or Hawaii national guard duty pay Add lines 22a through 29...Total Adjustments Line 21 minus line Adjusted Gross Income 31 Spouse s social security number Your occupation Spouse s occupation Enter number of boxes checked on 6a and 6b Enter number of your children listed Enter number of other dependents Add numbers entered in boxes above Note: Checking Yes will not increase your tax or reduce your refund. 6c 6d 6e FORM N-12

53 FORM N-12 PAGE 2 TAX PAYMENTS AND CREDITS CREDITS TAX COMPUTATION REFUND OR AMOUNT YOU OWE PLEASE SIGN HERE 32 Amount from line 31. (adjusted gross income) Caution: If you can be claimed as a dependent on another person s return, see the worksheet on page 12 of the Instructions and check here If you are married filing separately and your spouse itemizes deductions, see page 12 of the Instructions. 33 If you do not itemize deductions, go to line 34. If you itemize, enter amounts from Schedule A (Form N-12). 33a Medical and dental expenses (from Schedule A, line 4)... 33a 33b Taxes (from Schedule A, line 8)... 33b 33c Interest expense (from Schedule A, line 12)... 33c 33d Contributions (from Schedule A, line 16)... 33d 33e Casualty and theft losses (from Schedule A, line 17)... 33e 33f Miscellaneous deductions (from Schedule A, line 25)... 33f 33g If line 32 is more than $100,000 ($50,000 for married filing separately) see the worksheet on page 12 of the Instructions. If not, add lines 33a through 33f. Enter total here and go to line 35...Total Itemized Deductions 34 Standard Deduction. 1, enter $1,500 3, enter $950 If you checked filing status box: [ 2 or 5, enter $1,900 4, enter $1,650 ]... Standard Deduction Line 32 minus line 33g or 34, whichever applies. (This line MUST be filled in) Multiply $1,040 by the total number of exemptions claimed on line 6e. If you and/or your spouse are blind, deaf, or disabled, check applicable box(es) Yourself Spouse, and see page 13 of the Instructions Taxable Income. Line 35 minus line 36. (but not less than zero.)... Taxable Income 37 Caution: If under age 14 and you have more than $1,000 of investment income, check here and see page 13 of the Instructions and Form N Tax. Check if from Tax Table; Tax Rate Schedule I, II, or III; Schedule D; or Form N-615, Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1,000. ( Include separate tax from Forms N-2, N-103, N-152, N-312, N-405, N-586, or N-814)... Tax Income tax paid to another state or to a foreign country (attach copy of return and tax receipt) Energy Conservation Tax Credit (attach Form N-157) Enterprise Zone Tax Credit (attach Form N-756) Low-Income Housing Tax Credit (attach Form N-586) (see page 14 of Instructions) Credit for Employment of Vocational Rehabilitation Referrals (attach Form N-884) Add lines 39 through Total Credits Line 38 minus line 44 (but not less than zero)... Balance Hawaii State Income tax withheld and tax withheld on IHA distribution estimated tax payments Amount of estimated tax applied from 1993 return Amount paid with extension(s) Credit for Child and Dependent Care Expenses (attach Form N-141) Food/Excise Tax Credit (attach Form N-311) i Food portion exemptions from Form N-311, Part II, line 1 ii Excise portion exemptions from Form N-311, Part II, line 8 iii DHS, etc. exemptions from Form N-311, Part II, line 10 iv If married filing separately, enter spouse s AGI here $ Enter total credit amount from Form N-311, Part II, line Credit for Low-Income Household Renters (attach Form N-153) Fuel Tax Credit for Commercial Fishers (attach Form N-163) Credit for $1 general income tax (see page 16 of Instructions for qualifications) Credit for Child Passenger Restraint System(s) (attach Form N-165) Capital Goods Excise Tax Credit (attach Form N-312) Medical Services Excise Tax Credit (attach Form N-858) Other credits (see page 17 of Instructions) (attach schedule) Add lines 46 through 58...Total If line 59 is larger than line 45, enter the amount OVERPAID (line 59 minus line 45) Amount of line 60 to be REFUNDED TO YOU... Refund Amount of line 60 to be applied to your 1995 ESTIMATED TAX If line 45 is larger than line 59, enter the AMOUNT YOU OWE (line 45 minus line 59). DO NOT include penalty and interest for the late filing of your return; see page 17 of the Instructions. Attach check or money order for full amount payable to Hawaii State Tax Collector. Write your social security number and 1994 Form N-12" on it....balance Due Estimated tax penalty. (see page 17 of Instructions) Also include on line 60 or 63, whichever applies If you do not need Hawaii income tax forms mailed to you next year because a tax preparer will prepare your return, check here, and you will receive a preprinted label only DECLARATION I declare, under the penalties set forth in section , HRS, that this return (including accompanying schedules or statements) has been examined by me and, to the best of my knowledge and belief, is a true, correct, and complete return, made in good faith, for the taxable year stated, pursuant to the Hawaii Income Tax Law, Chapter 235, HRS. Your signature Date Spouse s signature (if filing jointly, BOTH must sign) Date Preparer s Signature Preparer s social security number Check if Paid and date self-employed Preparer s Firm s name (or yours Federal E.I. No. Information if self-employed) and address ZIP Code 33g FORM N-12

54 STATE OF HAWAII DEPARTMENT OF TAXATION SCHEDULES A & B Form N-12 Schedule A Itemized Deductions (Rev. 1994) (Schedule B is on back) Attach to Form N-12. See Instructions for Schedules A and B (Form N-12) 1994 Name(s) as shown on Form N-12 Your Social Security Number Medical and Dental Expenses Taxes You Paid (See page 19 of the Instructions.) Interest You Paid (See pages of Hawaii Instructions and federal Instructions.) Note: Personal interest is no longer deductible. Gifts to Charity (See pages of the Instructions.) Casualty and Theft Losses Miscellaneous Deductions Subject to 2% AGI Limit (See pages of the Instructions.) Other Miscellaneous Deductions Total Miscellaneous Deductions Total Itemized Deductions Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses. (See page 19 of the Instructions)... 2 Enter amount from Form N-12, line Multiply line 2 above by 7.5% (.075) Line 1 minus line 3. If zero or less, enter zero. Enter the result here and on Form N-12, line 33a. Total medical and dental expenses State and local income taxes Real estate taxes Other taxes. (List) Add the amounts on lines 5 through 7. Enter the total here and on Form N-12 line 33b. Total taxes.... 9a Home mortgage interest and points reported to you on federal Form b Home mortgage interest not reported to you on federal Form (If paid to an individual, show that person s name and address) b 10 Points not reported to you on federal Form 1098 (See federal Instructions for special rules.) Investment interest (Attach Form N-158 if required). (See Instructions) Add the amounts on lines 9a through 11. Enter the total here and on Form N-12, line 33c. Total interest expense.... Caution: If you made a charitable contribution and received a benefit in return, see the federal Instructions. 13 Gifts by cash or check (If any gift of $250 or more, see Instructions) Other than by cash or check. (If any gift of $250 or more, see Instructions) (Attach required statement if over $500) Carryover from prior year Add the amounts on lines 13 through 15. Enter the total here and on Form N-12, line 33d. Total contributions Total casualty and theft loss(es) (attach Form N-184). (See page 21 of the Instructions) Enter total here and on Form N-12, line 33e Unreimbursed employee business expenses job travel, union dues, job education, etc. (You must attach Form N-106 if required) Other expenses (investment, tax preparation, safe deposit box, etc.). List type and amount Add the amounts on lines 18 and 19. Enter the total Multiply the amount on Form N-12, line 32 by 2% (.02). Enter the result here Line 20 minus line 21. (Enter the result here, but not less than zero) Moving expenses incurred before 1994 (attach Form N-139). (See page 21 of the Instructions) Miscellaneous deductions not subject to 2% AGI limit. (See pages of the Instructions) (List type and amount) Enter the total here 25 Add the amounts on lines 22 through 24. Enter the total here and on Form N-12, line 33f. Total miscellaneous deductions... Note: If your adjusted gross income is more than $100,000 ($50,000 if married filing separately), you may not be able to deduct all of your itemized deductions on Form N-12, line 33g. See page 12 of the Instructions. 1 9a Schedule A (Form N-12)

55 SCHEDULES A & B(Form N-12)(Rev. 1994) Schedule B Interest and Dividend Income Page 2 Name(s) as shown on Form N-12 (Do not enter name and social security number if shown on other side) Your Social Security Number Part I Interest Income (See page 22 of the Instructions.) Note: If you received a federal Form 1099-INT, Form 1099-OID, or substitute statement, from a brokerage firm, list the firm s name as the payer and enter the total interest shown on that form. Part II Dividend Income (See page 22 of the Instructions.) Note: If you received a federal Form 1099-DIV, or substitute statement, from a brokerage firm, list the firm s name as the payer and enter the total dividends shown on that form. Note: You must report all taxable interest and dividends on Form N-12, even if you are not required to complete Schedule B. If you have received more than $400 in taxable interest income, you must complete Part I and list ALL interest received. If you received interest as a nominee for another, or you received or paid accrued interest on securities transferred between interest payment dates, see Instructions. Interest Income 1 Interest income from seller-financed mortgages. (See Instructions and list name of payer) Other interest income. (List name of payer) Add the amounts on lines 1 and 2. Enter the total here and on Form N-12, line Amount If you received more than $400 in gross dividends (and/or) other distributions on stock, complete Part II. If you received dividends as a nominee for another, see Instructions. Dividend Income Amount 4 Dividend income. (List name of payer include on this line capital gain distributions, nontaxable distributions, etc.) Add the amounts on line 4. Enter the total here Capital gain distributions. Enter here and on Schedule D, line Nontaxable distributions. (See Schedule D Instructions for adjustments to basis.) Add the amounts on line 6 and 7. Enter the total here Line 5 minus line 8. Enter the result here and on Form N-12, line Schedule B (Form N-12)

56 STATE OF HAWAII DEPARTMENT OF TAXATION SCHEDULE C FORM Profit or (Loss) From Business or Profession N-12/N-15/N-40 (Sole Proprietorship) 1994 (REV. 1994) Partnerships, Joint Ventures, etc., Must File Form N-20 Attach to Form N-12 or Form N-15 or Form N-40. See Instructions for Schedule C (Form N-12). Name of Proprietor Social security no. of proprietor A Main business activity (see Instructions) ;product B Business name C Hawaii G.E./Use Ident. No. D Business address E Accounting Method: (1) Cash (2) Accrual (3) Other (specify) F Method(s) used to value the closing inventory: (1) Cost (2) Lower of cost or market (3) Other (if other, attach explanation) (4) Does not apply (if checked, skip line G) G Was there any major change in determining quantities, costs, or valuations between opening and closing inventory?... (If Yes, attach explanation.) H Were you required to file Form HW-3 or Form N-196 for 1994?... If Yes, where filed I Did you materially participate in the operation of this business during 1994? (If No, see Instructions for limitations on losses.)... J Was this business in operation at the end of 1994?... K How many months was this business in operation during 1994?... PART I Income 1 Gross receipts or sales Returns and allowances Balance (line 1 minus line 2) Cost of goods sold and/or operations (from Part III, line 41) Gross profit (line 3 minus line 4) Other income (attach schedule) Total income (add lines 5 and 6)... 7 PART II Expenses (Caution: Enter expenses for business use of your home on line 31.) 8 Advertising Rent or lease: 9 Bad debts from sales or services (Cash method taxpayers, see p. 23 of Instructions.) Car and truck expenses Commissions and fees Depletion Depreciation and section 179 deduction from Form N-164 (not included in Part III) Employee benefit programs (other than on line 20) Freight (not included in Part III) Insurance (other than health) Interest: a Mortgage (paid to financial institutions)... b Other... 17a 17b 18 Legal and professional services Office expense Pension and profit-sharing plans a Vehicles, machinery and equipment... b Other business property... 21a 21b 22 Repairs and maintenance Supplies (not included in Part III) Taxes and licenses Travel, meals, and entertainment: a Travel... b Meals and entertainment... c Enter 50% of line 25b subject to limitations (see p. 24 of Instructions)... d Line 25b minus line 25c... 25a 25d 26 Utilities (see p. 24 of Instructions) Wages (less Hawaii jobs credit) Other expenses (from line 47 on page 2) Yes No 29 Total expenses before business use of your home expenses (add amounts in columns for lines 8 through 28) Tentative profit (loss). (Line 7 minus line 29) Expenses for business use of your home (attach federal Form 8829) Net profit or (loss) (line 30 minus line 31). If a profit, enter on Form N-12, line 12, Form N-15, line 12, or Form N-40, line 5. If a loss, go on to line If you have a loss, you MUST check the box that describes your investment in this activity (see Instructions)... 33a } 33b If you checked 33a, enter the loss on Form N-12, line 12, Form N-15, line 12, or Form N-40, line 5. If you checked 33b, you MUST attach federal Form All investment is at risk. Some investment is not at risk. Schedule C (Form N-12/N-15/N-40)

57 Page 2 Schedule C (Form N-12/N-15/N-40) (Rev. 1994) PART III Cost of Goods Sold and/or Operations 34 Inventory at beginning of year. (If different from last year s closing inventory, attach explanation.) Purchases less cost of items withdrawn for personal use Cost of labor. (Do not include salary paid to yourself.) Materials and supplies Other costs Add lines 34 through Inventory at end of year Cost of goods sold and/or operations (line 39 minus line 40). Enter the result here and on page 1, line PART IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 10 and are not required to file Form N-164 for this business. 42 When did you place your vehicle in service for business purposes? (month, day, year) Of the total number of miles you drove your vehicle during 1994, enter the number of miles you used your vehicle for: a Business... b Commuting... c Other Do you (or your spouse) have another vehicle available for personal use?... Yes No 45 Was your vehicle available for use during off-duty hours?... Yes No 46a Do you have evidence to support your deduction?... Yes No b If Yes, is the evidence written?... Yes No PART V Other Expenses. List below business expenses not included on lines 8-27 or line Total other expenses. Enter here and on page 1, line

58 SCHEDULE D STATE OF HAWAII DEPARTMENT OF TAXATION FORM N-12/N-15 Capital Gains and Losses 1994 (REV. 1994) Name(s) as shown on Form N-12 or N-15 1 PART I Attach to Form N-12 or N-15. See Instructions for Schedule D (Form N-12 or N-15). Short-term Capital Gains and Losses Assets Held One Year or Less Your social security number (a) Description of property (b) Date (f) LOSS (g) GAIN (Example, 100 shares 7% acquired (c) Date sold (d) Sales price (e) Cost or other basis If (e) is more than (d), If (d) is more than (e), preferred of Z Co.) (Mo., day, yr.) (Mo., day, yr.) (see Instructions) (see Instructions) subtract (d) from (e). subtract (e) from (d). 2 Enter your short-term totals, if any, from line Total short-term sales price amounts. Add column (d) of lines 1 and Short-term gain from Forms N-103 and N-171, and short-term gain or (loss) from Form N-184, Schedule D-3, and federal Form Net short-term gain or (loss) from partnerships, S Corporations, and fiduciaries from Schedule(s) K Short-term capital loss carryover from 1993 Schedule D, line Add lines 1, 2, and 4 through 6 in columns (f) and (g)... 7 ( ) 8 Net short-term capital gain or (loss). Combine columns (f) and (g) of line PART II Long-term Capital Gains and Losses Assets Held More Than One Year 9 10 Enter your long-term totals, if any, from line Total long-term sales price amounts. Add column (d) of lines 9 and Gain from Schedule D-1; long-term gain from Forms N-103, N-171, and federal Form 2439; and long-term gain or (loss) from Form N-184, Schedule D-3, and federal Form Net long-term gain or (loss) from partnerships, S Corporations, and fiduciaries from Schedule(s) K Capital gain distributions Long-term capital loss carryover from 1993 Schedule D, line Add lines 9, 10, and 12 through 15 in columns (f) and (g) ( ) 17 Net long-term capital gain or (loss). Combine columns (f) and (g) of line PART III Summary of Parts I and II 18 Combine lines 8 and 17 and enter the net gain or (loss) here. If a loss, go to line 19. If a gain, also enter the gain on Form N-12, line 13a or Form N-15, line 13a Note: If both lines 17 and 18 are net gains and your taxable income is taxed over the 7.25% tax rate, you should use Part IV on page 2 to figure your tax. 19 If line 18 is a loss, enter here and as a loss on Form N-12, line 13a or Form N-15, line 13a, the smaller of: a. The amount on line 18 or b. $3,000 ($1,500 if married filing a separate return) Note: When figuring whether 19a or 19b is smaller, treat both numbers as if they are positive. Go on to Part V if the loss on line 18 is more than $3,000 ($1,500, if married filing a separate return), OR if taxable income on Form N-12, line 37 or Form N-15, line 37, is zero. ( ) Schedule D (Form N-12/N-15)

59 Schedule D - Form N-12/N-15 (REV. 1994) Page 2 Name(s) as shown on Form N-12 or Form N-15 (Do not enter name and social security number if shown on other side) Your social security number PART IV Alternative Tax Computation (Complete this part AFTER completing your return up to line 37 of Form N-12 or line 37 of Form N-15) Use Part IV if both lines 17 and 18 show net gains, and: you checked filing status box: AND Form N-12, line 37 or Form N-15, line 37 is over: 1 or 3 $5,500 2, 4, or 5 $11, Enter your taxable income from Form N-12, line 37 or Form N-15, line Enter the smaller of the gain on line 17 or the gain on line If you are filing Form N-158, enter the amount from Form N-158, line 4e Line 21 minus line 22. If zero or less, stop here; you cannot use Part IV to figure your tax. Instead, use the Tax Table or Tax Rate Schedules, whichever applies Line 20 minus line Enter: a $3,500 if you checked filing status box 1 or 3; b $7,000 if you checked filing status box 2 or 5; or c $5,500 if you checked filing status box Enter the greater of line 24 or Line 20 minus line 26 (Also enter on Form N-12, line 13b or Form N-15, line 13b) Compute the tax based on the amount on line 26 using the Tax Table or Tax Rate Schedules, as applicable Multiply line 27 by 7.25% (.0725) and enter the result Add lines 28 and 29. Enter the result here and on Form N-12, line 38, or on Form N-15, line 38 and check the box for Schedule D PART V Computation of Capital Loss Carryovers From 1994 to 1995 Section A Carryover Limit 31 Enter the amount from Form N-12, line 35 or Form N-15, line 35. If a loss, enclose the amount in parentheses Enter the loss from line 19 as a positive amount Combine lines 31 and 32. If zero or less, enter zero Enter the smaller of line 32 or line Section B. Short-Term Capital Loss Carryover to 1995 (Complete this section only if there is a loss shown on line 8 and line 19. Otherwise, go on to Section C.) 35 Enter the loss shown on line 8 as a positive amount Enter the gain, if any, shown on line Enter the amount shown on line Add lines 36 and Line 35 minus line 38. If zero or less, enter zero. This is your short-term capital loss carryover to Section C. Long-Term Capital Loss Carryover to 1995 (Complete this section only if there is a loss shown on line 17 and line 19.) 40 Enter the loss shown on line 17 as a positive amount Enter the gain, if any, shown on line Line 34 minus line 35. If zero or less, enter zero Add lines 41 and Line 40 minus line 43. If zero or less, enter zero. This is your long-term capital loss carryover to PART VI Short-term Capital Gains and Losses Assets Held One Year or Less (Continuation of Part I) (a) Description of property (b) Date (f) LOSS (g) GAIN (Example, 100 shares 7% acquired (c) Date sold (d) Sales price (e) Cost or other basis If (e) is more than (d), If (d) is more than (e), preferred of Z Co.) (Mo., day, yr.) (Mo., day, yr.) (see Instructions) (see Instructions) subtract (d) from (e). subtract (e) from (d) Short-term totals. Add columns (d), (f), and (g) of line 45. Enter here and on line PART VII Long-term Capital Gains and Losses Assets Held More Than One Year (Continuation of Part II) Long-term totals. Add columns (d), (f), and (g) of line 47. Enter here and on line

60 Schedule STATE OF HAWAII DEPARTMENT OF TAXATION Sales of Business Property (Also Involuntary Conversions and Recapture Amounts Under D-1 IRC Sections 179 and 280 F) 1994 (Rev. 1994) Name(s) as shown on tax return To be filed with Form N-12, N-15, N-20, N-30, N-35, N-40, etc. See Separate Instructions CAUTION: Do not confuse this schedule with the federal Schedule D-1. Social Security Number or Federal Employer I.D. No. Part I Sales or Exchanges of Property Used in a Trade or Business and Involuntary Conversions From Other Than Casualty and Theft Property Held More Than 1 Year Notes: Use Form N-184 to report involuntary conversions from casualty and theft. File federal Form 6198 if you are reporting a loss and have amounts invested in the activity for which you are not at risk. (See Instructions under At-Risk Rules ) Complete federal Form 8582 before you complete Schedule D-1 if you are reporting a loss from a passive activity. (See Instructions under Passive Loss Limitations ) 1 Enter here the gross proceeds from the sale or exchange of real estate reported to you for 1994 on federal Form(s) 1099-S (or an equivalent statement) that you will be including on line 2 or 11 (Column d), or on line (a) Description of property (b) Date acquired (mo., day, yr.) (c) Date sold (mo., day, yr.) (d) Gross sales price (e) Depreciation allowed (or allowable) since acquisition (f) Cost or other basis, plus improvements and expense of sale (g) LOSS (f) minus the sum of (d) and (e) (h) GAIN (d) plus (e) minus (f) 3 Gain, if any, from Form N-184, line IRC section 1231 gain from installment sales from Form N-171, line 26 or IRC section 1231 gain or (loss) from like-kind exchanges from federal Form Gain, if any, from Part III, line 34, from other than casualty and theft Add lines 2 through 6 in columns (g) and (h)... 7 ( ) 8 Combine columns (g) and (h) of line 7. Enter gain or (loss) here, and on the appropriate line as follows (partnerships and S corporations see the Instructions for your line references)... 8 If line 8 is zero or a loss, enter the amount on line 12 below and skip lines 9 and 10. If line 8 is a gain and you did not have any prior year IRC section 1231 losses, or they were recaptured in an earlier year, enter the gain as a long-term capital gain on Schedule D and skip lines 9, 10, and 13, below. 9 Nonrecaptured net IRC section 1231 losses from prior years (see Instructions) Line 8 minus line 9. If zero or less, enter zero If line 10 is zero, enter the amount from line 8 on line 13 below. If line 10 is more than zero, enter the amount from line 9 on line 13 below, and enter the amount from line 10 as a long-term capital gain on Schedule D. (see specific Instructions for line 10) Part II Ordinary Gains and Losses 11 Ordinary gains and losses not included on lines 12 through 18 (include property held 1 year or less) 12 Loss, if any, from line Gain, if any, from line 8, or amount from line 9 if applicable Gain, if any, from Part III, line Net gain or (loss) from Form N-184, lines 31 and 38a Ordinary gain from installment sales from Form N-171, line(s) 26 and/or Ordinary gain or (loss) from like-kind exchanges from federal Form Recapture of IRC section 179 expense deduction for partners and S corporation shareholders from property dispositions by partnerships and S corporations. (see Instructions) Add lines 11 through 18 in columns (g) and (h) ( ) 20 Combine columns (g) and (h) of line 19. Enter gain or (loss) here, and on the appropriate line as follows: a For all except individual returns: Enter the gain or (loss) from line 20, on the return being filed. (Form N-30, etc.) b For individual returns: (1) If the loss on line 12 includes a loss from Form N-184, line 35, column (b) (ii), enter that part of the loss here and on line 17 of Schedule A (Form N-12) or on line 18 of Schedule A (Form N-15). Identify as from Schedule D-1, line 20b(1) b(1) (2) Redetermine the gain or (loss) on line 20, excluding the loss (if any) on line 20b(1). Enter here and on line 14 of Form N-12 or Form N b(2) Schedule D-1

61 Schedule D-1 (Rev. 1994) PAGE 2 Part III Gain from Disposition of Property Under IRC Sections 1245, 1250, 1252, 1254, and (a) Description of IRC sections 1245, 1250, 1252, 1254, and 1255 property: (b) Date acquired (c) Date sold (mo., day, yr.) (mo., day, yr.) A B C D Relate lines 21A through 21D to these columns Property A Property B Property C Property D 22 Gross sales price (Note: See line 1 before completing.) Cost or other basis plus expense of sale Depreciation (or depletion) allowed (or allowable) Adjusted basis, line 23 minus line Total gain, line 22 minus line If IRC section 1245 property: a Depreciation allowed (or allowable) after applicable date (see Instructions). 27a b Enter smaller of line 26 or 27a... 27b 28 If IRC section 1250 property: (If straight line depreciation was used, enter zero on line 28i) a Additional depreciation after 12/31/76 (see Instructions)... 28a b Applicable percentage times the smaller of line 26 or line 28a (see Instructions)... 28b c Line 26 minus line 28a. If line 26 is not more than line 28a, skip lines 28d through 28h... 28c d Additional depreciation after 12/31/74 and before 1/1/ d e Applicable percentage times the smaller of line 28c or 28d (see Instructions)... 28e f Line 28c minus line 28d. If line 28c is not more than line 28d, skip lines 28g and 28h... 28f g Additional depreciation after 12/31/64 and before 1/1/ g h Applicable percentage times the smaller of line 28f or 28g (see Instructions)... 28h i Add line 28b, 28e, and 28h... 28i 29 If IRC section 1252 property: Skip this section if you did not dispose of farm property or farmland, or if this form is completed by a partnership. a Soil, water and land clearing expenses made after 12/31/ a b Line 29a times applicable percentage (see Instructions)... 29b c Enter smaller of line 26 or 29b... 29c 30 If IRC section 1254 property: a Intangible drilling and development costs deducted after 12/31/76 (see Instructions)... 30a b Enter smaller of line 26 or 30a... 30b 31 If IRC section 1255 property: a Applicable percentage of payments excluded from income under IRC section 126 (see Instructions)... 31a b Enter smaller of line 26 or 31a... 31b Summary of Part III Gains (Complete Property columns A through D through line 31b before going on line 32.) 32 Total gains for all properties (add columns A through D, line 26) Add columns A through D, lines 27b, 28i, 29c, 30b, and 31b. Enter here and on Part II, line Line 32 minus line 33. Enter the portion from casualty and theft on Form N-184, Section B, line 33, and enter the portion from other than casualty and theft on Schedule D-1, Part I, line Part IV Recapture Amounts Under IRC Sections 179 and 280F When Business Use Drops to 50% or Less (See Instructions for Part IV.) (a) Section IRC section 179 expense deduction or IRC section 280F recovery deductions Depreciation or recovery deductions (see Instructions) Recapture amount. (line 35 minus line 36) (see Instructions for where to report) (b) Section 280F

62 STATE OF HAWAII DEPARTMENT OF TAXATION 1994 Instructions for Schedule D-1 (Rev. 1994) Sales of Business Property (Also Involuntary Conversions and Recapture Amounts Under IRC Sections 179 and 280F) (Section references are to the Internal Revenue Code as adopted and incorporated in Chapter 235, HRS) (Publication references are to federal Publications) CAUTION: Do not confuse this schedule with the federal Schedule D-1 Who May File Any individual, corporation, partnership, estate or trust may file Schedule D-1, unless instructions for the form it relates to (Form N-12, N-30, etc.) provides otherwise. Purpose of Form Use Schedule D-1 to report: The sale or exchange of property used in your trade or business; depreciable and amortizable property; oil, gas, geothermal, or other mineral properties; and section 126 property. The involuntary conversion (from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business, or a transaction entered into for profit. Disposition of noncapital assets other than inventory or property held primarily for sale to customers in the ordinary course of your trade or business. Recapture of section 179 expense deductions for partners and S corporation shareholders from property dispositions by partnerships and S corporations. The computation of recapture amounts under sections 179 and 280F(b)(2), when the business use of section 179 or listed property drops to 50% or less. Do not use this form, unless otherwise stated, to report gain or loss on the disposition of a capital asset; instead, use the Schedule D associated with the return you are filing. (Refer to Schedule D instructions for the definition of a capital asset.) Other Forms To Use Use Form N-184, Casualties and Thefts, to report involuntary conversions from casualty and theft. Use federal Form 8824, Like-Kind Exchanges, for each exchange. A like-kind exchange occurs when you exchange business or investment property for property of like kind. For exchanges of property used in a trade or business (and other noncapital assets), enter the gain or (loss) from federal Form 8824, if any on line 5 or 17. Special Rules Installment Sales. If you sold property at a gain and you will receive a payment in a tax year after the year of sale, you must report the sale on Examples of Items Reportable on this Form. Where to Make First Entry. Below are common examples of items reportable on this form. Columns (b) and (c) indicate where to make the first entry on Schedule D-1. (a) Type of property (b) Held one year or less (c) Held more than one year 1 Depreciable trade or business property: a Sold or exchanged at a gain Part II Part III (sec. 1245, 1250) b Sold or exchanged at a loss Part II Part I 2 Depreciable residential rental property: a Sold or exchanged at a gain Part II Part III (sec. 1250) b Sold or exchanged at a loss Part II Part I 3 Farm land held less than 10 years upon which soil, water, and/or land-clearing expenses were deducted after December 31, 1976: a Sold at a gain Part II Part III (sec. 1252) b Sold at a loss Part II Part I 4 Disposition of certain cost-sharing payments described in section Part II Part III (sec.1255) 5 Cattle and horses acquired after December 31, 1974, that were used in a trade or business for draft, breeding, dairy, or sport purposes: Held less than 24 months Held 24 months or more a Sold at a gain Part II Part III (sec. 1245) b Sold at a loss Part II Part I c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses acquired after December 31, 1974, that were used in a trade or business for draft, breeding, dairy, or sport purposes: Held less than 12 months Held 12 months or more a Sold at a gain Part II Part III (sec. 1245) b Sold at a loss Part II Part I c Raised livestock sold at a gain Part II Part I Note: All livestock acquired before January 1, 1975, used in a trade or business for draft, breeding, or dairy purposes, receive same treatment as livestock held for 12 months or more. the installment method unless you elect not to do so. Use Form N-171, Installment Sale Income, to report the sale on the installment method. Also use Form N-171 to report any payment received in 1994 from a sale made in an earlier year that you reported on the installment method. To elect out of the installment method, report the full amount of the gain on a timely filed return (including extensions). See Publication 537, Installment Sales, for more details. Recapture of Preproductive Expenses. If you elected out of the uniform capitalization rules of section 263A, any plant or animal that you produce is treated as section 1245 property. For dispositions of plants and animals reportable on Schedule D-1, enter the recapture amount taxed as ordinary income on line 24. See Publication 225, Farmer s Tax Guide, for more information. Involuntary Conversion of Property. You may not have to pay tax on a gain from an involuntary or compulsory conversion of property. See Publication 544, Sales and Other Dispositions of Assets, for details. At Risk Rules. If you report a loss on an asset used in an activity for which you are not at risk, in whole or in part, see the instructions for federal Form 6198, At-Risk Limitations. Also get Publication 925, Passive Activity and At-Risk Rules. Losses from passive activities are first subject to the at-risk rules and then to the passive activity rules. Passive Loss Limitations. If you have an overall loss from passive activities, and you are reporting a loss on an asset used in a passive activity, use federal Form 8582, Passive Activity Loss Limitations, to see how much of the loss is allowed before entering it on Schedule D-1. Unused passive activity credits are not allowable when you dispose of your interest in an activity. However, if you dispose of your entire interest in an activity, you may elect to increase the basis of the credit property by the original basis reduction of the property to the extent that the credit has not been allowed because of the passive activity rules. No basis adjustment may be elected on a partial disposition of your interest in an activity. See Publication 925 for details. Transfer of Appreciated Property to Political Organizations. Treat a transfer of property to a political organization as a sale of property on the date of transfer if the property s fair market value when transferred is more than your adjusted basis. Apply the ordinary income or capital gains provisions as if a sale actually occurred. See section 84. Allocation of Purchase Price. If you acquire or dispose of assets which constitute a trade or business, the buyer and seller must allocate the total purchase price using the residual method and file federal Form 8594, Asset Acquisition Statement. Federal Form 1099-A, Information Return for Acquisition or Abandonment of Secured

63 Page 2 Property. If you receive a federal Form 1099-A from your lender, you may have gain or loss to report because of acquisition or abandonment. See Publication 544 for more information. Where to Report Transactions on this Form Page 1 contains a chart identifying examples of property reportable on this form and the part in which you should first report it. The chart refers to three parts: Part I is for reporting sales or exchanges of property used in your trade or business and certain involuntary conversions of property or capital assets used in a trade or business, or held for profit, and kept for more than 1 year. You may have to complete Part III before Part I if you disposed of, at a gain, depreciable property (certain amortizable property, certain oil or gas property, or certain farm property) held for more than one year. If livestock is involved, see section 1231 for a longer holding period. Part II is for reporting gain or loss on the sale, exchange, or involuntary or compulsory conversion of noncapital assets (trade or business property) not reportable in Part I. Examples are: land held one year or less that does not qualify as a capital asset, and certain depreciable property held one year or less (for livestock see section 1231 for a longer holding period), and gains on certain involuntary conversions of capital assets held one year or less. Part III is for reporting the sale, exchange, or involuntary or compulsory conversion of certain property subject to amortization or depreciation, certain farm property, oil or gas property, or section 126 property. Do not use Part III unless there is a gain and the property was held for more than one year. Line-by-Line Instructions To show losses, enclose figures in (parentheses). Part I Section 1231 transactions are: Sales or exchanges of real or depreciable property used in a trade or business and held for more than 1 year. To figure the holding period, begin counting on the day after you received the property and include the day you disposed of it. Cutting of timber that the taxpayer elects to treat as a sale or exchange under section 631(a). Disposal of timber with a retained economic interest that is treated as a sale under section 631(b). Disposal of coal (including lignite) or iron ore mined in the United States with a retained interest that is treated as a sale under section 631(c). Sale or exchanges of cattle and horses, regardless of age, used in a trade or business by the taxpayer for draft, breeding, dairy, or sporting purposes and held for 24 months or more from acquisition date. Sales or exchanges of livestock other than cattle and horses, regardless of age, used by a taxpayer for draft, breeding, dairy, or sporting purposes and held for 12 months or more from acquisition date. Note: Livestock does not include poultry. Sales or exchanges of unharvested crops. See section 1231(b)(4). Involuntary conversions of trade or business property or capital assets held in connection with a trade or business or a transaction entered into for profit, and kept more than 1 year. These conversions may result from (a) part or total destruction, (b) theft or seizure, or (c) requisition or condemnation (whether threatened or carried out). If any recognized losses were from involuntary conversions from fire, storm, shipwreck, or other casualty, or from theft, and they exceed the recognized gains from the conversions, do not include them in figuring your net section 1231 losses. Section 1231 transactions do not include: Sales or exchanges of inventory or property held primarily for sale to customers. Sales or exchanges of copyrights, literary, musical, or artistic compositions, letters or memoranda, or similar property (a) created by your personal efforts, (b) prepared or produced for you (in the case of letters, memoranda, or similar property), or (c) that you received from someone who created them or for whom they were created, as mentioned in (a) or (b), in a way (such as by gift) that entitled you to the basis of the previous owner. Sales or exchanges of U.S. Government publications, including the Congressional Record, that you received from the Government, other than by purchase at the normal sales price, or that you got from someone who had received it in a similar way, if your basis is determined by reference to the previous owner s basis. Line 9. Nonrecaptured Net Section 1231 Losses Part or all of your section 1231 gains on line 8 may be taxed as ordinary income instead of receiving long-term capital gain treatment. These net section 1231 gains are treated as ordinary income to the extent of the nonrecaptured section 1231 losses. The nonrecaptured losses are net section 1231 losses deducted during the 5 preceding taxable years that have not yet been applied against any net section 1231 gain for determining how much of the gain is ordinary income under these rules. Example. If you had net section 1231 losses of $4,000 and $6,000 in 1989 and 1990 and net section 1231 gains of $3,000 and $2,000 in 1993 and 1994, line 8 would show the 1994 gain of $2,000, and line 9 would show nonrecaptured section 1231 losses of $7,000 ($10,000 net section 1231 losses minus the $3,000 that was recaptured becouse of the 1993 gain). The $2,000 gain on line 8 is all ordinary income and would be entered on line 13 of Schedule D-1. For recordkeeping purposes, the $4,000 loss from 1989 is all recaptured ($3,000 in 1993 and $1,000 in 1994) and you have $5,000 left to recapture from 1990 ($6,000 minus the $1,000 recaptured this year). Figuring the prior year losses. You had a net section 1231 loss if your section 1231 losses exceeded your section 1231 gains. Section 1231 gains are included only to the extent taken into account in computing gross income. Section 1231 losses are included only to the extent taken into account in computing taxable income except that the limitation on capital losses does not apply. Get Publication 544 for more information. Line 10. For recordkeeping purposes, if line 10 is zero, the amount on line 8 is the amount of net section 1231 loss recaptured in If line 10 is more than zero, you have recaptured in 1994 all of your net section 1231 losses from prior years. Part II If a transaction is not reportable in Part I or Part III and the property is not a capital asset reportable on Schedule D, report the transaction in Part II. If you receive ordinary income from a sale or other disposition of your interest in a partnership, get Publication 541, Tax Information on Partnerships. Line 11. Report other ordinary gains and losses, including property held one year or less on this line. Section 1244 (small business) stock. Individuals report ordinary losses from the sale or exchange (including worthlessness) of section 1244 (small business) stock on line 11. The maximum amount that may be treated as an ordinary loss is $50,000 ($100,000, if married filing a joint return). Gains from the sale or exchange of section 1244 stock (and losses in excess of the maximum amount that may be treated as an ordinary loss) are reported on Schedule D. If you claim a section 1244 stock loss, you must file a statement with your return that specifies: 1. The address of the corporation that issued the stock; 2. The manner in which you acquired the stock; 3. The amount and type of consideration you gave in exchange for the stock; and 4. If you acquired the stock in a nontaxable transaction in exchange for property other than money, the type of property and the adjusted basis and fair market value of the property on the date it was transferred to the corporation. If you do not file this statement with your return, ordinary loss treatment under section 1244 may not be allowed. Be sure to keep adequate records to distinguish section 1244 stock from any other stock owned in the same corporation. See Publication 550, Investment Income and Expenses, for more information. Line 18. Enter any recapture of section 179 expense deduction included on Schedule K-1 (Form N-20), line 19 and on Schedule K-1 (Form N-35), line 22, but only if it is due to a disposition. Include if only to the extent that you took a deduction for it in an earlier year. See instructions for Part IV if you have section 179 recapture when the business use percentage of property dropped to 50% or less. Line 20b(1). You must complete this line if there is a gain on Schedule D-1, line 3; a loss on Schedule D-1, line 12; and a loss on Form N-184, line 35, column (b)(ii). Enter on this line and on Schedule A (Form N-12), line 17, or Schedule A (Form N-15), line 18, as the case may be, the smaller of the loss on Schedule D-1, line 12; or the loss on Form N-184, line 35, column (b)(ii). To figure which loss is smaller, treat both losses as positive numbers. Part III Part III is used to compute recapture of depreciation and certain other items that must be reported as ordinary income on the disposition of property. Fill out lines 21 through 26 to determine the gain on the disposition of the property. If you have more than four properties to report, use additional forms. For more information, see Publication 544. Note: If the property was sold on the installment sales basis, see the Instructions for Form N-171 before completing this part. Also, if you have both installment sales and non-installment

64 sales, you may want to use a separate Schedule D-1, Part III, for each installment sale and one Schedule D-1, Part III, for the non-installment sales. Line 22. The gross sales price includes money, the fair market value of other property received, and any existing mortgage or other debt the buyer assumes or takes the property subject to. For casualty or theft gains, include insurance or other reimbursement you received or expect to receive for each item. Include on this line your insurance coverage, whether or not you are submitting a claim for reimbursement. For section 1255 property, show the amount realized from the sale, exchange, or involuntary conversion. Enter the fair market value for any other disposition. Line 23. The asset basis used on this line should be determined without taking into account any reduction under section 179 (expense deduction) which is to be accounted for on line 24. Line 24. This line should show all adjustments for deductions (whether for the same or other property) allowed or allowable to you or any other person for depreciation or amortization. If you are not a partnership or an S corporation, use the following computation to determine the amount to enter on line 24: Add preproductive expenses, depreciation, amortization, or depletion allowed or allowable. Add the section 179 expense deducted. Subtract any section 179 or 280F recapture amount included in gross income in a prior tax year because the business use of the property dropped to 50% or less. You may have to include depreciation allowed or allowable on another asset (and recompute the basis amount for line 23) if you use its adjusted basis in determining the adjusted basis of the property described on line 21. An example is property acquired by a trade-in. See Regulations section (a)(4). Partnerships should enter the deductions for depreciation, amortization, or depletion allowed or allowable on line 24. Enter the section 179 expense deduction on Form N-20, Schedule K, line 19. S corporations should enter the deduction for depreciation, amortization, or depletion allowed or allowable on line 24. Enter the section 179 expense deduction on Form N-35, Schedule K, line 17 but only if you are disposing of property acquired in tax years beginning after Line 25. For section 1255 property, enter the adjusted basis of the section 126 property disposed of. Line 27. Section 1245 Property Section 1245 property is depreciable (or amortizable under section 185 (repealed) or 1253(d)(2) or (3) (as in effect before the enactment of Public Law )) and is one of the following: Personal property. Livestock held for draft, breeding, dairy, or sport purposes. Elevators and escalators placed into service before Real property (other than property described under tangible real property below) subject to amortization or deductions under section 169, 179, 185 (repealed), 188 (repealed), 190, 193, or 194. Tangible real property (except buildings and their structural components) if it is used in any of the following ways: (1) As an integral part of manufacturing, production, extraction, or furnishing transportation, communications, or certain other public utility services. (2) As a research facility in these activities. (3) For the bulk storage of fungible commodities (including commodities in a liquid or gaseous state) used in these activities. A single purpose agricultural or horticultural structure (as defined in section 168(i)(13). A storage facility (not including a building or its structural components) used in connection with the distribution of petroleum or any primary product of petroleum. See section 1245(b) for exceptions and limits involving: Gifts. Transfers at death. Certain tax-free transactions. Certain like-kind exchanges, involuntary conversions, etc. Sales or exchanges to carry out FCC policies, and exchanges to comply with SEC orders. Property distributed by a partnership to a partner. Transfers to tax-exempt organizations where the property will be used in an unrelated business. Timber property. See the following section for special rules: Section 1245 (a)(4) for player contracts and section 1056(c) for information required from the transferor of a franchise of any sports enterprise if the sale of exchange involves the transfer of player contracts. Section 1245(a)(5) as in effect before the Tax Reform Act of 1986 for property placed in service before , when only a portion of a building is section 1245 recovery property. Section 1245(a)(6) as in effect before the Tax Reform Act of 1986, for qualified lease property placed in service by Line 28. Section 1250 Property Section 1250 property is depreciable real property (other than section 1245 property). ACRS deductions under section 168 are subject to recapture under section 1245 except for the following, which are treated as section 1250 property if the property was placed in service before year, 18-year, or 19-year real property and low-income housing which is residential rental property. 15-year, 18-year, or 19-year real property and low-income housing which is used mostly outside the United States. 15-year, 18-year, or 19-year real property and low-income housing for which a straight line election was made. Low-income rental housing as described in clause (i), (ii), (iii), or (iv) of section 1250(a)(1)(B). See instructions for line 28b. Section 1250 recapture applies to certain recovery property and to depreciable nonrecovery real property when an accelerated depreciation method was used. Page 3 The section 1250 recapture rules do not apply to dispositions of 27.5-year (or 40-year, if elected) residential rental property or 22-year, 31.5-year, or 39-year (or 40-year, if elected) nonresidential real property, placed in service after (or after , if the election is made). See section 1250(d) for exceptions and limits involving: Gifts. Transfers at death. Certain tax-free transactions. Certain like-kind exchanges, involuntary conversions, etc. Sales or exchanges to carry out FCC policies, and exchanges to comply with SEC orders. Property distributed by a partnership to a partner. Disposition of a main home. Disposition of qualified low-income housing. Transfers of property to tax-exempt organizations where the property will be used in an unrelated business. Disposition of property as a result of foreclosure proceedings. Special Rules For additional depreciation attributable to rehabilitation to rehabilitation expenditures, see section 1250(b)(4). If substantial improvements have been made, see section 1250(f). Lines 28a, 28d, and 28g. For property held for more than one year, additional depreciation is the excess of actual depreciation attributable to periods after December 31, 1964, over depreciation computed for the same period using the straight line method. Enter on line 28a the additional depreciation for the period after December 31, 1976, on line 28d the additional depreciation for the period after December 31, 1974, and before January 1, 1977, and on line 28g the additional depreciation for the period after December 31, 1964, and before January 1, If the depreciation figured using the straight line method is more than the actual depreciation taken for any period, the additional depreciation for the next prior period should be reduced, but not below zero, by that amount. Line 28b. Use 100% as the percentage for this line, except for low-income rental housing described in clause (i), (ii), (iii), or (iv) of section 1250(a)(1)(B). For this type of low-income rental housing, see section 1250(a)(1)(B) for the percentage to use. Line 28e. Use 100% as the percentage for this line, except for residential rental property (and property disposed of under a written contract binding at all times since July 24, 1969). For this type of property, see section 1250(a)(2)(B) for the percentage to use. Line 28h. The applicable percentage is 100 percent minus one percent for each full month the property was held for more than 20 full months. Line 29. Section 1252 Property Partnerships should skip this section. Partners should enter on the applicable lines of Part III amounts subject to section 1252 according to instructions from the partnerships. You may have ordinary income on the disposition of certain farmland held for more than 1 year but less than 10 years.

65 Page 4 Refer to section 1252 to determine if there is ordinary income on the disposition of certain farmland for which deductions were allowed for expenditures made after December 31, 1976, under sections 175 (soil and water conservation) and 182 (land clearing) as in effect before January 1, If you dispose of such farmland within the 10th or later year after you acquire it, skip line 29. Gain from disposition of certain farmland is subject to ordinary income rules under section 1252 before being considered under section 1231 (Part I). Line 29b. Enter 100 percent of line 29a on line 29b except as follows: 80 percent if the farmland was disposed of within the sixth year after acquisition; 60 percent if disposed of within the seventh year; 40 percent if disposed of within the eighth year; 20 percent if disposed of within the ninth year; or zero, if disposed of within the tenth or later year. Line 30. Section 1254 Property If you dispose of oil, gas, or geothermal property placed in service before at a gain, treat all or part of the gain as ordinary income. Include on line 24 any depletion allowed (or allowable) in determining the adjusted basis of the property. If you dispose of oil, gas, geothermal, or other mineral properties (section 1254 property) placed in service after at a gain, you must recapture all expenses that were deducted as intangible drilling costs, depletion, mine exploration costs, and development costs, under sections 263, 616, and 617. Exception: Property acquired under a written contract entered into before and binding at all times thereafter, is excluded from this change. Previously expensed mining costs, that have been included in income upon reaching the producing state, are not taken into account in determining recapture under section Line 30a. If the property was placed in service before , enter the total amount of expenses after that: were deducted by the taxpayer or any other person as intangible drilling and development costs under section 263(c); and would have been reflected in the adjusted basis of the property if they had not been so deducted. If the property was placed in service after , enter the total amount of expenses that: were deducted under section 263, 616, or 617 by the taxpayer or any other person; and which, but for such deduction would have been included in the basis of the property; plus the deduction under section 611 which reduced the adjusted basis of such property. If you dispose of a portion of section 1254 property or an undivided interest in it, see section 1254(a)(2). Line 31. Section 1255 Property Line 31a. Use 100 percent if the property is disposed of less than 10 years after receipt of payments excluded from income. Use 100 percent minus 10 percent for each year, or part of a year, that the property was held over 10 years. Use zero if 20 years or more. Part IV Section 179 Property. If you took a deduction under section 179 for property placed in service before (other than listed property, as defined in section 280F(d)(4)), and the business use of the property was reduced to 50% or less during either of the two taxable years following the taxable year the property was placed in service, complete column (a) of lines 35 through 37 to figure the amount to be recaptured. For property placed in service after the recapture must be made if the property is not used predominantly in your trade or business at any time. Section 280F Property. If you have listed property that you placed in service in a prior year and the business use percentage dropped to 50% or less this year, you must figure the amount to be recaptured. Complete column (b), lines 35 through 37. Note: If you have more than one property subject to the recapture rules, use a separate schedule to figure the recapture amounts and attach the statement to your tax return. Line 35. Column (a) Enter the section 179 expense deducted when the property was placed in service. Column (b) Enter the depreciation allowable on the property in prior tax years. Include any section 179 expense deduction you took as depreciation. Line 36. Column (a) Enter the depreciation deductions that would have been allowed on the section 179 amount from the year it was placed in service until the current year. Column (b) Enter the depreciation that would have been allowable if the property had not been used more than 50% in a qualified business. Figure the deductions from the year it was placed in service until the current year. See Publication 534, Depreciation, and Publication 917 for more information. Line 37. Subtract line 36 from line 35 and enter the recapture amount as other income on the same form or schedule you took the deduction. For example, if you took the deduction on Schedule C (Form N-12/N-15/N-40), report the recapture amount as other income on Schedule C (Form N-12/N-15/N-40). Be sure to increase the basis of the property by the recapture amount.

66 SCHEDULE E STATE OF HAWAII DEPARTMENT OF TAXATION FORM N-12/N-15 Supplemental Income Schedule (REV. 1994) (From rents and royalties, partnerships, estates and trusts, REMICs, etc.) 1994 Attach to Form N-12 or N-15. See Instructions for Schedule E (Form N-12 or N-15) Name(s) as shown on Form N-12 or Form N-15 Your social security number Part I Income or (Loss) From Rentals and Royalties Caution: Your rental loss may be limited. See Instructions. Hawaii G.E. number 1 Show kind and location of each rental property: 2 For each rental property listed on line 1, did you or your family Yes No A... use it for personal purposes for more than the greater of 14 A days or 10% of the total days rented at fair rental value B B... during the tax year? C 3 For each rental real estate property listed on line 1, did A C... you actively participate in its operation during the tax year? B (See Instructions) C Properties D Totals Rental and Royalty Income A B C (Add columns A, B, and C) 4 Rents received Royalties received Rental and Royalty Expenses 6 Advertising Auto and travel Cleaning and maintenance Commissions Insurance Legal and other professional fees Management fees Mortgage interest paid to financial institutions (see Instructions) Other interest Repairs Supplies Taxes Utilities (see Instructions) Other (list) Add lines 6 through Depreciation expense or depletion (see Instructions) Total expenses. Add lines 20 and Income or (loss) from rental or royalty properties. Line 4 (rents) or line 5 (royalties) minus line 22. If the result is a (loss), see Instructions to find out if you must file federal Form Deductible rental loss. Caution: Your rental loss on line 23 may be limited. See Instructions to find out if you must file federal Form ( ) ( ) ( ) 25 Income. Add rental and royalty income from line 23. Enter the total income here Losses. Add royalty losses from line 23 and rental losses from line 24. Enter the total (losses) here ( ) 27 Combine amounts on lines 25 and 26. Enter the net income or (loss) here Net farm rental income or (loss) from federal Form 4835 (Attach copy of federal form) Total rental or royalty income or (loss). Combine amounts on lines 27 and 28. Enter the total here. If Parts II, III, and IV on page 2 do not apply to you, write this amount on Form N-12, line 17, or Form N-15, line 17. Otherwise, include this amount in line 42, on page 2 of Schedule E FOR LIMITATIONS ON LOSSES FROM PASSIVE ACTIVITIES, SEE THE INSTRUCTIONS FOR FEDERAL FORM Schedule E (Form N-12/N-15)

67 Page 2 Schedule E Form N-12/N-15 (REV. 1994) Name(s) as shown on Form N-12 or Form N-15 (Do not enter name and social security number if shown on other side) Your social security number Part II Income or (Loss) from Partnerships and S Corporations If you report a loss from an at-risk activity, you MUST check either column (e) or (f) to describe your investment in the activity. If you check column (f), you must attach federal Form See Instructions. (b) Enter P (c) Check if Investment At Risk? 30 (a) Name for partnership; S foreign (d) Employer (e) All is (f) Some is for S corporation partnership identification number at risk not at risk A B C D E Passive Income and Loss Nonpassive Income and Loss (j) IRC section 179 (g) Passive loss allowed (h) Passive income (i) Nonpassive loss deduction (see Instructions (k) Nonpassive income from from federal Form 8582 from Schedule K-1 from Schedule K-1 for limits) Schedule K-1 A B C D E 31 a Totals b Totals 32 Add amounts in columns (h) and (k), line 31a. Enter total income here Add amounts in columns (g), (i), and (j), line 31b. Enter total (loss) and IRC section 179 deduction here Total partnership and S corporation income or (loss). Combine amounts on lines 32 and 33. Enter the total here and include in line 42 below Part III Income or (Loss) from Estates and Trusts 35 A B C A B C 36 a Totals b Totals Passive Income and Loss (a) Name Nonpassive Income and Loss (b) Employer identification number (c) Passive deduction or loss allowed (d) Passive income (e) Deduction or loss (f) Other income from from federal Form 8582 from Schedule K-1 from Schedule K-1 Schedule K-1 37 Add amounts in columns (d) and (f), line 36a. Enter total income here Add amounts in columns (c) and (e), line 36b. Enter total (loss) here Total estate and trust income or (loss). Combine amounts on lines 37 and 38. Enter the total here and include in line 42 below Part IV Income or (Loss) from Real Estate Mortgage Investment Conduits (REMICs) Residual Holder ( ) ( ) (c) Excess inclusion (a) Name (b) Employer from Schedules Q, (d) Taxable income (net loss) (e) Income from Schedules Q, 40 identification number line 2c (see Instructions) from Schedules Q, line 1b line 3b 41 Combine columns (d) and (e) only. Enter the total here and include in line 42 below Part V Summary of Parts I Through IV 42 TOTAL income or (loss). Combine lines 29, 34, 39, and 41. Enter total here and on Form N-12, line 17 or Form N-15, line FOR LIMITATIONS ON LOSSES FROM PASSIVE ACTIVITIES, SEE THE INSTRUCTIONS FOR FEDERAL FORM 1040.

68 SCHEDULE F FORM N-12/N-15 N-20/N-40 (REV. 1994) Name of proprietor STATE OF HAWAII DEPARTMENT OF TAXATION Farm Income and Expenses Attach to Form N-12, N-15, N-20, OR N-40 See Instructions for Schedule F Note: You may use federal Schedule F provided your Hawaii G.E./Use I.D. No. is written on that schedule. Hawaii G.E./Use I.D. No A C Principal Product. (Describe in one or two words your principal crop or activity for the current tax year.) Accounting Method: Cash Accrual Social Security Number (SSN) B Agricultural Activity Code (from Part IV) D Employer ID Number (Not SSN) E Did you materially participate in the operation of this business during 1994? (If No, see Instructions for limitations on losses) Yes No PART I Farm Income Cash Method Complete Parts I and II (Accrual method taxpayers complete Parts II and III, and line 11 of Part I.) Do not include sales of livestock held for draft, breeding, sport, or dairy purposes; report these sales on Schedule D-1. 1 Sales of livestock and other items you bought for resale Cost or other basis of livestock and other items you bought for resale Line 1 minus line Sales of livestock, produce, grains, and other products you raised a Total cooperative distributions (federal Form(s)1099-PATR) 5a 5b Taxable amount... 5b 6a Agricultural program payments (see Instructions)... 6a 6b Taxable amount... 6b 7 Commodity Credit Corporation (CCC) loans: a CCC loans reported under election (see Instructions)... 7a b CCC loans forfeited or repaid with certificates... 7b 7c Taxable amount... 7c 8 Crop insurance proceeds and certain disaster payments (see Instructions): a Amount received in a 8b Taxable amount... 8b c If election to defer to 1995 is attached, check here.. 8d Amount deferred from d 9 Custom hire (machine work) income Other income, including federal and State gasoline or fuel tax credit or refund (see Instructions) Add amounts in the right column for lines 3 through 10. If accrual method taxpayer, enter the amount from page 2, line 51. This is your gross income PART II Farm Expenses Cash and Accrual Method (Do not include personal or living expenses such as taxes, insurance, repairs, etc., on your home.) 12 Car and truck expenses 25 Pension and profit-sharing (attach Form N-164) plans Chemicals Rent or lease: 14 Conservation expenses a Vehicles, machinery, (attach federal Form 8645) and equipment... 26a 15 Custom hire (machine work) b Other (land, animals, etc.)... 26b 16 Depreciation and IRC section Repairs and maintenance expense deduction not claimed 28 Seeds and plants purchased elsewhere (see Instructions) Storage and warehousing Employee benefit programs 30 Supplies purchased other than on line Taxes Feed purchased Utilities Fertilizers and lime Veterinary, breeding, and medicine Freight and trucking Other expenses (specify) 21 Gasoline, fuel and oil a... 34a 22 Insurance (other than health) b... 34b 23 Interest: c... 34c a Mortgage (paid to banks, etc.)... 23a d... 34d b Other... 23b e... 34e 24 Labor hired (less Hawaii jobs credit) f... 34f 35 Add lines 12 through 34f. These are your total expenses Net farm profit or (loss). Line 11 minus line 35. If a profit, enter on Form N-12/N-15, line 18; N-20, line 5; or N-40, line 5. If a loss, you MUST go to line 37. (Fiduciaries and partnerships, see Instructions) If you have a loss, you MUST check the box that describes your investment in this activity (see Instructions). If you check 37a, enter the loss on Form N-12/N-15, line 18; N-20, line 5; or N-40, line 5. 37a All investment is at risk. If you checked 37b, you MUST attach federal Form b Some investment is not at risk. SCHEDULE F

69 Schedule F (Form N-12/N-15/N-20/N-40) (Rev. 1994) Page 2 Part III Farm Income Accrual Method Do not include sales of livestock held for draft, breeding, sport, or dairy purposes; report these sales on Schedule D-1 and do not include this livestock on line 46 below. 38 Sales of livestock, produce, grains, and other products during the year a Total cooperative distributions (from federal Form(s) 1099-PATR)... 39a 39b Taxable amount... 39b 40a Agricultural program payments (see Instructions)... 40a 40b Taxable amount... 40b 41 Commodity Credit Corporation (CCC) loans: a CCC loans reported under election (see Instructions)... 41a b CCC loans forfeited or repaid with certificates... 41b 41c Taxable amount... 41c 42 Crop insurance proceeds Custom hire (machine work) income Other income, including federal and State gasoline or fuel tax credit or refund (see Instructions) Add amounts in the right column for lines 38 through Inventory of livestock, produce, grains, and other products at beginning of the year Cost of livestock, produce, grains, and other products purchased during the year Add lines 46 and Inventory of livestock, produce, grains, and other products at end of year Cost of livestock, produce, grains, and other products sold. Line 48* minus line Line 45 minus line 50. Enter the result here and on page 1, line 11. This is your gross income *If you use the unit-livestock-price method or the farm-price method of valuing inventory and the amount on line 49 is larger than the amount on line 48, subtract line 48 from line 49. Enter the result on line 50. Add lines 45 and 50. Enter the total on line 51. Part IV Principal Agricultural Activity Codes Caution: File Schedule C (Form N-12/N-15/N-40), Profit or Loss From Business, instead of Schedule F if: Your principal source of income is from providing agricultural services such as soil preparation, veterinary, farm labor, horticultural, or management for a fee or on a contract basis, or You are engaged in the business of breeding, raising, and caring for dogs, cats, or other pet animals. Select one of the following codes and write the 3-digit number on page 1, line B. 120 Field crop, including grains and nongrains such as cotton, peanuts, feed corn, wheat, tobacco, Irish potatoes, etc. 160 Vegetables and melons, garden-type vegetables and melons, such as sweet corn, tomatoes, squash, etc. 170 Fruit and tree nuts, including grapes, berries, olives, etc. 180 Ornamental floriculture and nursery products 185 Food crops grown under cover, including hydroponic crops 211 Beefcattle feedlots 212 Beefcattle, except feedlots 215 Hogs, sheep, and goats 240 Dairy 250 Poultry and eggs, including chickens, ducks, pigeons, quail, etc. 260 General livestock, not specializing in any one livestock category 270 Animal specialty, including fur-bearing animals, pets, horses, etc. 280 Animal aquaculture, including fish, shellfish, mollusks, frogs, etc., produced within confined space 290 Forest products, including forest nurseries and seed gathering, extraction of pine gum, and gathering of forest products 300 Agricultural production, not specified

70 1994 (REV. 1994) STATE OF HAWAII DEPARTMENT OF TAXATION Instructions for Schedule F Farm Income and Expenses (Section references are to the Internal Revenue Code as adopted and incorporated in Chapter 235, HRS) (Publication references are to federal publications) Note: You may use federal Schedule F provided your Hawaii G.E./Use I.D. No. is written on that Schedule. Purpose Use Schedule F to report farm income and expenses if you file Hawaii Forms N-12, N-15, N-20, or N-40. Do not report the following income on Schedule F: Rent you received that was based on farm production or crop shares if you did not materially participate in the operation or management of the farm. Report this income on Schedule E (Form N-12/N-15) and attach a copy of federal Form 4835, Farm Rental Income and Expenses. Rent from your pasture land. Report this income in Part I of Schedule E (Form N-12/N- 15). However, report on line 10 of Schedule F pasture income received from taking care of someone else s livestock. Sales, exchanges, or involuntary conversions (other than casualties or thefts) of certain trade or business property. Report this income on Schedule D-1, Supplemental Schedule of Gains and Losses. Sales of livestock held for draft, breeding, sport, or dairy purposes. Report this income on Schedule D-1. Use Form N-184, Casualties and Thefts, to report a casualty or theft involving farm business property, including livestock held for draft, breeding, sport or dairy purposes. Lines A and B On line A, enter your principal crop or activity for the current year. On line B, enter one of the 15 principal agricultural activity codes listed in Part IV on Page 2 of Schedule F. Select the code that best describes the source of most of your income. Field crop includes the production of grains, such as wheat, rice, feed corn, soybeans, barley, rye, and lentils; and nongrains such as cotton, tobacco, sugar, and Irish potatoes. Line C Under the cash method, include all income in the year you actually get it. Generally, deduct expenses when you pay them. If you use the cash method, check the box labeled cash. Complete Parts I and II of Schedule F. Under the accrual method, include income in the year you earn it. It does not matter when you get it. Deduct expenses when you incur them. If you use the accrual method, check the box labeled accrual. Complete Parts II and III and line 11 of Schedule F. Other rules also apply that determine the timing of deductions based on economic performance. See Publication 538, Accounting Periods and Methods, for details. Farming syndicates cannot use the cash method of accounting. A farming syndicate may be a partnership, any other noncorporate group, or an S corporation if: 1. The interests in the business have ever been for sale in a way that would require registration with any federal or State agency, or 2. More than 35% of the loss during any tax year is shared by limited partners or limited entrepreneurs. A limited partner is one who can lose only the amount invested in the partnership. A limited entrepreneur is a person who does not take any active part in managing the business. Line D Enter your federal employer ID number if available. Do not enter your SSN. Line E Material Participation. For the definition of material participation for purposes of the passive activity rules, see the federal instructions for Schedule C (Form 1040). If you meet any of the material participation tests described in the federal instructions for Schedule C (Form 1040), check the Yes box. If you are a retired or disabled farmer, you are treated as materially participating in a farming business if you materially participated 5 of the 8 years preceding your retirement or disability. Also, a surviving spouse is treated as materially participating in a farming activity if the real property used for farming meets the federal estate tax rules for special valuation of farm property passed from a qualifying decedent, and the surviving spouse actively manages the farm. Check the No box if you did not materially participate. If you checked No and you have a loss from this business, see Limit on Losses below. If you have a profit from this business activity but have current year losses from other passive activities or prior year unallowed passive activity losses, see the instructions for federal Form 8582, Passive Activity Loss Limitations. Limit on Losses. If you checked the No box on line E and you have a loss from this business, you may have to use federal Form 8582 to figure your allowable loss, if any, to enter on Schedule F, line 36. Generally, you can deduct losses from passive activities only to the extent of income from passive activities. For more details, see Publication 925, Passive Activity and At-Risk Rules. Part I Farm Income Cash Method In Part I, show income received for items listed on lines 1 through 10. Count both the cash actually or constructively received and the fair market value of goods or other property received for these items. Income is constructively received when it is credited to your account or set aside for you to use. If you ran the farm yourself and received rents based on farm production or crop shares, report these rents as income on line 4. Sales of Livestock Because of Drought. If you sold livestock because of a drought, you can count the income from the sale in the year after the drought, instead of in the year of the sale. You can do this if all of the following apply: Your main business is farming. You can show that you sold the livestock only because of the drought. Your area qualified for federal aid. Information Returns If you received information returns (federal Forms 1099 or CCC-1099-G) showing amounts paid to you, first determine if the amounts are to be included with farm income. Then, use the chart below to determine where to report the income on Schedule F. Include the federal Form 1099 or CCC-1099-G amounts with any other income reported on that line. Information return Where to report Federal Form 1099-PATR Line 5a Federal Form 1099-A Line 7b Federal Form 1099-MISC (for crop insurance) Line 8a Federal Form 1099-G or CCC-1099-G (for disaster payments) Line 8a Federal Form 1099-G or CCC-1099-G (for other agricultural program payments) Line 6a You may also receive federal Form MISC for other types of income. In this case, report it on whichever line best describes the income. For example, if you received a federal Form 1099-MISC for custom farming work, include this amount on line 9, Custom hire (machine work) income. Lines 1 and 2 On line 1 show amounts received from sales of livestock and other items bought for resale. On line 2, show the cost or other basis of the livestock and other items you actually sold. Line 4 Show amounts received from sales of livestock, produce, grains, and other products you raised. Lines 5a and 5b If you received distributions from a cooperative in 1994, you should receive federal Form PATR, Statement for Recipients (Patrons) of Taxable Distributions Received from Cooperatives. On line 5a, show your total distributions from cooperatives. This includes patronage dividends, nonpatronage distributions, per-unit retain allocations, and redemption of nonqualified notices and per-unit retain allocations. Show patronage dividends (distributions) received in cash, and the dollar amount of qualified written notices of allocation. If you received property as patronage dividends, report the fair market value of the property as income. Include cash

71 Page 2 advances you received from a marketing cooperative. If you received per-unit retains in cash, show the amount of cash. If you received qualified per-unit retain certificates, show the stated dollar amount of the certificate. Do not include as income on line 5b patronage dividends from buying personal or family items, capital assets, or depreciable assets. Enter these amounts on line 5a only. If you do not report patronage dividends from these items as income, you must subtract the amount of the dividend from the cost or other basis of these items. Lines 6a and 6b Enter on line 6a the TOTAL of the following amounts. These are government payments you received, usually reported to you on federal Form 1099-G. You may also receive federal Form CCC-1099-G from the federal Department of Agriculture showing the amounts and types of payments made to you. Price support payments. Diversion payments. Cost-share payments (sight drafts). Payments in the form of materials (such as fertilizer or lime) or services (such as grading or building dams). Face value of commodity credit certificates (often called generic or PIK certificates). On line 6b report only the taxable amount. For example, if you qualify to exclude payments received under certain cost-sharing conservation programs (see Publication 225), do not include these payments on Line 6b. Lines 7a through 7c Commodity Credit Corporation (CCC) Loans. Generally, you do not report CCC loan proceeds as income. However, if you pledge part or all of your production to secure a CCC loan, you may elect to report the loan proceeds as income in the year you receive them, instead of in the year you sell the crop. If you make this election (or made the election in a prior year), report loan proceeds you received in 1994 on line 7a and attach a statement to your return showing the details of the loan(s). What If I Forfeited a CCC Loan? Include the full amount forfeited on Line 7b, even if you reported the loan proceeds as income. If you did not elect to report the loan proceeds as income, also include the forfeited amount on line 7c. If you did elect to report the loan proceeds as income, you generally will not have an entry on line 7c. But if the amount forfeited is different from your basis in the commodity, you may have an entry on line 7c. What If I Repaid a CCC Loan With CCC Certificates? Include on line 7b the amount of any CCC loan you repaid with certificates, even if you reported the loan proceeds as income. If you did not elect to report the CCC loan proceeds as income, include on line 7c the amount of the loan you repaid with the certificates minus your basis in those certificates. Your basis in certificates is the face value of the certificates you included as income, or the amount you paid for them. If you elected to report the loan proceeds as income, do not include on line 7c the amount of the loan you repaid with the certificates. SCHEDULE F INSTRUCTIONS For more information on the tax consequences of electing to report CCC loan proceeds as income, forfeiting CCC loans, and repaying CCC loans with certificates, see Publication 225. Lines 8a through 8d In general, you must report crop insurance proceeds in the year you receive them. Federal crop disaster payments are treated as crop insurance proceeds. However, if 1994 was the year of damage, you may elect to include certain proceeds in income for To make this election, check the box on line 8c and attach a statement to your return. See Publication 225 for a description of the proceeds for which an election may be made and for what you must include in your statement. Generally, if you elect to defer any eligible crop insurance proceeds, you must defer all such crop insurance proceeds (including federal disaster payments). Enter on line 8a the TOTAL crop insurance proceeds you received in 1994, even if you elect to include them in income for Enter on line 8b the taxable amount of the proceeds you received in Do not include proceeds you elect to include in income for Enter on line 8d the amount, if any, of crop insurance proceeds you received in 1993 and elected to include in income in Line 9 Enter on this line the income you received for custom hire (machine work). Line 10 Use this line to report income not shown on lines 1 through 9. For example, include the following income items on line 10: Illegal federal irrigation subsidies. See Publication 225. Barter income. Income from discharge of indebtedness. Generally, if a debt is cancelled or forgiven, you must include the cancelled amount in income. However, certain solvent farmers may exclude from income discharged qualified farm indebtedness. For information on whether you must include in income any discharge of indebtedness, see Publication 225. State gasoline tax refund you got in The amount of credit for federal tax on fuels claimed on your 1993 federal Form The amount of credit for alcohol used as a fuel that was entered on federal Form Any recapture of excess depreciation, including any section 179 expense deduction, if the business use percentage of any listed property decreased to 50% or less in Use Schedule D-1, Sales of Business Property, to figure the recapture. See the federal instructions for Schedule C (Form 1040) for the definition of listed property. The inclusion amount on leased listed property (other than vehicles) when the business use percentage drops to 50% or less. Get Publication 534, Depreciation, to figure the amount. Report the gain or (loss) on the sale of commodity futures contracts on this line if the contracts were made to protect you from price changes. These are a form of business insurance and are considered hedges. Enter any profit on line 10. If you had a loss in a closed futures contract, enclose it in parentheses. Caution: For property acquired and hedging positions established, you must clearly identify on your books and records that the transaction was a hedging transaction. Purchases or sales contracts are not true hedges if they offset losses that already occurred. If you bought or sold commodity futures with the hope of making a profit due to favorable price changes, do not report the profit or loss on this line. Report the gain or loss on Schedule D-3, Gains and Losses from Section 1256 Contracts and Straddles. Part II Farm Expenses Do not deduct: Personal or living expenses (such as taxes, insurance, or repairs on your home) that do not produce farm income. Expenses of raising anything you or your family used. The value of animals you raised that died. Loss of inventory. Personal losses. If you were repaid for any part of an expense, you must subtract the amount you were repaid from the deduction. (Note: See the federal instructions for Schedule F, Profit or Loss From Farming, for a discussion of the following topics: 1. Capitalizing Costs of Property, 2. Election To Deduct Certain Preproductive Period Expenses, and 3. Prepaid Farming Expenses. Line 12 You can deduct the actual cost of running your car or truck, or take the standard mileage rate. You must use actual costs if you did not own the vehicle or if you used more than one vehicle simultaneously in your business (such as in fleet operations). If you deduct actual costs, include on line 12 the business portion of expenses for gasoline, oil, repairs, insurance, tires, license plates, etc. Show depreciation on line 16 and rent or lease payments on line 26a. If you want to take the standard mileage rate, multiply the number of business miles by 29 cents a mile. Add to this amount your parking fees and tolls, and enter the total on line 12. If you claim any car or truck expenses (actual or the standard mileage rate), you must provide the information requested in Part V of Form N-164 (or federal Form 4562) and attach Form N-164 (or federal Form 4562) to your return. For more details, see Publication 917, Business Use of a Car. Line 14 Amounts you spent to conserve soil or water, or to prevent erosion of your land can be deducted only if the expenses are consistent with a conservation plan approved by the Soil Conservation Service (SCS) of the federal Department of Agriculture for the area in which your land is located. If no plan exists, the expenses must be consistent with a plan of a comparable state agency. You cannot deduct expenses if they were paid or incurred for land used in farming in a foreign country. You must attach federal Form 8645, Soil and

72 Page 3 Water Conservation Plan Certification, to your return if you claim this deduction. Do not deduct expenses you pay or incur to drain or fill wetlands or to prepare land for center pivot irrigation systems. The amount you deduct may not exceed 25% of your gross income from farming (excluding certain gains from selling assets such as farm machinery and land). If your conservation expenses are more than the limit, the excess may be carried forward and deducted in later tax years. However, the amount deductible for any 1 year may not exceed the 25% gross income limit for that year. Attach a copy of the original federal Form 8465 to your return for each carryover year you claim the deduction. Line 15 Enter amounts paid for custom hire or machine work (the machine operator furnished the equipment). Do not include amounts paid for rental or lease of equipment that you operated yourself; report those amounts on line 26a. Line 16 You can deduct depreciation of buildings, improvements, cars and trucks, machinery, and other farm equipment of a permanent nature. Do not deduct depreciation on your home, furniture, or other personal items, land, livestock you bought or raised for resale, or other property in your inventory. You may also choose under IRC section 179 to expense a portion of the cost of certain depreciable property you bought in 1994 for use in your business. For more details, including when you must complete and attach Form N-164 (or federal Form 4562), see the federal instructions for Schedule C (Form 1040). Note that if you take a section 179 deduction, you may not claim the Capital Goods Excise Tax Credit for that portion of the costs of the property for which the section 179 deduction was taken. Figure your depreciation deduction, including the section 179 expense deduction, on Form N-164, Depreciation and Amortization. Enter on line 16 of Schedule F the amount from Form N-164, Part I. If you took a Capital Goods Excise Tax Credit on property that you disposed of before the end of its class life or life years, or the business use percentage decreases, or the use of the property otherwise changes so that it no longer qualifies, you may have to refigure the credit. For more details, see Part II, Form N-312, Capital Goods Excise Tax Credit. Line 17 Deduct contributions to employee benefit programs that are not an incidental part of a pension or profit-sharing plan included on line 25. Examples are accident and health plans, group-term life insurance, and dependent care assistance programs. Do not include on line 17 any contributions you made on your behalf as a self-employed person to an accident and health plan or for group-term life insurance. Line 18 Generally, you cannot currently deduct expenses for feed to be consumed by your livestock in a later tax year. See Prepaid Farming Expenses in the federal instructions for Schedule F, Profit or Loss From Farming. Line 20 Do not include as freight paid the cost of transportation incurred in purchasing livestock held for resale. Instead, add these costs to the cost of the livestock, and deduct them when the livestock are sold. Line 22 Deduct premiums paid for farm business insurance on line 22. Deduct on line 17 amounts paid for employee accident and health insurance. Do not deduct amounts credited to a reserve for self-insurance or premiums paid for a policy that pays for your lost earnings due to sickness or disability. Lines 23a and 23b Interest Allocation Rules. The tax treatment of interest expense differs depending on its type. For example, home mortgage interest and investment interest are treated differently. Interest allocation rules require you to allocate (classify) your interest expense so it is deducted on the correct line of your return and gets the right tax treatment. These rules could affect how much interest you are allowed to deduct on Schedule F. Generally, you allocate interest expense by tracing how the proceeds of the loan are used. See Publication 535, Business Expenses, for details. If you paid interest on a debt secured by your main home, and any of the proceeds from that debt were used in your farming business, see Publication 535 to figure the amount that is deductible on Schedule F. If you have a mortgage on your real property used in your farming business (other than your main home), enter on line 23a the interest you paid for 1994 to banks or other financial institutions for which you received a federal Form 1098, Mortgage Interest Statement. Note: If the recipient was not a financial institution or you did not receive a federal Form 1098 from the recipient, report your mortgage interest on line 23b. If you paid $600 or more of interest on this mortgage, the recipient should send you a federal Form 1098 or similar statement showing the total interest received from you during This statement must be sent to you by February 1, If you paid more mortgage interest to financial institutions than is shown on federal Form 1098 or similar statement, see Publication 535 to find out if you can deduct the additional interest. If you can, enter the amount on line 23a. Attach a statement to your return explaining the difference and write See attached in the left margin next to line 23a. If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on the mortgage and the other person received the federal Form 1098, report your share of the interest on line 23b. Attach a statement to your return showing the name and address of the person who received the federal Form In the left margin, next to line 23b, write See attached. On line 23b, enter the interest on other loans related to this farm. Do not deduct interest you prepaid in 1994 for later years; include only the part that applies to Line 24 Enter amounts you paid for farm labor minus the amount of any Hawaii jobs credit you claimed on Form N-884. Do not include amounts paid to yourself. Count the cost of boarding farm labor but not the value of any products they used from the farm. Count only what you paid household help to care for farm laborers. Caution: If you provided taxable fringe benefits to your employees, such as personal use of a car, do not include in farm labor the amounts depreciated or deducted elsewhere. Line 25 Enter your deduction for contributions to employee pension, profit-sharing, or annuity plans. If the plan included you as a self-employed person, see the federal instructions for Schedule C (Form 1040). Lines 26a and 26b If you rented or leased vehicles, machinery, or equipment, enter on line 26a the business portion of your rental cost. But if you leased a vehicle for a term of 30 days or more, you may have to reduce your deduction by an inclusion amount. For details, see the federal instructions for Schedule C (Form 1040). Enter on line 26b amounts paid to rent or lease other property such as pasture or farm land. Line 27 Enter amounts you paid for repairs and maintenance of farm buildings, machinery, and equipment. You can also include what you paid for tools of short life or small costs, such as shovels and rakes. Do not deduct repairs or maintenance on your home. Line 31 You may deduct the following taxes: Real estate and personal property taxes on farm business assets. Social security and Medicare taxes you paid to match what you are required to withhold from farm employees wages and any federal unemployment tax paid. To deduct one-half of your self-employment tax, see the instructions for federal Form Do not deduct: Federal income taxes. Estate and gift taxes. Taxes assessed to pay for improvements, such as paving and sewers. Taxes on your home or personal property. State and local sales taxes on property purchased for use in your farm business, instead, treat these taxes as part of the cost of the property. Other taxes not related to the farm business. Line 32 Enter amounts you paid for gas, electricity, water, etc., for business use on the farm. Do not include personal utilities. You cannot deduct the base rate (including taxes) of the first telephone line into your resi- SCHEDULE F INSTRUCTIONS

73 Page 4 dence, even if you use it for business. See the federal instructions for Schedule C (Form 1040). Lines 34a through 34f Enter all ordinary and necessary farm expenses not deducted elsewhere on Schedule F, such as advertising, office supplies, etc. See the federal instructions for Schedule F, Profit or Loss From Farming, for a discussion of the following subjects: 1. Amortization, 2. At-Risk Loss Deduction, 3. Bad Debts, 4. Business Use of Your Home, 5. Legal and Professional Fees, 6. Travel, Meals, and Entertainment, and 7. Preproductive Period Expenses. Line 36 If you have a loss, the amount of loss you can deduct this year may be limited. Go on to line 37 before entering your loss on line 36. If you answered No to Question E on Schedule F, also see federal Form Enter the net profit or deductible loss here and on Form N-12 or N-15, line 18; or Form N-40, line 5. Partnerships should stop here and enter the profit or loss on this line and on Form N-20, line 5. Line 37 At-Risk Rules. Generally, if you have (a) a loss from a farming activity, and (b) amounts in the activity for which you are not at risk, you will have to complete federal Form 6198, At-Risk Limitations, to figure your allowable loss. The at-risk rules generally limit the amount of loss (including loss on the disposition of assets) you can claim to the amount you could actually lose in the activity. Check box 37b if you have amounts for which you are not at risk in this activity, such as the following: Nonrecourse loans used to finance the activity, to acquire property used in the activity, or to acquire the activity, that are not secured by your own property (other than property used in the activity). However, there is an exception for certain nonrecourse financing borrowed by you in connection with holding real property. Cash, property, or borrowed amounts used in the activity (or contributed to the activity, or used to acquire the activity) that are protected against loss by a guarantee, stop-loss agreement, or similar arrangement (excluding casualty insurance and insurance against tort liability). Amounts borrowed for use in the activity from a person who has an interest in the activity, other than as a creditor, or who is related, under section 465(b)(3), to a person (other than you) having such an interest. If all amounts are at risk in this business, check box 37a and enter your loss on line 36. But if you answered No to Question E, you may need to complete federal Form 8582 to figure your allowable loss to enter on line 36. See the instructions for federal Form 8582 for more details. If you checked box 37b, get federal Form 6198 to determine the amount of your deductible loss and enter that amount on line 36. But if you answered No to Question E, your loss may be further limited. See the instructions for federal Form If your at-risk amount is zero or less, enter zero on line 36. Be sure to attach federal Form 6198 to your return. If you checked box 37b and you fail to attach federal Form 6198, processing of your tax return may be delayed. Any loss from this activity not allowed for 1994 because of the at-risk rules is treated as a deduction allocable to the activity in For more details, see Publication 925, Passive Activity and At-Risk Rules. Also see the instructions for federal Form Part III Farm Income Accrual Method If you use the accrual method, report farm income when you earn it, not when you receive it. Generally, you must include animals and crops in your inventory if you use this method. See Publication 538, Accounting Periods and Methods, for exceptions, inventory methods, how to change methods of accounting, and for rules that require certain costs to be capitalized or included in inventory. Line 38 Enter the amount earned from the sale of livestock, produce, grains, and other products you raised. Lines 39a through 41c See the instructions for lines 5a through 7c, above. Lines 43 and 44 See the instructions for lines 9 and 10, above. SCHEDULE F INSTRUCTIONS

74 SCHEDULE J FORM N-12/N-15/N-40 (REV. 1994) STATE OF HAWAII DEPARTMENT OF TAXATION SUPPLEMENTAL ANNUITIES SCHEDULE Annuities, benefits under pension and profit-sharing plans, death benefits, and pensions in general Name(s) as shown on Form N-12, N-15, or N-40 Attach to Form N-12, N-15, or N-40 Your Social Security Number or FEIN PART I COMPUTATION OF ANNUAL PENSION EXCLUSION (Complete this Part only for the first year an annuity is received. Keep a copy of the first year computations for your records because you will use information from this Part every year you receive payments from your annuity.) 1. Annual annuity Multiple. (See Instructions.)... 2 X years 3. Total expected return. (Line 1 multiplied by line 2.) Employee s contributions: a. Upon which tax was withheld. (Investment in contract)... 4a b. Upon which tax was not withheld... 4b c. Total employee s contributions. (Line 4a plus line 4b.) If there were no employee contributions, see Instructions.... 4c 5. Employer s contributions. If there were no employer contributions, enter zero on line 5, skip lines 6-13, and enter zero on line Total cost of annuity. (Line 4c plus line 5) Annuity proceeds in excess of cost. (Line 3 minus line 6.) Is this annuity received as part of an employer s retirement plan because you retired or because you are a beneficiary Yes No of someone who retired? If you checked No, skip lines 9 through 13 and enter zero on line Portion of the total cost of the annuity attributable to employee contributions. (Line 4c divided by line 6. Round to 2 decimal places.) Portion of the total cost of the annuity attributable to employer contributions. (Line 5 divided by line 6. Round to 2 decimal places.) Excess attributable to employee s contribution. (Line 7 multiplied by line 9.) Excess attributable to employer s contribution. (Line 7 multiplied by line 10.) Expected return attributable to employer s contribution. (Add lines 5 and 12.) Annual pension exclusion. (Line 13 divided by the multiple on line 2.) Annual exclusion of the employee s investment in the annuity contract. (Line 4a divided by the multiple on line 2.) Annual death benefit exclusion, if applicable. Enter the amount of the death benefit exclusion available $. Divide this amount by the multiple on line PART II COMPUTATION OF TAXABLE ANNUITY (Complete for any year in which an annuity is received.) 17. Amount of annuity received this year Annual pension exclusion. (From line 14.) Line 17 minus line Enter total amount of annuity dividends received this year Portion of total cost of annuity attributable to employee s contribution. (See Instructions) Taxable annuity dividends. (Line 20 multiplied by line 21.) Add lines 19 and Annual recovery of employee s investment. (From line 15.) Line 23 minus line 24. (For lump-sum distributions, see Instructions) Death benefit exclusion. (From line 16) Total taxable annuity. (Line 25 minus line 26.) Enter this amount on Form N-12, line 16b, on Form N-15, line 16, Column A, or on Form N-40, line GENERAL INSTRUCTIONS This form is used to compute the taxable part of distributions from pensions and other annuities received during the year. This form is also used for determining the taxable portion of lump-sum distributions from qualified retirement plans for which the recipient uses Form N-152 and makes the capital gain election or elects to use either the 5- or 10-year averaging method. To qualify as a pension, the payment must be received upon retirement. It can be received in a lump-sum or in periodic payments. This includes payments made to a retired employee as well as payments made to the beneficiary of a retired employee because of the employee s death. Required distributions received by pension plan participants who have reached age 70 1/2 and who are still employed by their employers also qualify as pensions. Payments received because of separation of service before retirement do not qualify. Benefits incidental to a retirement plan received on or after termination of employment because of death or disability qualify for the pension exclusion if the other requirements for the exclusion are met. The pension exclusion applies only to amounts attributable to employer contributions. Amounts attributable to employer contributions which already have been deducted under other provisions cannot be deducted again. WHO MUST USE THIS FORM You MUST use this form if you received payment from any of the following: 1. A privately purchased annuity. The portion of your cost included in each distribution may be excluded. 2. A profit-sharing plan to which employee contributions were made. Only the increase in the value of the plan attributable to your contributions is taxable. 3. A death benefit as a beneficiary of a deceased employee. SCHEDULE J (FORM N-12/N-15/N-40)

75 SCHEDULE J (FORM N-12/N-15/N-40) INSTRUCTIONS 4. A pension plan to which employee contributions were made (i.e. both the employee and the employer contributed towards the cost of the pension). Only the increase in the value of the plan attributable to your contributions is taxable. 5. A qualified retirement plan in the form of a lump-sum and you are using Form N-152 to make a capital gain election or to use the 5- or 10-year averaging method to report the lump-sum distribution. If you did not contribute to the cost of your annuity that is not a part of an employer s pension plan or you recovered your entire cost before July 1, 1989, under the prior three year recovery rule, report your total annuity received this year on Form N-12, lines 16a and 16b or Form N-15, line 16, Column A. If you receive benefits from more than one plan, a separate Schedule J must be completed for each plan. WHO SHOULD NOT USE THIS FORM DO NOT use this form if you received a payment from any of the following: 1. An annuity you receive which is NOT part of your employer s pension plan AND to which no employee contributions were made. The full amount received is taxable and must be reported on Form N-12, lines 16a and 16b, or Form N-15, line 16, column A. 2. An annuity you receive which is NOT part of your employer s pension plan in which the cost to you was recovered before July 1, 1989, under the three year recovery rule formerly permitted. The full amount received is taxable and must be reported on Form N-12, lines 16a and 16b, or Form N-15, line 16, Column A. 3. A pension plan to which NO employee contributions were made (i.e. the employer paid for the entire cost of the pension) if distributions are made after retiring or after attaining the age of 70-1/2. The entire amount is NOT subject to Hawaii taxation and need not be reported. 4. A pension plan to which NO employee contributions were made (i.e. the employer paid for the entire cost of the pension) if distributions are made for any reason other than because of retirement or the attainment of age 70-1/2 (e.g., you quit, were laid off or fired, the plan was terminated, etc.). The full amount received is taxable and must be reported on Form N-12, lines 16a and 16b, or Form N-15, line 16, Column A. 5. The state retirement system or any other public retirement system. These amounts are not subject to Hawaii s personal net income tax. If you have received a lump-sum distribution, also see Form N-152, Tax on Lump-Sum Distributions. See Administrative Rules section (a)(3) for further information. LINE-BY-LINE INSTRUCTIONS PART I COMPUTATION OF THE ANNUAL PENSION EXCLUSION Use this part to compute the amount of the nontaxable portion of pension or annuity payments received each year. This Part must be completed only in the first year a distribution is received. The computations made in this Part will not change from year to year. Keep a copy of this Part since you will need the information each year a distribution is received to compute the taxable portion of the distribution. Line 1. Annual annuity Enter the amount you will receive each year. If you received a distribution for only part of a year, report an amount that reflects what you would have received had distributions been made for a 12 month period. Include on this line only amounts that are fixed and definite. Any indefinite or varying amounts should be included in Part II, line 20. If you are using this form to determine the taxable amount of a lump-sum distribution to be reported on Form N-152, enter on line 1 the total amount of the distribution. If you are electing to include in taxable income this year the net unrealized appreciation (NUA) of your employer s securities received as part of the distribution, include on this line the amount from federal Form 1099-R, Box 6. Line 2. Multiple Enter the multiple used for federal purposes to determine the expected return on the contract. This number represents the expected number of years that the annuity will be paid based on your age and other factors. See the discussion regarding Expected Return and actuarial tables in Internal Revenue Service Publication 939. If you are using this form to determine the taxable amount of a lump-sum distribution to be reported on Form N-152, enter 1 on this line. Line 4a. Employee s contributions upon which tax was withheld. (Investment in contract) This includes premiums, contributions, or other amounts paid including amounts your employer contributed if you were required to include these amounts in income. Do NOT include amounts paid for health and accident benefits or deductible voluntary employee contributions. Also do NOT include any refunded premiums, rebates, dividends, or unrepaid loans (any of which were not included in your income) that you received before the later of the annuity starting date or the date on which you received your first payment. Finally, do NOT include any additional premiums paid for double indemnity or disability benefits and any other amounts received under the contract or plan before the later of the above dates that you did not have to include in your income. Your employer or the organization that pays you the benefits (the plan administrator) should be able to tell you what your cost in the plan is. Line 4b. Employee s contributions upon which tax was not withheld The portion of the cost you paid for with money not previously taxed may not be deductible, but is part of your cost. Line 4c. Total employee s contributions Add the amounts on lines 4a and 4b. If the total is zero (i.e., there were no employee contributions), do not complete this form unless you are using this form to determine the taxable amount of a lump-sum distribution to be reported on Form N-152. See WHO SHOULD NOT USE THIS FORM in the general instructions. If the payments received qualify as a pension, no part of the annuity is taxable. You do not have to complete the rest of this form. Enter the total amount received this year on Form N-12, line 16a, and zero on line 16b or on Form N-15, line 16, Column A. If there were no employee contributions and the payments received do not qualify as a pension, the entire amount received is taxable. Enter the total amount received on Form N-12, lines 16a and 16b or on Form N-15, line 16, Column A. Line 5. Employer s contributions Enter the amount paid by the employer for the contract. If there were no employer contributions, enter zero on line 5, skip lines 6 through 13, enter zero on line 14, and continue on line 15. Line 15. Annual exclusion of the employee s investment in the annuity contract Divide the amount on line 4a by the multiple on line 2. This is the portion of your cost which is excluded from taxation each year. The tax-free part remains the same even if the total payment increases or you outlive the life expectancy factor used. If your annuity starting date is after 1986, however, the tax-free part cannot exceed the unrecovered cost of the contract. Line 16. Death benefit exclusion If you are the beneficiary of a deceased employee or a deceased former employee, the pension or annuity you get because of that person s death may qualify for a death benefit exclusion. This exclusion is limited to a maximum of $5,000 regardless of the number of employers paying death benefits or the number of beneficiaries. The death benefit exclusion does not apply to amounts that the employee had, immediately before death, a nonforfeitable right to receive while living. It may apply to lump-sum distributions from a qualified pension, annuity, stock bonus, or profit-sharing plan or from certain tax-sheltered annuities. If you are the survivor under a joint and survivor annuity, the exclusion only applies if the deceased had received no retirement pension or annuity payments, or the deceased had received disability income payments that were not treated as pension or annuity income. Even if the employee dies after the annuity starting date, the death benefit exclusion applies to amounts received by a beneficiary if the amounts are received other than as the survivor under a joint and survivor annuity. If more than one person is entitled to a survivor annuity, the annuitants generally must allocate the allowable death benefit among themselves in proportion to the relative value of their benefits under the contract. Further information regarding this exclusion may be found in Internal Revenue Service Publications 575 and 939. PART II COMPUTATION OF TAXABLE ANNUITY Use this Part to compute the taxable portion of pension and annuity payments you received this year. Line 18. Annual pension exclusion Enter the amount from line 14. If the beginning date of your annuity is a date other than the first day of the year, however, the exclusion allowed for the first and last years will be the annual pension exclusion multiplied by the ratio of months the annuity is received to the total number of months in the year. Line 20. Amount of annuity dividends received this year Enter the amount of any variable or indefinite amounts you received from your pension or annuity this year in excess of the fixed, definite amount shown on line 1. Line 21. Portion of annuity attributable to employee s contribution Enter the amount from line 9, but if this annuity or distribution is not part of an employer s pension plan or is received for a reason other than retirement, death, or disability, enter 1.00 (100%). Line 24. Annual recovery of employee s investment. Enter the amount from line 15. If the beginning date of your annuity is a date other than the first day of the year, the exclusion allowed for the first and last years will be the annual amount multiplied by the ratio of months the annuity is received to the total number of months in the year. If the employee s total investment in the contract has been recovered and the annuity starting date is after 1986, do not include any amount on this line for the recovery of the employee s investment in the contract. Line 25. Taxable annuity or distribution before adjustment for the death benefit exclusion If you are using this form to determine the taxable amount of a lump-sum distribution to be reported on Form N-152, enter this amount on line 1, Part III or Part IV of Form N-152. You do not have to complete the rest of this form. Line 27. Total taxable annuity Subtract the amount on line 26 from the amount on line 25. Enter the result on Form N-12, line 16b, on Form N-15, line 16, Column A, or on Form N-40, line 8.

76 FORM N-615 (REV. 1994) Child s name shown on return STATE OF HAWAII DEPARTMENT OF TAXATION Computation of Tax for Children Under Age 14 Who Have Investment Income of More than $1,000 See Instructions below and on back Attach ONLY to the Child s Form N-12, Form N-13, or Form N Child s social security number A Parent s name (first, initial, last) (Caution: See Instructions on back before completing) B Parent s social security number C Parent s filing status (check one): Single, Married filing jointly, Married filing separately, Head of household or Qualifying widow(er) D Enter number of exemptions claimed on parent s return. (If the parent s filing status is married filing separately, see Instructions.)... Step 1 Figure child s net investment income 1 Enter the child s investment income, such as taxable interest and dividend income (See Instructions. If this amount is $1,000 or less, stop here; do not file this form.) If the child DID NOT itemize deductions on Schedule A (Form N-12 or Form N-15), enter $1,000. If the child ITEMIZED deductions, see Instructions Line 1 minus line 2. Enter the result. (If zero or less, stop here; do not complete the rest of this form but ATTACH it to the child s return.) Enter the child s taxable income (from Form N-12, line 37; Form N-13, line 15; or Form N-15, line 37) Compare the amounts on lines 3 and 4 and enter the smaller of the two amounts Step 2 Figure tentative tax based on the parent s tax rate 6 Enter the parent s taxable income (from Form N-12, line 37; Form N-13, line 15; or Form N-15, line 37). If the parent transferred property to a trust, see Instructions Enter the total, if any, of the net investment income from Forms N-615, line 5, of ALL OTHER children of the parent listed above. (Do NOT include the amount on line 5 above) Add the amounts on lines 5, 6, and 7. Enter the total Tax on the amount on line 8 based on the parent s filing status, see Instructions. Check if from Tax Table, Tax Rate Schedule, or Schedule D Enter the parent s tax (from Form N-12, line 38; Form N-13, line 16; or Form N-15, line 38) Line 9 minus line 10. Enter the result. (If no amount is entered on line 7, enter the amount from line 11 on line 13; skip lines 12a and 12b.) a Add the amounts on lines 5 and 7. Enter the total a b Divide the amount on line 5 by the amount on line 12a. Enter the percentage... 12b 13 Multiply the amount on line 11 by the percentage on line 12b. Enter the result Step 3 Figure child s tax If the amounts on lines 4 and 5 are the same, go to line 16 now. 14 Line 4 minus line 5. Enter the result Tax on the amount on line 14 based on the child s filing status, see Instructions. Check if from Tax Table, Tax Rate Schedule, or Schedule D Add the amounts on lines 13 and 15. Enter the total Tax on the amount on line 4 based on the child s filing status. Check if from Tax Table, Tax Rate Schedule, or Schedule D Compare the amounts on lines 16 and 17. Enter the larger of the two amounts here and on Form N-12, line 38; Form N-13, line 16; or Form N-15, line 38. Be sure to check the box for Form N General Instructions Purpose of Form. For children under age 14, investment income (such as taxable interest and dividends) over $1,000 is taxed at the parent s rate if the parent s rate is higher than the child s rate. Do not use this form if the child s investment income is $1,000 or less. Instead, figure the tax in the normal manner on the child s income tax return. For example, if the child had $900 of taxable interest income and $200 of wages, Form N-615 is not required to be completed and the child s tax should be figured on Form N-13 using the Tax Table. If the child s investment income is more than $1,000, use this form to see if any of the child s investment income is taxed at the parent s rate and, if so, to figure the child s tax. For example, if the child had $1,100 of taxable interest income and $200 from wages, complete Form N-615 and attach it to the child s Form N-13. Investment Income. As used on this form, investment income includes all taxable income other than earned income as defined on page 2. It includes income such as taxable interest, dividends, capital gains, rents, royalties, etc. It also includes annuity income and income (other than earned income) received as the beneficiary of a trust. Who Must File. Generally, Form N-615 must be filed for any child who was under age 14 on January 1, 1995, and who had more than $1,000 of investment income. If neither parent was alive on December 31, 1994, do not use, Form N-615. Instead, figure the child s tax based on his or her own rate. Note: The parent may be able to elect to report the child s investment income on his or her return. If the parent makes this election, the child will not have to file a return or Form N-615. For more information, see Instructions for Form N-12 or Form N-13 or get Form N-814, Parent s Election To Report Child s Interest and Dividends. Additional Information. For more information about the tax on investment income of children, get federal Publication 929, Tax Rules for Children and Dependents. Line-by-Line Instructions We have provided specific instructions for most of the lines on the form. Those lines that do not appear in these instructions are self-explanatory. Lines A and B. If the child s parents were married to each other and filed a joint return, enter Form N-615

77 FORM N-615 (REV. 1994) Page 2 the name and social security number of the parent who is listed first on the joint return. For example, if the father s name is listed first on the return and his social security number is entered in the block labeled Your social security number, enter his name on line A and his social security number on line B. If the parents were married but filed separate returns, entre the name and social security number of the parent who had the higher taxable income. If you do not know which parent has the higher taxable income, see federal Publication 929. If the parents were unmarried, treated as unmarried for State income tax purposes, or separated either by a divorce or separate maintenance decree, enter the name and social security number of the parent who had custody of the child for most of the year (the custodial parent). Exception: If the custodial parent remarried and filed a joint return with his or her spouse, enter the name and social security number of the individual who is listed first on the joint return even if that individual is not the child s parent. If the custodial parent and his or her spouse filed separate returns, enter the name and social security number of the person with the higher taxable income, even if that person is not the child s parent. Note: If the parents were unmarried but lived together during the year with the child, enter the name and social security number of the parent who had the higher taxable income. Line D. If the parent s filing status is married filing separately and the parent claimed an exemption for his or her spouse, write Spouse in the space to the left of the box on line D. Line 1. If the child had no earned income (defined below), enter the child s adjusted gross income (from Form N-12, line 32; Form N-13, line 11; or Form N-15, line 32). If the child had earned income, use the worksheet below to figure the amount to enter on line 1. However, if the child had a net loss from self-employment or claims a net operating loss deduction, use the worksheet in federal Publication 929 instead of the one below to figure the amount to enter on Form N-615, line 1. Worksheet (keep a copy for your records) 1. Enter the amount from the child s Form N-12, line 21; Form N-13, line 11; or Form N-15, line 21, whichever applies Enter the child s earned income (defined below) plus any deduction the child claims on Form N-12, line 26 or Form N-15, line 26, whichever applies Line 1 minus line 2. Enter the result here and on Form N-615, line 1... Earned Income includes wages, tips, and other payments received for personal services performed. Generally, earned income is the total of the amounts reported on Form N-12, lines 7, 12, and 18; Form N-13, line 7; or Form N-15, lines 7, 12, and 18. Line 2. If the child itemized deductions on Schedule A (Form N-12/N-15), enter on line 2 the greater of: $500 plus the portion of the amount on Form N-12, line 33g or Form N-15, line 33h, that is directly connected with the production of the investment income on Form N-615, line 1; OR $1,000 Line 6. Enter the taxable income shown on the tax return of the parent identified on line A of Form N-615. If the parent s taxable income is less than zero, enter zero on line 6. If the parent filed a joint return, enter the taxable income shown on the return even if the parent s spouse is not the child s parent. Caution: If the parent transferred property to a trust which sold or exchanged the property during the year at a gain, include any gain that was taxed to the trust under Internal Revenue Code (IRC) section 644 in the amount entered on line 6. Write IRC Section 644" and the amount on the dotted line next to line 6. Also see the Caution below line 10. Line 7. If the individual identified as the parent on this Form N-615 is also identified as the parent on any other Form N-615, add the amounts, if any, from line 5 on each of the other Forms N-615 and enter the total on line 7. Line 9. Figure the tax on the amount on line 8 using the Tax Table, Tax Rate Schedules or Schedule D (Form N-12/N-15) Capital Gains and Losses, whichever applies. If any net capital gain is included on lines 5, 6, and/or 7, the tax on the amount on line 8 (the total of those lines) may be less if Part IV of Schedule D can be used to figure the tax. (See federal Publication 929 for information on how to figure the net capital gain included on line 8.) Schedule D should be used to figure the tax if: the parent s filing status is AND the amount on Form N-615, line 8, is over Single $ 5,500 Married filing joint return or Qualifying widow(er) with dependent child $ 11,000 Married filing separate return $ 5,500 Head of household $ 11,000 If Schedule D is used to figure the tax: 1. Enter the child s name and social security number at the top of Schedule D, Page 2; 2. Enter on Part IV, line 20 the amount from Form N-615, line 8; 3. Enter on Part IV, line 21 the net capital gain included on Form N-615, line 8; 4. Complete Part IV; 5. Enter on Form N-615, line 9, the amount from Part IV, line 30, and check the box for Schedule D ; and 6. Attach Schedule D, Page 2 to the child s return. Caution: If the parent is filing Schedule D with his or her own return, DO NOT attach that Schedule D to the child s return. Line 10. Enter the tax as shown on the tax return of the parent identified on Form N-615, line A. If the parent filed a joint return, enter the tax shown on that return even if the parent s spouse is not the child s parent. Caution: If line 6 includes any gain taxed to a trust under IRC section 644, add the tax imposed under IRC section 644(a)(2)(A) to the tax shown on the parent s return. Enter the total on line 10 instead of entering the tax from the parent s return. Write IRC Section 644" on the dotted line next to line 10. Line 15. Figure the tax on the amount on line 14 using the Tax Table, Tax Rate Schedules, or Schedule D, whichever applies. If the amount on line 14 is more than $5,500 and includes any net capital gain, the tax on the amount on line 14 may be less if Schedule D (Form N-12/N-15) is used to figure the tax. See federal Publication 929 for information on how to figure the net capital gain included on line 14. If Schedule D is used to figure the tax, follow the steps in the instructions for line 9. However, on line 20 of Part IV, enter the amount from Form N-615, line 14. On line 21, enter the net capital gain included on line 14. Enter the amount from Part IV, line 30, on Form N-615, line 15, and check the box for Schedule D. Line 17. Figure the tax on the child s taxable income as if these rules did not apply. For example, if the child files Schedule D and can use Part IV to figure his or her tax, complete Part IV on the child s actual Schedule D. Line 18. Compare the amounts on lines 16 and 17, then enter the larger of the 2 amounts on line 18. Be sure to check the box for Form N-615" on the appropriate line of the child s tax return even if the amount on line 17 is the larger of the 2 amounts. Amended Returns. If after the child s return is filed the parent s taxable income is changed or the net investment income of any of the parent s other children is changed, the child s tax must be refigured using the adjusted amounts. If the child s tax is changed as a result of the adjustment(s), file Form N-188X, Hawaii Amended Individual Income Tax Return, to correct the child s tax.

78 Parent s Election to Report Child s Interest and Dividends FORM N-814 See Instructions below and on back (REV. 1994) Attach to Parent s Form N-12 or Form N-15 Name(s) as shown on parent s return Your social security number Child s name (first, initial and last) Child s social security number Caution: If more than one Form N-814 is attached, check here... Step 1 Figure amount of child s interest and dividend income to report on your return 1a Enter your child s taxable interest income, If this amount is different than the amounts shown on the child s federal Forms 1099-INT and 1099-OID, see the Instructions... b Enter your child s tax-exempt interest income. DO NOT include this amount on line 1a... 1b 1a 2a Enter your child s gross dividends (including any Alaska Permanent Fund dividends). If none, enter zero on line 2c and go to line 3. If your child received any capital gain distributions or dividends as a nominee, see the Instructions... b Enter your child s nontaxable distributions (from federal Form 1099-DIV, Box 1d) that are included on line 2a... 2a 2b c Line 2a minus line 2b. Enter the result... 2c 3 Add lines 1a and 2c. Enter the total. If the total is $1,000 or less, skip lines 4 and 5 and go to line 6. If the total is $5,000 or more, do not file this form. Your child MUST file his or her own return to report the income Base amount , Line 3 minus line 4. Enter the result. (If filing more than one Form N-814 or if line 2a includes any capital gain distributions, see the Instructions.) Also, include this amount in the total on Form N-12, line 20 or on Form N-15, line 20. In the space provided on line 20, Form N-12 or on line 20, Form N-15, write Form N-814" and show the amount. Go on to line 6 below... 5 Step 2 Figure your tax on the first $1,000 of child s interest and dividend income 6 Amount not taxed Line 3 minus line 6. Enter the result. If less than zero, enter zero Tax If the amount on line 7 is $500 or more, enter $10.00 here. (Also, see the Note } below for where to enter it on your tax return.)... 8 If the amount on line 7 is less than $500, multiply the amount on line 7 by 2% (.02). Enter the result here. (Also, see the Note below for where to enter it on your tax return.) Note: Add the amount from line 8 to any tax you enter on your Form N-12, line 38 or Form N-15, line 38. Make sure to check the box noting that a tax from Form N-814 is included on line 38, Form N-12 or line 38, Form N-15. (If filing more than one Form N-814, see the Instructions.) General Instructions Purpose of Form. Use this form if you are a parent and choose to report the income of your child on your return. If you do, the child will not have to file a return. You can make this election if your child meets all of the following conditions: Was under age 14 on January 1, Is required to file a 1994 return. Had income only from interest and dividends (including Alaska Permanent Fund dividends). Had gross income for 1994 that was more than $500 but less than $5,000. Had no estimated tax payments for Did not have any overpayment of tax shown on his or her 1993 return applied to the 1994 return. Had no Federal income tax withheld from his or her income (backup withholding). The parent(s) must also qualify as explained on page 2 of these instructions. Step 1 is used to figure the amount of the child s income to report on the parent s return. Step 2 is used to figurean additional tax that must be added to your tax. How To Make the Election. To make the election, complete and attach Form N-814 to your tax return and file your return by the due date (including extensions). A separate Form N-814 must be filed for each child whose income the parent chooses to report. Caution: The income tax on your child s income may be less if you file a tax return for the child instead of making this election. This is because you cannot take certain deductions that your child would be entitled to on his or her own return. For details see Deductions You May Not Take on page 2. FORM N-814

79 FORM N-814 (REV. 1994) Parents Who Qualify To Make the Election. You qualify to make this election if you file Form N-12 or N-15 and any of the following apply: You are filing a joint return for 1994 with the child s other parent. You and the child s other parent were married to each other but file separate returns for 1994 AND you had the higher taxable income. (If you do not know if you had the higher taxable income, get federal Publication 929, Tax Rules for Children and Dependents.) You were unmarried, treated as unmarried for income tax purposes, or separated from the child s other parent by a divorce or separate maintenance decree. You must have had custody of your child for most of the year (you were the custodial parent). If you were the custodial parent and you remarried, you may make the election on a joint return with your new spouse. But if you and your new spouse (your child s step-parent) do not file a joint return, you qualify to make the election only if you had higher taxable income than your new spouse. Note: If you and the child s other parent were not married but you lived together during the year with the child, you qualify to make the election only if you are the parent with the higher taxable income. Deductions You May Not Take. If you elect to report your child s income on your return, you may not reduce that income by any of the following deductions that your child would be entitled to on his or her own return. Standard deduction of $500. Penalty on early withdrawal of child s savings. Itemized deductions (such as child s investment expenses or charitable contributions). If any of the above applies to your child, first figure the tax on your child s income as if he or she is filing a return. Next, figure the tax as if you are electing to report your child s income on your return. Then, compare the two methods to determine which results in the lower tax. Investment Interest Expense. Your child s income (excluding Alaska Permanent Fund dividends and capital gain distributions) that you report on your return is considered to be your investment income for purposes of figuring your investment interest expense deduction. If your child received Alaska Permanent Fund dividends or capital gain distributions, get federal Publication 550, Investment Income and Expenses, to figure the amount you may treat as your investment income. Additional Information. For more information, see federal Publication 929. Line-by-Line Instructions Parent s Name and Social Security Number. Enter the name(s) shown on your return. If filing a joint return, enter the social security number of the person whose name is shown first on the return. Line 1a. Enter ALL taxable interest income received by your child in If your child received a federal Form 1099-INT for tax-exempt interest, such as from municipal bonds, write the amount and Tax-exempt interest on the dotted line next to line 1a. Be sure to include this interest on line 1b but do not include it in the total for line 1a. If your child received, as a nominee, interest that actually belongs to another person, write the amount and ND (for nominee distribution) on the dotted line next to line 1a. Do not include amounts received as a nominee in the total for line 1a. If your child had accrued interest that was paid to the seller of a bond, amortizable bond premium (ABP) allowed as a reduction to interest income, or if any original issue discount (OID) included on line 1a is less than the amount shown on your child s federal Form 1099-OID, follow the instructions above for nominee interest to see how to report the nontaxable amounts. But, on the dotted line next to line 1a, write the nontaxable amount and Accrued interest, ABP adjustment, or OID adjustment, whichever applies. Do not include any nontaxable amounts in the total for line 1a. Line 1b. If your child received any tax-exempt interest income, such as interest on certain state and municipal bonds, enter the total tax-exempt interest on line 1b. Also include any exempt-interest dividends your child received as a shareholder in a mutual fund or other regulated investment company. Do not include this interest on lines 1a or 3. Line 2a. Enter gross dividends received by your child in 1994, including capital gain distributions and nontaxable distributions. Federal Form 1099-DIV shows gross dividends in Box 1a. Also, include dividends your child received through a partnership, an S corporation, or an estate or trust. If line 2a includes any capital gain distributions (from federal Form 1099-DIV, Box 1c), see the line 5 instructions that follow. If your child received, as a nominee, dividends that actually belong to another person, write the amount and ND (for nominee distribution) on the dotted line next to line 2a. Do not include amounts received as a nominee in the total for line 2a. Line 5. If you are filing more than one Form N-814, add the amounts from line 5 of ALL Forms N-814 and include the total on Form N-12, line 20 or on Form N-15, line 20. Be sure to write Form N-814" and show the total of the line 5 amounts in this space provided on line 20, Form N-12 or on line 20, Form N-15. If line 2a includes any capital gain distributions and you are filing Schedule D (Form N-12/N-15), part or all of your child s capital gain distributions should be reported on your Schedule D instead of on Form N-814, line 5. Before you enter an amount on line 5, see federal Publication 929 for details on how to figure the amount to report on your Schedule D. Line 8. If you are filing more than one Form 814, add the amounts from line 8 of ALL Forms 814 and include the total on Form N-12, line 38 or on Form N-15, line 38. Make sure to check the box noting that a tax from Form 814 is included on line 38, Form N-12 or on line 38, Form N-15.

80 Instructions for preparing 1994 Form N-12 RESIDENT Hawaii Individual Income Tax Return For Residents and Part-Year Residents DUE DATE: APRIL 20, 1995 STATE OF HAWAII DEPARTMENT OF TAXATION and instructions for Schedules A & B, C, D, E, and J (HAWAII TAX TABLE- PAGES 32-43) MESSAGE FROM THE DIRECTOR We realize that the tax law does change from year to year and is complex. To make tax filing easier for you, Hawaii has adopted many of the federal income tax provisions. The Department of Taxation appreciates the efforts you made last year in filing an accurate tax return. This resulted in the faster processing of your returns and a prompt refund. We congratulate you. For another successful tax season, the following are suggested to assist you in filing your return and receiving an early refund: Please check your mathematical calculations before sending in your return. Mistakes may bring requests for clarification and may slow up refunds. Mail your return as soon as possible to avoid those delays that are inevitable due to the volume of business at the end of the State income tax season on April 20th. Use the preprinted name and address label and preaddressed envelope, if you receive them. Both help to prevent mistakes and to assist in processing refunds faster. To reduce State printing and postage costs, the Department of Taxation has added a line for you to indicate if you do not need a Hawaii income tax package next year because a tax preparer will prepare your tax return. If you do not need a package, check the box at line 65 on Form N-12, and you will receive a preprinted name and address label only. The Department of Taxation continues to be committed to improve and to provide quality service to you, our customers. We thank you for the suggestions you have given us in the past, many of which have been helpful and have been used. If you have more suggestions, please send them to me in writing at the Department of Taxation, P. O. Box 259, Honolulu, Hawaii RICHARD F. KAHLE, JR. Director of Taxation

81 Changes for 1994 A one-time $1 General Income Tax Credit for (Act 85) The deduction for moving expenses incurred after December 31, 1993, is allowed as a deduction in computing adjusted gross income rather than as an itemized deduction. (Act 13) If you do not need Hawaii income tax forms mailed to you next year because a tax preparer will prepare your tax return, check the box at line 65 on Form N-12, and you will receive a preprinted name and address label only. Charitable contributions of $250 or more, made on or after January 1, 1994, must be substantiated by a written acknowledgement from the donee organization to be deductible. (Act 13) The low-income housing credit is permanently extended applicable to periods ending after June 30, (Act 13) The income exclusion of employer-provided education assistance is extended through December 31, Effective for tax years ending after June 30, (Act 13) Taxpayers may elect to include any amount of their net capital gain in their investment income when computing their allowable investment interest deduction. If the election is made, capital gains that are otherwise eligible for the capital gains tax rate must be reduced by the amount included as investment income. Effective for tax years beginning after December 31, (Act 13) The amount a taxpayer may elect to deduct, rather than depreciate, is increased from $10,000 to $17,500 of the cost of section 179 property placed in service during the taxable year. Applies for tax years beginning after December 31, (Act 13) The 25% deduction for health insurance costs of self-employed individuals, which was extended for tax years ending after June 30, 1992, is not available after December 31, (Act 13) Important Reminders for 1994 If you cannot file by April 20, 1995, you may request an extension to file Form N-12 on Hawaii Form N-101A. Federal forms or letters MAY NOT be used for this purpose. Line 35 on Form N-12 MUST be filled in. Failure to do so could cause delays in processing your return. Please be sure to check the appropriate filing status box. Please check all arithmetic on the return. A correct return will help us process your return efficiently and issue refunds quickly. If you are married and filing separate returns, the refund from your spouse s return cannot be applied to your liability. Include your spouse s social security number if you are married whether a joint or separate return is filed. Enter zeros ( ) if your spouse has no social security number. If your spouse is a nonresident alien, enter NRA. Attach your employee earning statements (HW-2 s or federal W-2 s) to the front of your return. If someone prepares your tax return and charges you a fee, the preparer must sign and complete the Paid Preparer s Information box. Please mail on or before April 20, Please place proper postage on envelope before mailing. Keep a copy of your return for your records. If you would like a copy of the Hawaii Taxpayer s Bill of Rights, please contact any District Tax Office. Note for 1994 Act 13, SLH 1994, updated Hawaii s conformity to the Internal Revenue Code (IRC) to include amendments made to operative provisions of the IRC by the Revenue Reconciliation Act of A number of amendments serve to reactivate previously expired provisions or to allow certain deductions and income recognition provisions to be effective for tax years beginning prior to Some of the retroactive provisions include the low-income housing credit, the income exclusion of employer-provided education assistance, the deduction for health insurance costs of self-employed individuals, the election to include net capital gain in investment income when computing the allowable investment interest deduction, and the increase in the IRC section 179 deduction. Taxpayers who were affected by the changes should file amended income tax returns on Form N-188X to take advantage of the changes. For more information, consult your taxation district office. Page 2

82 STATE OF HAWAII DEPARTMENT OF TAXATION RELATED FEDERAL/HAWAII TAX FORMS Copy of Fed. Form Federal Comparable May Be Form Number Title or Description of Federal Form Hawaii Form Submitted+ W-2...Wage and Tax Statement... HW-2...Yes W-4...Employee s Withholding Allowance Certificate... HW-4...No W-10...Dependent Care Provider s Identification and Certification... HW-16...No U.S. Individual Income Tax Return... N-12...No 1040 Sch A...Itemized Deductions... Sch A&B...No Sch B...Interest and Dividend Income... Sch A&B...No Sch C...Profit or Loss from Business... Sch C...Yes* Sch C-EZ...Net Profit From Business... None...Yes* Sch D...Capital Gains and Losses... Sch D...No Sch E...Supplemental Income and Loss... Sch E...Yes* Sch F...Farm Income and Expenses... Sch F...Yes* Sch R...Credit for the Elderly or the Disabled... None...No 1040A...U.S. Individual Income Tax Return (short form)... N-13...No 1040ES...Estimated Tax for Individuals... N-1...No 1040EZ...Income Tax Return for Single and Joint Filers With No Dependents... N-13EZ...No 1040NR...U.S. Nonresident Alien Income Tax Return... None...No 1040X...Amended U.S. Individual Income Tax Return... N-188X...No Application for Tentative Refund... N No Application for Change in Accounting Period... N Yes Statement of Person Claiming Refund Due a Deceased Taxpayer... N No Questionnaire Exemption Claimed for Dependent... None...No Employee Business Expenses... N Yes 2106-EZ...Unreimbursed Employee Business Expenses... None...Yes Sale of Your Home... N No Multiple Support Declaration... N Yes Underpayment of Estimated Income Tax by Individuals and Fiduciaries... N No Child and Dependent Care Expenses... N No Application for Additional Extension of Time to File U.S. Individual Income Tax Return... N-101B...No Power of Attorney and Declaration of Representative... N Yes Moving Expenses... N No Depreciation and Amortization... N Yes Casualties and Thefts... N Yes Sales of Business Property... Sch D-1...No Farm Rental Income and Expenses... None...Yes Employee s Substitute Wage & Tax Statement... L-15...No Application for Automatic Extension of Time to File U.S. Individual Income Tax Return... N-101A...No Investment Interest Expense Deduction... N No Tax on Accumulated Distribution of Trusts... N No Tax on Lump-Sum Distributions... N No Election to Postpone Determination (Hobby Losses)... N Yes Return for Additional Taxes Attributable to Qualified Retirement Plans (Includings IRA s), Annuities and Modified Endowment Contracts... None...No Jobs Credit... N No At-Risk Limitations... None...Yes Installment Sale Income... N Yes Gains and Losses From Section 1256 Contracts and Straddles... Sch D-3...Yes Passive Activity Loss Limitations... None...Yes Low-Income Housing Credit... N No Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1, N No Parent s Election to Report Child s Interest and Dividends... N No Like-Kind Exchanges... None...Yes Expenses for Business Use of Your Home... None...Yes +If Yes is indicated and there is no Hawaii equivalent form, the federal form must be used. *A copy of the federal schedule may be substituted if your Hawaii General Excise ID Number is written on the schedule. Page 3

83 Form N-12 General Instructions Who Must File 1. Every individual doing business in Hawaii during the taxable year, whether or not he or she derives any taxable income therefrom. Doing business includes all activities engaged in or caused to be engaged in with the object of gain or economic benefit, direct or indirect, except personal services performed as an employee under the direction and control of an employer. For this purpose every person receiving rents from property owned in Hawaii is classed as doing business and must file a return whether or not he or she derives taxable income therefrom. 2. Every individual receiving: (1) $2,540 (the combined amount of the personal exemption and the standard deduction for an individual) or more in gross income subject to taxation under chapter 235, HRS; or (2) $3,580 (the combined amount of the personal exemption and the standard deduction for an individual) or more if an individual attains the age of 65 before the close of the taxable year. 3. Every individual claiming the benefit of the provision as to persons taking up residence in Hawaii after attaining the age of 65 years and before July 1, The return should be accompanied by a signed statement setting forth the date that the individual established residence in Hawaii and the individual s date of birth. 4. Children receiving income during the taxable year who have not attained the age of 14 years before the end of the taxable year. The income of a minor child is not included in the gross income of the parent for income tax purposes, unless the parent files Form N-814, Parent s Election to Report Child s Interest and Dividends. The minor child s income shall be reflected in the return filed by or for such child. Resident A resident is taxed on income from all sources. A resident must file an Individual Income Tax Return ---- Resident (Form N-12, N-13, or N-13EZ), if required to do so. A Hawaii resident is an individual who is: 1. Domiciled for the entire year in Hawaii even though temporarily outside of Hawaii; or 2. Even though domiciled outside of Hawaii, an individual may be presumed to be a resident while maintaining a permanent place of abode within the State and spending a total of more than 200 days in the aggregate, during the taxable year within Hawaii. This presumption may be overcome by evidence satisfactory to the Department of Taxation that the individual maintained a permanent place of abode outside the State and is in the State for a temporary or transitory purpose. No person shall be deemed to have gained or lost a residence simply because of his or her presence or absence in compliance with military or naval orders of the United States, while engaged in aviation or navigation, while temporarily relocated by an employer, or while a student at any institution of learning. See Tax Information Release No. 90-3, Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or from Nonresident to Resident. Nonresident A Hawaii nonresident is an individual who is in Hawaii for a temporary or transient purpose, and whose permanent domicile is not Hawaii. This includes, but is not limited to, citizens of countries other than the U.S. who do not have permanent resident alien visas (i.e. those who do not have their green cards ). A nonresident must file an Individual Income Tax Return----Nonresident (Form N-15), if required to do so, and will be taxed on income from Hawaii sources only. A nonresident married to a Hawaii resident may choose to file a joint return with the resident spouse on Form N-12; however, the nonresident will then be taxed on all income from all sources as a Hawaii resident. For more information, see Married Filing Joint Return on page 6. Part-Year Resident A part-year resident is an individual who was a Hawaii resident for part of the year, and a nonresident of Hawaii during the other part of the year. This includes those who became Hawaii residents during the year and those who gave up being a Hawaii resident during the year. A part-year resident must file an Individual Income Tax Return ---- Resident long form (Form N-12), if required to do so, and will be taxed on ALL income from all sources during the period of residency, and on income from Hawaii sources only during the period of nonresidency. Domicile Defined The term domicile means the place where an individual has a true, fixed, permanent home and principal establishment, and to which place the individual has, whenever absent, the intention of returning. It is the place in which an individual has voluntarily fixed the habitation of himself or herself and family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. Three things are necessary to create a new domicile: first, an abandonment of the old domicile; second, the intention and establishing of a new domicile; and third, an actual physical presence in the new domicile. The mere intention to abandon a domicile once established is not of itself sufficient to create a new domicile, but before a person can be said to have changed his or her domicile, even though he or she manifests an intention to abandon the old domicile, a new domicile must be shown. Reminder: If you are in Hawaii because of military orders and do not intend to make Hawaii your permanent home, you are not considered a Hawaii resident for income tax purposes, even though you have been in the State for more than 200 days in Resident vs. Nonresident Examples Note: For more information, see Tax Information Release No. 90-3, Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or from Nonresident to Resident and Tax Information Release No , Clarification of Taxation and the Eligibility for Personal Exemptions and Credits of Residents and Nonresidents in the Military and Spouses and Dependents of Persons in the Military. Example 1 - A person, who is a Hawaii resident and enlists in the military, will remain a Hawaii resident regardless of the length of absence from Hawaii while stationed at bases outside of Hawaii. Example 2 - A Hawaii resident working in a foreign country will remain a Hawaii resident unless permanent resident status is granted by the foreign country. Example 3 - Foreign students, researchers, and faculty members who are granted entry into the United States on F, H, or J visas are nonresidents for Hawaii tax purposes. Example 4 - Spouses of those in the military service do not become Hawaii residents if their principal reason for moving to Hawaii was the transfer of the servicemember spouse to Hawaii, and if it is their intention to leave Hawaii when the servicemember spouse either is transferred to another military station or leaves the service. Example 5 - A Hawaii resident who marries a nonresident will remain a Hawaii resident unless the three requirements for changing his or her domicile are also met. (Refer to the definition Domicile above.) This situation applies in reverse to a nonresident who marries a resident. A person s status will not change merely due to the person s marriage. Who Should File Even if you do not have to file, you should file to get a refund if income tax was withheld from your pay. Also, a return may be required to support a claim for a credit or refund. Which Form to File You MAY Be Able to Use Form N-13EZ if: Your filing status is either Single or Married Filing Joint Return and you do not claim any dependents, You had only wages, salaries, tips, interest of $400 or less, and scholarship or fellowship grants, AND Your adjusted gross income is less than $30,000. You MAY Be Able to Use Form N-13 if: You had only wages, salaries, tips, interest, ordinary dividends, and unemployment compensation, AND Your taxable income (adjusted gross income less standard deduction and personal exemptions) is less than $100,000. Since Form N-13 is easier to complete than Form N-12, you should use it if you can unless Form N-12 allows you to pay less tax. However, even if you meet the above tests, you may still have to file Form N-12. Note: If you had more than $400 in interest income or more than $400 in dividends, you may still file Form N-13, provided you are not required to file Form N-12 for any of the reasons listed below under You Must Use Form N-12 if... You MUST Use Form N-12 if: You itemize your deductions. Your spouse files a separate return and itemizes deductions. Exception: You can still use Form N-13 if you have a dependent child and can meet the tests on page 7 under Married Persons Who Live Apart (and Abandoned Spouses). You take any of the Adjustments to Income shown on Form N-12, lines 22a through 29. You filed Form N-1, Declaration of Estimated Tax for Individuals, for You applied any part of your 1993 overpayment to estimated tax for 1994, or if you want to apply any part of your 1994 overpayment to estimated tax for You took up residence in Hawaii during the tax year. (Part-year resident) Page 4

84 You gave up residence in Hawaii during the tax year. (Part-year resident) You are claiming the benefit of persons who took up residence in Hawaii after attaining the age of 65 years and before July 1,1976. You are a resident husband or wife making a joint return if the other spouse is a nonresident, or the other spouse: ----took up Hawaii residence during the tax year, (Part-year resident) ----gave up Hawaii residence during the tax year, (Part-year resident) or ----is claiming the benefit of persons who took up residence in Hawaii after attaining age 65 and before July 1, You claim any credit on Form N-12, lines 39, 41, 42, 43, 53, 56, or 58. You make your return using an accounting method other than the cash receipts and disbursements method. You make your return on the fiscal year basis which began in When to File You should file as soon as you can after January 1, but not later than April 20, If you file late, you may have to pay penalties and interest. Please see the instructions for Penalties and Interest on page 18. If you know that you cannot meet the April 20 deadline, you should ask for an extension on Form N-101A, Application for Automatic Extension of Time to File Hawaii Individual Income Tax Return. This is an extension of time to file, not an extension of time for payment of tax. Note: Returns for the fiscal year which began in 1994 must be filed on or before the 20th day of the fourth month following the close of the fiscal year. The official U.S. Post Office cancellation mark will be considered primary evidence of the date of filing of tax documents and payments. Timely filing of mail which does not bear a U.S. Post Office cancellation mark will be determined by reference to other competent evidence. Where to File Please use the addressed envelope that came with your return. If you do not have an addressed envelope, or if you moved during the year, mail your return to the taxation district office in which you reside or have your principal place of business, or if you have no residence in Hawaii, then with the Oahu District Office, P. O. Box 3559, Honolulu, Hawaii The State of Hawaii is divided into four taxation districts. Consequently, you must file your return, pay your tax, get your refund, get your forms, or conduct other Hawaii tax affairs with the taxation district office located in the county where you reside or have your principal business. MAILING ADDRESSES OAHU DISTRICT OFFICE P.O. Box 3559 Honolulu, Hawaii MAUI DISTRICT OFFICE P.O. Box 913 Wailuku, Hawaii HAWAII DISTRICT OFFICE P.O. Box 1377 Hilo, Hawaii KAUAI DISTRICT OFFICE P.O. Box 1688 Lihue, Hawaii DISTRICT OFFICE LOCATIONS OAHU DISTRICT OFFICE 830 Punchbowl Street Honolulu, Hawaii Telephone: For tax information: (808) (Jan. - April 20) (808) Toll-Free To request tax forms: (808) Toll-Free MAUI DISTRICT OFFICE State Office Building 54 High Street Wailuku, Hawaii Telephone: (808) HAWAII DISTRICT OFFICE State Office Building 75 Aupuni Street Hilo, Hawaii Telephone: (808) KAUAI DISTRICT OFFICE State Office Building 3060 Eiwa Street Lihue, Hawaii Telephone: (808) Other Information Death of Taxpayer Did the taxpayer die before filing a return for 1994? If so, the taxpayer s spouse or personal representative may have to file a return and sign it for the person who died (decedent) if the decedent was required to file a return. A personal representative can be an executor, administrator, or anyone who is in charge of the taxpayer s property. If the decedent did not have to file a return but either had State income tax withheld, made estimated tax payments, or is eligible for various tax credits, a return must be filed to get a refund. If your spouse died in 1994 and you did not remarry in 1994, or if your spouse died in 1995 before filing a return for 1994, you may still file a joint return for the 1994 tax year. A return filed for a deceased taxpayer, including a joint return with a surviving spouse, must have the word DECEASED written in the upper left hand corner of the return. The word DECEASED and the date of death also must be written after the deceased taxpayer s first name and middle initial in the name and address area of the tax return. Generally, the personal representative must sign the return on behalf of the decedent. However, if a joint return is being filed by the decedent s spouse, the spouse should write Filing as surviving spouse on the line provided for the taxpayer s signature. If a refund is due, you must complete Form N-110, Statement of Person Claiming Refund Due a Deceased Taxpayer, and attach it to the return to ensure that the refund check will be issued in the name of the surviving spouse, personal representative, or other responsible individual instead of the decedent s name. Filing a Final Return A return filed by a taxpayer who is giving up his or her Hawaii residency during the year must have the words FINAL RETURN written in the upper left hand corner of the return. Also, fill in the appropriate period of your Hawaii residency on the line which begins or other tax year beginning... Declaration of Estimated Tax Basic rules. - Individuals who must pay more tax than is withheld, or have no withholding, may have to file a declaration of estimated tax and pay that tax in a lump sum or installments. Income tax obligation may not be satisfied through withholding when an individual has income not subject to withholding, e.g., from business or profession, rent, gains from sales of property, interest and dividend income, unemployment compensation, or taxable pension distributions. Who Must File a Declaration on Form N-1 - An individual must generally file Form N-1 if his or her gross income for the year either (1) could be reasonably expected to include wages subject to withholding in excess of $9,000; or (2) could be reasonably expected to include more than $100 from non-wage income and to exceed the sum of $1,040 for each allowable personal exemption plus $200. Exceptions. - Notwithstanding (1) and (2) above, a declaration need not be filed if : (a) the gross income is not expected to exceed $12,000 of which 90% shall consist of wages subject to withholding (the foregoing applies to single taxpayers as well as the combined income of married taxpayers who are entitled to file a joint return) or (b) the total estimated income tax payable is less than $500 after deducting the total estimated credits allowed. Date and Payment of Estimated Tax. - Your declaration for 1995 must be filed on or before April 20, It may be paid in full with the declaration, or in equal installments on or before April 20, 1995, June 20, 1995, September 20, 1995 and January 20, Each installment payment must be submitted with a payment voucher. Make checks or money orders payable to the Hawaii State Tax Collector. See Form N-1 for details. Multistate Tax Compact Act Any taxpayer, other than a corporation acting as a business entity in more than one state, who is required by the Hawaii Income Tax Law to file a return and whose only activities in the State consist of sales and who does not own or rent real estate or tangible personal property and whose annual gross sales in or into the State during the tax year are not in excess of $100,000 may elect to report and pay a tax of.5 percent of such annual gross sales. Taxpayers who elect the foregoing shall file Form N-310 in lieu of Form N-12. Steps for Preparing Your Return We have set up these instructions using 8 steps. You should complete the first 3 steps that follow BEFORE you begin to fill in your return. Then, you may find it helpful to follow the Line-By- Line Instructions. They begin on page 6 and end on page 18. Finally, steps 5 through 8 are on page 18. They are the steps you should take after your Form N-12 and other schedules and forms you need are filled in. If you follow these steps and read the Line-By- Line Instructions, we feel you can fill in your return Page 5

85 quickly and accurately. If you have any questions, call or visit your respective taxation district office. Step 1 Get all of your income records together. These include any Forms HW-2 and federal Forms W-2 or 1099s that you may have. If you don t get a Form HW-2 or federal Form W-2 by January 31, or if the one you get isn t correct, please contact your employer as soon as possible. Only your employer can give you a Form HW-2 or federal Form W-2, or correct it. If you cannot get a Form HW-2 or federal Form W-2, by February 15, please contact your taxation district office. If you have someone prepare your return for you, make sure that person has all your income and expense records so he or she can fill in your return correctly. Remember, even if someone else prepares your return incorrectly ---- you are still responsible. Step 2 If you plan to claim tax credits or itemize deductions, get all the information and expense records you will need. Pages 13 through 22 of these instructions tell you what credits and deductions you can claim. Some of the records you may need are: Medical and dental payment records. Real estate and personal property tax receipts. Interest payment records for a home mortgage. Step 3 Get any forms, schedules, or information you need. Resident tax form and instruction packages are automatically mailed to you based on the return you filed last year. Make sure that all the forms you need are in the package you receive. If you need any other forms and instructions, you may pick them up at any district tax office. You may also request that the forms be mailed to you. Please allow approximately 10 days for the mailing of the tax forms. See page 5 for the location of your district tax office or phone number to request the needed forms. Step 4 Fill in your return. Line-By-Line instructions for filling in the Form N-12 begin on this page and end on page 18. Please read and follow the instructions carefully. Step 5 begins on page 18. Line-By-Line Instructions ---- Form N-12 Special Instruction for Part-Year Residents If you were a Hawaii resident for only part of 1994, write PART-YEAR in the upper left hand corner of page 1 of Form N-12. Also, fill in the appropriate period of residency on the line which begins or other tax year beginning... Page 6 Name, Address, Social Security Number, and Occupation Use the mailing label from the forms booklet we sent to you and make sure it is correct. Draw a line through any incorrect information and write the correct information directly onto the label. If the label is for a joint return and the social security numbers are not listed in the same order as the first names, show the numbers in the correct order. Do not attach your label to the return until you have completed and checked all entries. Use of the label helps us identify your account, saves processing time, and speeds refunds. If you did not receive a booklet with a label, print or type the entries in this section. Do not use the IRS mailing label. Name You must use your legal name. Nicknames are not permitted. If you have changed your name because of marriage, divorce, etc., make sure you immediately notify the Social Security Administration (SSA) so that the name on your tax return is the same as the name the SSA has on its records. This may prevent delays in issuing your refund. If you file joint returns, write the names in the same order every year. Write any descriptions (e.g. Jr., III, etc.) after your last name. If filing a joint return and if you and your spouse have different last names, list your last names in the same order as your first names and separate them with an and. For example, John Keawe and Mary Aloha should write their last names as Keawe and Aloha. Address Write your current mailing address in the space provided. If you receive your mail in care of someone else (i.e., your mail is sent to an address belonging to someone other than yourself), fill in that person s name on the line under your name. Important: If your address should change after you file your return, you must notify the Department in writing of your new address. Any refund checks due to you will not be forwarded to your new address by the postal service, and you may not receive your income tax forms and instructions next year. Social Security Number Write your social security number in the space provided. If you are married, you must also write your spouse s social security number in the space provided whether joint or separate returns are filed. Your social security numbers must be written in the same order as your names are written. If your spouse is a nonresident alien and does not have a social security number, please write NRA in the block for your spouse s social security number. Occupation Write your occupation in the space provided. If married and filing a joint return, also write your spouse s occupation in the space provided. Hawaii Election Campaign Fund This fund was established by the Hawaii State Legislature to support public financing of Hawaii gubernatorial election campaigns. You may have $2 go to the fund by checking the Yes box. On a joint return, both of you may choose to have $2 go to this fund, or both may choose not to. One may choose to have $2 go to this fund and the other may choose not to. If you check Yes, it will not change the tax or refund shown on your return. Filing Status Check either box 1, 2, 3, 4, or 5 as appropriate. Do not put a check in more than 1 box. Single Select box 1, Single, if on December 31, 1994, you were unmarried, divorced, or separated from your spouse under a separate maintenance decree. State law governs whether you are married, divorced, or legally separated. If you are married on December 31, 1994, consider yourself married for the whole year. If your spouse died during 1994, consider yourself married to that spouse for the whole year, unless you remarried before the end of If you are unmarried and provide a home for certain other persons, you may be able to file as Head of Household. If you were married in 1994, had a child living with you, and lived apart from your spouse during the last 6 months of 1994, you may be able to file as Head of Household. See Married Persons Who Live Apart (and Abandoned Spouses) on page 7. Married Filing Joint Return In most cases, married couples will pay less tax if they file a joint return. You must report all income, exemptions, deductions, and credits for you and your spouse. Both of you must sign the return, even if only one of you had income. You and your spouse can file a joint return even if you did not live together for the whole year. Both of you are responsible for any tax due on a joint return, so if one of you doesn t pay, the other may have to. Note: If you filed a joint return, and you and your spouse decide to file separate returns for the year, both of you must file amended returns on or before the due date of the original return. If your spouse died in 1994 or in 1995 before filing a return for 1994, see page 5 of instructions, Death of Taxpayer. Tax Savings.---- If you decide not to file a joint return and plan to file a separate return, see if you can lower your tax by meeting the tests described on page 7 under Married Persons Who Live Apart (and Abandoned Spouses). If you can, you should check Box 4 for Head of Household. Special Rule for Nonresidents of Hawaii Who File a Joint Return With a Hawaii Resident.---- If at the end of the taxable year you were a nonresident of Hawaii (i.e. a U.S. resident who is not a resident of Hawaii) who is married to a resident of Hawaii, you may choose to file a joint return with the resident spouse on Form N-12. However, if a joint return is filed, you and your spouse must agree to be taxed on your combined worldwide income. Special Rule for Nonresident and Dual-Status Aliens.----Generally, you cannot file a joint return if either spouse was a nonresident alien at any time during the tax year. However, nonresident aliens married to U.S. citizens or residents can elect to be taxed as a U.S. resident on their federal income tax return and file joint returns. If a joint return is filed, you and your spouse must agree to be taxed on your combined worldwide income. Note: For purposes of filing a joint return, common law marriages are not recognized under Hawaii law unless they began in a state which permits common law marriages.

86 Married Filing Separate Returns You may file separate returns whether both you and your spouse had income, only one of you had income, or neither of you had income. If you choose to file separate returns, both you and your spouse must figure your tax the same way. This means that if one of you itemizes your deductions, the other must also itemize their deductions. You each report only your own income, exemptions, deductions, and credits, and you are responsible only for the tax due on your own return. If you file a separate return, write your spouse s full name in the space after Box 3 and your spouse s social security number in the block provided for that number. If your spouse does not file a Hawaii tax return, you may be able to claim the exemptions for your spouse. See instructions for lines 6a and 6b on this page. Married Persons Who Live Apart (and Abandoned Spouses) You will be considered unmarried if you meet ALL of the following tests: 1) You file a separate return, and 2) You paid more than half the cost of keeping up your home for the tax year, and 3) Your spouse did not live in your home during the last 6 months of the tax year, and 4) Your home was, for more than 6 months of the year, the principal home of your child, stepchild, adopted child, or foster child whom you can claim as a dependent or whom you could claim as your dependent except that the noncustodial parent will c!aim the child as a dependent under the rules discussed on page 8, for Children of Divorced or Separated Parents. If you are considered unmarried under these rules, you will qualify to file as Head of Household. Head of Household There are special tax rates for a person who can meet the tests for Head of Household. These rates are lower than the rates for Single or Married Filing a Separate Return. You may be eligible to file as Head of Household if you were unmarried, or considered unmarried, on the last day of the year. You must have paid more than half the cost of keeping up a home that was the principal home for more than half the year for you and: 1) Your unmarried child, grandchild, stepchild, or adopted child. This child does not have to be your dependent. 2) Your married child, grandchild, stepchild or adopted child whom you can claim as your dependent without a Multiple Support Declaration or whom you could claim as your dependent except that the noncustodial parent will claim the child as a dependent under the rules, discussed on page 8, for Children of Divorced or Separated Parents. 3) Any other relative, including your mother or father, whom you can claim as a dependent, without a Multiple Support Declaration. For persons who qualify as a relative, see Relationship on page 8. Also, you may be eligible to file as Head of Household if you were unmarried, or considered unmarried, on the last day of the year, and pay more than half the cost of keeping up a home that was the principal home for the whole year for your mother or father whom you can claim as a dependent without a Multiple Support Declaration, but who does not live with you. Note: If you receive payments under the Aid to Families with Dependent Children (AFDC) program and use them to pay part of the cost of keeping up this home, you may not count these amounts as furnished by you. Qualifying Widow or Widower With a Dependent Child If your spouse died during 1992 or 1993 and you did not remarry before the end of 1994, file a return for 1994 showing only your own income, exemptions, deductions, and credits. However, you can figure your tax at joint return rates if you meet ALL 3 of the following tests: You could have filed a joint return with your spouse for the year your spouse died. (It does not matter whether or not you actually filed a joint return.) Your dependent child, stepchild, or foster child lived with you (except for temporary absences for vacation or school). You paid over half the cost of keeping up the home for this child for the whole year. Check Box 5, Qualifying Widow(er) with Dependent Child, and show the year your spouse died in the space provided. Do not claim an exemption for your spouse. (You can claim the exemption only for the year your spouse died.) If your spouse died in 1994 and you did not remarry, consider yourself married for the whole year. If your spouse died before 1992 and you did not remarry, you may check Box 4 if you met the tests under Head of Household. Otherwise you must file as Single. Note: Also see page 5 of instructions, Death of Taxpayer. Exemptions Lines 6a and 6b Boxes Regular You can take one exemption for yourself unless you can be claimed as a dependent on another person s tax return. Take two exemptions if you were married and filing a joint return. If you file married filing separately, you can take your spouse s exemptions only if your spouse is not filing a return, had no income, and was not the dependent of someone else. If at the end of the taxable year, you were divorced or legally separated, you cannot take an exemption for your former spouse. If you were separated by a divorce that is not final (interlocutory decree), you may take an exemption for your spouse if you file a joint return. If your spouse died during the taxable year and you did not remarry before the end of the taxable year, check the boxes for the exemptions you could have taken for your spouse on the date of death. Nonresident Alien Spouse. If you do not file a joint return, you may claim your spouse s exemption only if your spouse had no income from United States sources and is not the dependent of another taxpayer. When claiming your spouse s exemption, please write NRA after the word Spouse on line 6b. Age 65 or Over You can take the extra exemption for age 65 or over only for yourself and your spouse. You cannot take them for dependents. Age is determined as of December 31. However, if your 65th birthday was on January 1, 1995, you can take the extra exemption for age in If you file married filing separately, you may NOT claim the extra exemption for age 65 or over for your spouse. Lines 6c and 6d Children and Other Dependents Enter on lines 6c and 6d the full names, social security numbers, if any, and other information for your dependent children and other dependents. Enter the number of your dependent children listed in the box for line 6c. Enter the number of other dependents listed in the box for line 6d. Each person you claim as a dependent has to meet ALL 5 of these tests: a. income; b. support; c. married dependent; d. citizenship or residence; and e. relationship. These tests are explained below. a. Income The dependent received less than $2,450 gross income. (This test does not have to be met for your child who was under age 19 at the end of the year, or a full-time student at least 5 months of the year and under 24 years of age at the end of the year. Please see instructions for Student Dependent on page 8.) Note: Gross income does not include nontaxable benefits such as social security or welfare benefits. b. Support The dependent received over half of his or her support from you, or is treated as receiving over half of his or her support from you, under the rules for Children of Divorced or Separated Parents, or Dependent Supported by Two or More Taxpayers, on page 8. If you file a joint return, the support can be from you or your spouse. In figuring total support, you must include money the dependent used for his or her own support, even if this money was not taxable (for example, social security benefits, gifts, savings, welfare benefits, etc.). If your child was a student, do not include amounts he or she received as scholarships. Support includes items such as food, a place to live, clothes, medical and dental care, and education. In figuring support, use the actual cost of these items. However, the cost of a place to live is figured at its fair rental value. Do not include in support items such as income and social security taxes, premiums for life insurance, or funeral expenses. Capital Items - You must include capital items such as a car or furniture in figuring support, but only if they are actually given to, or bought by, the dependent for his or her use or benefit. Do not include the cost of a capital item such as furniture for the household or for use by persons other than the dependent. c. Married Dependent The dependent did not file a joint return with his or her spouse. However, if neither the dependent nor the dependent s spouse is required to file, but Page 7

87 they file a joint return to get a refund of tax withheld, you may claim him or her if the other four tests are met. d. Citizenship or Residence The dependent was a citizen or resident of the United States, a resident of Canada or Mexico, or an alien child adopted by and living with a U.S. citizen in a foreign country. e. Relationship The dependent met test 1 or 2 below: 1. Was related to you (or your spouse if you are filing a joint return) in one of the following ways: Child Grandchild Mother-in-law or, if related Mother Stepchild Father-in-law by blood: Father Stepbrother Brother-in-law Uncle Brother Stepsister Sister-in-law Nephew Sister Stepmother Daughter-in-law Aunt Grandparent Stepfather Son-in-law Niece 2. Was any other person who lived in your home as a member of your household for the whole year. A person is not a member of your household if at any time during your tax year the relationship between you and that person is against local law. The word child includes: Your son, daughter, stepson, or stepdaughter. A child who lived in your home as a member of your family if placed with you by an authorized placement agency for legal adoption. A foster child (any child who lived in your home as a member of your family for the whole year). Student Dependent. Even if your child had income of $2,450 or more, you can claim the child as a dependent if he or she can meet tests b, c, and d above: AND was under 24 years of age at the end of the year, and was enrolled as a full-time student at a school during any 5 months of 1994, or took a full-time on-farm training course during any 5 months of (The course had to be given by a school or a State, county, or local government agency.) The school must have a regular teaching staff, a regular course of study, and a regularly enrolled body of students in attendance. The word school includes: elementary, junior and senior high schools; colleges and universities; and technical, trade, and mechanical schools. However, school does not include on-the-job training courses or correspondence schools. Children of Divorced or Separated Parents. The parent having custody of a child for the greater portion of the year (the custodial parent) will generally be entitled to the dependency exemption. This rule applies to parents not living together during the last six months of the calendar year and those divorced or separated under a separation agreement. This general rule does not apply in the case of the following three exceptions: a. There is a multiple support agreement in effect, OR b. The custodial parent has agreed to release his or her claim to the dependency exemption to the noncustodial parent in a decree or agreement in effect before January 1985, and the noncustodial parent furnishes at least $600 support for the child within the taxable year, OR c. The custodial parent relinquishes the exemption and provides the noncustodial parent with a written statement that the custodial parent will not claim the dependency exemption for the taxable year. This statement shall be attached to the return of the noncustodial parent who claims the exemption. Federal Form 8332 may be used for this purpose. Support by the spouse of a remarried parent will be treated as support provided by that parent. Dependent Supported by Two or More Taxpayers. Sometimes two or more taxpayers together pay more than half of another person s support, but no one alone pays over half of the support. One of the taxpayers may claim the person as a dependent only if the tests for income, married dependent, citizenship or residence, and relationship discussed earlier (tests a, c, d, and e) are met. In addition, the taxpayer who claims the dependent must: a. have paid more than 10% of the dependent s support; and b. attach to his or her tax return a signed Form N-120, Multiple Support Declaration, from every other person who paid more than 10% of the support. This form states that the person who signs it will not claim an exemption in 1994 for the person he or she helped to support. Birth or Death of Dependent. You can take an exemption for a dependent who was born or who died during the taxable year if he or she met the tests for a dependent while alive. This means that a baby who lived only a few minutes can be claimed as a dependent. Line 6e Box Add the numbers you entered in the boxes 6a, 6b, 6c and 6d. Enter the total in the box on line 6e. Income An individual who was a Hawaii resident for the entire year is subject to income tax on his or her entire income, computed without regard to source in the State. If a part-year resident (see Part-Year Resident on page 4) is unable to determine the income subject to taxation in Hawaii, then a ratio (period of Hawaii residency/the calendar year) may be applied to the entire year s income. Example: Mr. X s period of Hawaii residency was from April 1 to December 31. He is unable to determine the income not subject to taxation in Hawaii during the period of nonresidency. His entire income for the taxable year was $50,000. His income subject to taxation in Hawaii is $37,500 (9 months/12 months x $50,000). Examples of Income You Must Report The following kinds of income should be reported on Form N-12, or related forms and schedules. Wages, including salaries, bonuses, commissions, fees, and tips. U.S. Cost of Living Allowance. Living Quarter Allowance. Dividends (Schedule B). Interest (Schedule B) on: ----tax refunds; ----bank deposits, bonds, notes; ----bonds issued by other states and other local governments; and ----accounts with savings and loan associations, mutual savings banks, credit unions. etc. Unemployment compensation benefits. Temporary Disability Insurance Benefits to the extent that such amounts: ----are attributable to contributions by your employer which were not includible in your gross income, OR ----are paid by your employer. Bartering income (fair market value of goods or services you received in return for your services). Business expense reimbursements you received that are more than you spent for those expenses. Alimony, separate maintenance or support payments received from and deductible by your spouse or former spouse. Refunds of State and local taxes if you deducted the taxes in an earlier year and got a tax benefit. See details on page 9 of instructions. Life insurance proceeds from a policy you cashed in if the proceeds are more than the premiums you paid. Income from businesses and professions. Your share of profits from partnerships and small business corporations. Annuities and endowments. Jury duty fees. Prizes and awards. Examples of Income You Do Not Report Pensions where no employee contributions are involved. Amounts you received as combat duty pay while deployed to an area designated as a war zone by the President of the United States. All Government payments and benefits made to veterans and their families. Dividends on veterans Government Insurance. Benefits paid by the Hawaii Retirement System or similar public (Federal, City County or other State) retirement system. Workmen s compensation, insurance, damages, etc., for bodily injury or sickness. Interest on Federal, Hawaii State and County municipal bonds. Also, U.S. Savings Bonds. Interest on bonds issued by the Governments of Puerto Rico, Virgin Islands and Guam. Life insurance proceeds upon death. Social Security benefits. Railroad Retirement Act benefits. Gifts, inheritances, bequests. Compensation by Hawaii or the U.S. to a patient affected with leprosy. Child support. Welfare benefits. Amounts you received from an insurance company because you lost the use of your home due to fire or other casualty to the extent the amounts were more than the cost of your normal expenses while living in your home. (You must report reimbursements for normal living expenses as income.) Contributions to deferred compensation plans with respect to service for state and local governments or to an annuity purchased by qualified nonprofit organizations and public schools. Rounding Off to Whole Dollars You may round off cents to the nearest whole dollar on your return and schedules. But, if you do round off, do so for all amounts. You can drop amounts under 50 cents. Increase amounts from 50 Page 8

88 to 99 cents to the next dollar. For example: $1.39 becomes $1 and $2.69 becomes $3. Line 7 Wages, Salaries, Tips, Etc. Report as income any salaries, wages, or other compensation received by you, or available to you, including compensation for services rendered outside Hawaii. You must report the full amount of your wages, salaries, fees, commissions, tips, bonuses, and other payments for your personal services even though taxes and other amounts have been withheld by your employer. Include in this total: The amount shown on Form HW-2 in the box Wages, Tips, Other Compensation. If you received federal Form W-2, report the amount in box 17, State wages, tips, etc. If you did not receive a Form HW-2 or federal Form W-2, see page 6, Step 1 of instructions. Tips received that you did not report to your employer. You must report as income the amount of allocated tips shown on your federal W-2 form(s) unless you can prove a lesser amount with adequate records. Payment in merchandise, etc If your employer pays part or all of your wages in merchandise, services, stock or other things of value, you must determine the fair market value of such items and include it in your wages. Fair market value of meals and living quarters if given by your employer as a matter of your choice and not for your employer s convenience. (Don t report the value of meals given you at work if they were provided for your employer s convenience. Also do not report the value of living quarters you had to accept as a condition of employment). Strike and lockout benefits paid by a union from union dues. Include cash and the fair market value of goods received. Don t report benefits that were meant as a gift. Amounts received under an employer-paid dependent care benefit plan from Form N-141, Part III. If you have received any benefits from such a plan for the taxable year, you must complete Parts I and III of Form N-141 and file it with your Form N-12. Include the taxable amount from line 20 of Form N-141 on Form N-12, line 7. On the dotted line next to line 7, write DCB. Also include on this line, amounts received as Cost of Living Allowance, Living Quarter Allowance, and Temporary Disability Insurance. Note: You must report on line 7 all wages, etc., paid for your personal services, even if the income was signed over to a trust, (including an IRA), another person, a corporation, or tax exempt organization. Line 8 Interest Income Enter your total interest income. If the total is more than $400, first fill in Schedule B. (The instructions for Schedule B begin on page 22.) Report any interest you received or that was credited to your account so you could withdraw it. (It does not have to be entered in your passbook.) If you were charged an interest penalty for early withdrawal of your savings, see the instructions for line 26 on page 11. Examples of Interest Income You MUST Report Accounts with banks, credit unions, and savings and loan associations. Building and loan accounts. Notes and loans. Tax refunds (report only the interest on them as interest income). Bonds and debentures. Line 9 Dividends Dividends are distributions of money, stock, or other property that corporations pay to stockholders. They also include dividends you receive through a partnership, an S corporation or an estate or trust. Payers include nominees or other agents. If the total, including capital gain and nontaxable distributions, is more than $400, first fill in Schedule B. (The instructions for Schedule B begin on page 22.) If you received $400 or less in dividends, include only the ordinary dividends on line 9. Dividends Include Ordinary dividends. These are paid out of earnings and profits and are ordinary income. Assume that any dividend you receive is an ordinary dividend unless the paying corporation tells you otherwise. Capital gain distributions. Enter your capital gain distributions on Schedule D. Nontaxable distributions. Some distributions are nontaxable because they are a return of your investment. They will not be taxed until you recover your cost. You must reduce your cost (or other basis) by the amount of nontaxable distributions received. After you get back all of your cost (or other basis), you must report these distributions as capital gains. Reinvestment dividends. Dividends that are reinvested in stock purchase plans are taxable. Do Not Report as Dividends Mutual insurance company dividends that reduced the premiums you paid. Amounts paid on deposits or accounts from which you could withdraw your money such as mutual savings banks, cooperative banks, and credit unions. Remember to report these amounts as interest on Form N-12, line 8. Line 10 Taxable Refunds of State and Local Income Taxes If you received a refund or credit in 1994 for state or local income taxes you paid before 1994, you may have to report it as income on your Hawaii income tax return. You should receive federal Form 1099-G, or similar statement, showing the refund. Any part of a refund of state or local income taxes paid before 1994 that you were entitled to receive in 1994 but chose to apply to your 1994 estimated state income tax is considered to have been received in Do not report your refund as income if the refund was for a year in which you did not itemize your deductions. If part of your refund was interest, report that amount on Form N-12, line 8. Complete the worksheet below to figure the taxable part of your State income tax refund. Note: See federal Publication 525 instead of using the worksheet below if you received a refund or recovery of an itemized deduction that was previously limited. If you received a refund or recovery of an itemized deduction that was previously limited, the refund or recovery is, in general, fully included in your gross income in the year you received it. However, you may be required to include only part of the refund or recovery in income. When referring to federal Publication 525, the following should be taken into consideration: The Hawaii standard deduction amounts must be used. For Hawaii income tax purposes, the base amount for the limitation of itemized deductions remains at $100,000. This base amount is not adjusted for inflation annually as is done for federal income tax purposes. The refund received in 1994 must be reduced by the following credits claimed on your 1993 income tax return: (1) Credit for child and dependent care expenses, (2) Food/Excise tax credit, (3) Credit for low-income household renter, (4) Credit for general income tax, (5) Credit for child passenger restraint system(s), and (6) Medical services excise tax credit. Worksheet 1. Enter your State tax overpayment (line 60) from your 1993 return 2. Enter from your 1993 Form N-12 the following: a. Credit for child and dependent care expenses (line 50).. b. Food/Excise tax credit (line 51)... c. Credit for low-income household renter (line 52) d. Credit for general income tax (line 54)... e. Credit for child passenger restraint system(s) (line 55).. f. Medical services excise tax credit (line 57) Add lines 2a through 2f Line 1 minus line 3. If zero or less, stop here; otherwise continue on to line Enter amount from your 1993 Form N-12, line 33h Enter the amount shown below for the filing status you claimed on your 1993 Form N Single---- $1,500 Married filing jointly or qualifying widow(er)---- 1,900 Married filing separately Head of household---- 1, Line 5 minus line 6. Enter the result, but not less than zero Compare the amounts on lines 4 and 7 above and enter the SMALLER of the two amounts here and on line 10, Form N-12. This is the taxable part of your refund... Page 9

89 Line 11 Alimony Received Alimony or separate maintenance payments that you received are taxable income to you. Report this income on line 11. If you received payments under a divorce or separation instrument executed after 1984, see the instructions for line 27 for information on the rules that apply in determining whether these payments qualify as alimony. Line 12 Business Income or (Loss) Please see the instructions for Schedule C which begins on page 22. Enter your income or (loss) from Schedule C. Lines 13a and 13b Capital Gain or (Loss) Please see the instructions for Schedule D which begins on page 25. Enter the gain or (loss) from Schedule D. Line 14 Supplemental Gains or (Losses) If you sold or exchanged assets used in a trade or business, see the instructions for Schedule D-1. Enter the gain or (loss) from Schedule D-1. Lines 15a and 15b IRA Distributions Use line 15a to report your total individual retirement arrangement (IRA) distributions and line 15b to report your taxable amount. If you are reporting a rollover from one IRA to another IRA, enter the amount of the distribution on line 15a. If the total distribution was rolled over enter zero on line 15b. Otherwise, enter the taxable part of the distribution as ordinary income on line 15b. If you are the owner of an IRA, into which there has been deposited a "roll-over" of a distribution from an employer s benefit plan, (and such distribution would have been exempt from income tax for Hawaii income tax purposes at the time received), all of the amounts withdrawn from such IRA shall be exempt from Hawaii income tax until the aggregate of the exempt withdrawals equal the total of the "roll-over." All withdrawals in excess of the "rollover" will be fully taxable for Hawaii income tax purposes. See Tax Information Release No , "Taxation of Amounts Withdrawn From Individual Retirement Accounts Representing "Roll-Over" From Employee Benefit Plans". Do not use lines 15a or 15b to report a rollover from a qualified employer s plan to an IRA; use lines 16a and 16b instead. Lines 16a and 16b Pensions and Annuities Use lines 16a and 16b to report annuity income that is fully or partially taxable. Also use these lines to report distributions from profit-sharing plans and employee-savings plans. The following two types of distributions are not taxed by Hawaii and do not need to be reported on lines 16a and 16b: (1) Pension or annuity distibutions from a public (i.e. government) retirement system (e.g. federal civil service annuity, military pension, state or county retirement system, etc.), and (2) Distributions from a private employer pension plan received upon retirement (including early retirement and disability retirement) if the employee did not contribute to the pension plan. Distributions from a private employer pension plan received upon retirement are partially taxed by Hawaii if the employee contributed to the pension plan. The interest earned on the employee s contribution is taxable. All other pension and annuity distributions are fully taxable except for the amount that represents a return of the individual s cost. To compute the taxable portion of your annuity or pension, use Schedule J (Form N-12/N-15/N-40). If you have been reporting your pension or annuity payments under the 3-Year Rule, use Part II on Schedule J (Form N-12/N-15/N-40) to figure the taxable part of your pension or annuity. Enter the amount you received this year on line 16a. Enter the taxable part on line 16b. Caution: Certain transactions, such as loans against your interest in a qualified plan, may be treated as taxable distributions. Note: If you did not contribute to the cost of your annuity or you recovered your entire cost before January 1, 1994, report your annuity on Form N-12, lines 16a and 16b. Lump-Sum Distributions If you received a lump-sum distribution from a profit-sharing plan, report the total distribution on line 16a and report the ordinary income part on line 16b of Form N-12 and, for those who have attained age 50 before January 1,1986, enter the capital gain part on Schedule D (Form N-12). Federal Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., shows the amount of the distribution. You may pay less tax on this distribution if you are eligible to use the special averaging methods. For more details, get Form N-152, Special 5-Year Averaging Method. Line 17 Rents, Royalties, Partnerships, Estates or Trusts Please see the instructions for Schedule E which begins on page 27. Enter the income or (loss) from Schedule E. Line 18 Farm Income or (Loss) Please see the separate instructions for Schedule F. Enter the income or (loss) from Schedule F. Line 19 Unemployment Compensation Unemployment compensation (insurance) you receive is taxable. You should receive federal Form 1099-G, or similar statement, showing the total unemployment compensation paid to you during the year. For payments in 1994 you should receive this statement by January 31, Note: Supplemental unemployment benefits received from a company-financed supplemental unemployment benefit fund are wages. They are not considered unemployment compensation. Report these benefits on Form N-12, line 7. If you received any unemployment compensation during the taxable year, please enter the total from federal Form(s) 1099-G on line 19. Line 20 Other Income Use line 20 to report any income you can t find a place for on your return or other schedules. Also show the nature and source of the income. Caution: Do not report any income from self-employment on line 20. If you do have any income from self-employment, you must use Schedule C or Schedule F. Examples of income to be reported on line 20 are: Prizes, awards and gambling winnings. Proceeds from lotteries, raffles, etc., are gambling winnings. You must report the full amount of your winnings on this line. You cannot offset losses against winnings and report the difference. If you had any gambling losses, you may take them as a miscellaneous itemized deduction not subject to the 2% AGI limitation on Schedule A. However, you cannot deduct more losses than the winnings you report. Repayment of medical expenses or other items such as real estate taxes that you deducted in an earlier year, if they reduced your tax. Amounts you recovered on bad debts that you deducted in an earlier year. Fees received for jury duty and precinct election board duty. You may be able to deduct part or all of your jury duty pay. See the instructions for line 30 on page 12. Individual Housing Account (IHA) distributions not used exclusively in connection with the purchase of the first principal residence in Hawaii for the individual for whose benefit the account was established must be included in the gross income of the individual for the taxable year in which the distribution is received. One-tenth of the total distribution from the IHA used to purchase the residential property MUST be included as gross income in the taxable year in which the distribution is completed and in each taxable year thereafter until all of the distribution has been included in the individual s gross income. Upon the sale or other transfer of residential property purchased with a distribution from an IHA, an amount equal to such distribution that has NOT been included in prior years gross income, must be included in the gross income of the individual for the taxable year in which the property is sold. In addition, for both cases, the tax liability of the individual shall be increased by 10% of the total distribution from the IHA. See Form N-103, Sale of Your Home, for details on the computation of your additional tax liability. If the individual sells the residential property after all of the distribution has been included in the individual s gross income at the end of the tenth taxable year after the purchase of the residential property, the tax liability of the individual shall not be increased by 10% of the total distribution from the IHA. Scholarships and Fellowships. If you received a scholarship or fellowship that was granted after August 16, 1986, part or all of it may be taxable even if you didn t receive a federal W-2 form. If you were a degree candidate, the amounts you used for expenses other than tui- Page 10

90 tion and course-related expenses are taxable. For example, amounts used for room, board, and travel are taxable. If you were not a degree candidate, the full amount of the scholarship or fellowship is taxable. Include the taxable amount on line 20. Net operating loss.---- If, in 1994, your business or profession lost money, or you had a casualty loss, or a loss from the sale or other disposition of depreciable property or real property used in your trade or business, you can apply the losses against your 1994 income. If the losses exceed your income, the excess is a net operating loss which generally may be used to offset your income for the 3 years prior to and the 15 years following this year. The loss may be carried back to the third prior year and any remaining balance brought forward to each succeeding year. Generally, you can use a net operating loss to reduce your income for the 3 years before 1994 and the 15 years after, or you may elect to use it to reduce your income for the 15 following years without carrying the loss to the 3 prior years. If you carryback the loss and are due a refund from the carryback, you may use Form N-109, Application for Tentative Refund from Carryback of Net Operating Loss, to get a quick refund. But if you elect to carry the loss forward instead, you must attach a statement to this effect on a timely filed return (including extensions). If you make such an election, it cannot be changed later. If you had a loss in a prior year to carry forward to 1994; enter it as a minus figure on line 20. Attach a separate sheet showing how you figured the amount. See Form N-109 for details. Line 21 Total Income Add the amounts in the column for line 7 through line 20. If any of these amounts are negative, first add all the positive amounts. Next, add all the negative amounts. Then, subtract the total of the negative amounts from the total of the positive amounts and enter the result on line 21. If the result is negative, enter it in (parentheses). Adjustments to Income Lines 22a and 22b Individual Retirement Arrangements (IRAs) Who Can Take the Deduction? If you were a Hawaii resident for the entire year, you may claim the same amount allowed on your Federal return as an IRA deduction. If you were a part-year resident, compute your allowable deduction as follows: 1) Divide your total earned income subject to taxation in Hawaii by the total earned income computed without regard to source. 2) Multiply the resulting percentage by the deduction allowed on your federal return. For more information, see the instructions for federal Form Line 23 Moving Expenses Note: The deduction for moving expenses incurred after December 31, 1993, is allowed as a deduction in computing adjusted gross income rather than as an itemized deduction. Employees and self-employed persons (including partners) can deduct certain moving expenses. You can take this deduction if you moved in connection with your job or business and your new workplace is at least 50 miles farther from your old home than your old home was from your old workplace. If you had no former workplace, your new workplace must be at least 50 miles from your old home. If you leave the State of Hawaii for other than temporary or transitory purpose and are not domiciled here, you thereby cease to be a resident; in such a case, moving expenses to a new place of employment outside the State of Hawaii shall not be allowed. For more details, see Form N-139. Attach the form to your return. Line 24 Deduction for Self-Employment Tax If you are self-employed, you will be able to deduct as a business expense 50% of the amount of self-employment taxes paid for the tax year. If you were a part-year resident, compute your allowable deduction as follows: 1) Divide your total self-employment income subject to taxation in Hawaii by the total self-employment income computed without regard to source. 2) Multiply the resulting percentage by the deduction allowed on your federal return. For more information see the instructions for federal Form Line 25 Keogh Retirement Plan and Self-Employed SEP Deduction Caution: You must have earnings from self-employment to claim this deduction. Sole proprietors and partners enter the allowable deduction for contributions to your Keogh (H.R. 10) Plan and your SEP on line 25. There are two types of Keogh (H.R. 10) retirement plans: Defined-contribution plan This plan provides an individual account for each person in the plan. In general, if contributions to the plan are geared to the employer s profits, the plan is a profit-sharing plan. If contributions are not based on the employer s profits, the plan is a money purchase pension plan. Defined-benefit plan The deduction for this type of plan is determined by the investment needed to fund a specific benefit at retirement age. Write DB on the line to the left of the amount if you have a defined-benefit plan. If you were a part-year resident, compute your allowable deduction as follows: 1) Divide your total self-employment income subject to taxation in Hawaii by the total self-employment income computed without regard to source. 2) Multiply the resulting percentage by the deduction allowed on your federal return. For more information, see the instructions for federal Form Line 26 Interest Penalty on Early Withdrawal of Savings The federal Form 1099-INT given to you by your bank or savings and loan association will show the amount of any interest penalty you were charged because you withdrew funds from your time savings deposit before its maturity. Enter this amount on line 26. (Be sure to include the interest income on Form N-12, line 8.) If you were a part-year resident, the penalty cannot be deducted on your Hawaii return if none of the interest from the account was received while you were a Hawaii resident. If part of the interest from the account was received while you were a Hawaii resident, compute your allowable deduction as follows: 1) Divide the amount of interest received on that account subject to taxation in Hawaii by the total interest received on that account. 2) Multiply the resulting percentage by the total penalty charged to that account. Line 27 Alimony Paid You can deduct (subject to Department of Taxation Rules) periodic payments of alimony or separate maintenance made under a court decree. You can also deduct payments made under a written separation agreement or a decree for support. Don t deduct lump-sum cash or property settlements, voluntary payments not made under a court or a written separation agreement, or amounts specified as child support. If you paid alimony to more than one person, enter the social security number of one of the recipients. Show the social security number(s) and the amount paid to the other recipient(s) on an attached statement. Enter your total payments on line 27. Generally, you may deduct any payment made in cash to, or on behalf of, your spouse or former spouse under a divorce or separation instrument executed after 1984 if ALL 5 of the following apply: 1) The instrument does not prevent the payment from qualifying as alimony. 2) You and your spouse or former spouse did not live together when the payment was made if you were separated under a decree of divorce or separate maintenance. 3) You are not required to make any payment after the death of your spouse or your former spouse. 4) The payment is not treated as child support. 5) For instruments executed in 1985 or 1986, the minimum term rule is met. If your alimony payments decrease or terminate during the first 3 calendar years, you may be subject to the recapture rule. If you were a part-year resident, compute your allowable deduction as follows: 1) Divide your total income subject to taxation in Hawaii as a part-year resident by your total income subject to taxation in Hawaii as if you were a full year resident. 2) Multiply the resulting percentage by your allowable alimony deduction. For more information, see federal Publication 504, Tax Information for Divorced or Separated Individuals. Page 11

91 Line 28 Payments to an Individual Housing Account You may be able to deduct from your gross income up to $5,000, paid in cash during the taxable year into a trust account which is established for savings for a down payment on your first principal residence whether you are a full or part-year resident. A deduction not to exceed $10,000 shall be allowed for a married couple filing a joint return. No deduction shall be allowed on any amounts distributed less than 365 days from the date on which a contribution is made to the account. Any deduction claimed for a previous taxable year for amounts distributed less than 365 days from the date on which a contribution was made shall be disallowed and the amount deducted shall be included in the previous taxable year s gross income and the tax reassessed. The account, established along the same lines as an individual retirement account (IRA), is to encourage first-time home buyers to save money for a down payment on a home. The interest income earned on the account within the taxable year shall not be included in gross income. The first principal residence means a residential property purchased with the payment or distribution from the individual housing account which shall be owned and occupied as the only home by an individual who did not have any previous interest in, individually, or if the individual is married, whose spouse did not have any interest in a residential property inside or outside of Hawaii within the last 5 years of opening the IHA. The amounts paid in cash allowable as a deduction for all taxable years are limited to $25,000, in the aggregate, excluding interest earned or accrued. This limitation also applies to married individuals having separate accounts, the sum of such separate accounts and the deduction shall not exceed $25,000 in the aggregate, excluding interest income earned or accrued. Other requirements: The trustee must be a qualified bank, savings and loan association, credit union, or depository financial services loan company. Check with your financial institution if it is a qualified institution under IHA rules. The entire interest of the trust account shall be distributed to the taxpayer(s) not later than 120 months after the date on which the first contribution is made to the trust. For more details, consult your taxation district office. Line 29 Military Reserve or Hawaii National Guard Duty Pay Exclusion The first $1,750 received by each member of the reserve components of the army, navy, air force, marine corps, coast guard of the United States of America, and the Hawaii national guard, as compensation for performance of duty as such is not taxable for Hawaii net income tax purposes but limited to that income that would have been subject to taxation in Hawaii. Line 30 Total Adjustments Add lines 22a through 29. Enter the total on this line. Also include in the total on line 30 jury duty pay you are required to give to your employer because Page 12 your employer continues to pay your salary while you serve on the jury. Include the amount you repaid during 1994 and write in the total on line 30 Jury Pay in the space to the left of the total. Line 31 Adjusted Gross Income Line 21 minus line 30. If line 31 is less than zero (0), you may have a net operating loss that you can carry to another tax year. If you carry the loss back to earlier years, see Form N-109. Tax Computation Line 32 Enter amount from line 31. Note: If you can be claimed as a dependent on another person s return check the box under line 32. Complete the worksheet on this page and enter the appropriate amount on line 34 if you do not itemize your deductions. Lines 33a to 33g You will fall into one of the three classes below: You MUST itemize deductions, or You choose to itemize, or You do not itemize. The three classes are described as follows: You MUST Itemize Deductions You must itemize deductions if: You are married, filing a separate return, and your spouse itemizes. You are making a return under IRC section 443(a)(1) for a period of less than 12 months on account of a change in your annual accounting period. You Choose to Itemize You may choose to itemize your deductions if you are: Married and filing a joint return, or a Qualifying widow(er) with dependent child, and your itemized deductions are more than $1,900. Married and filing a separate return, and your itemized deductions are more than $950. Single, and your itemized deductions are more than $1,500. A Head of Household, and your itemized deductions are more than $1,650. A dependent of another taxpayer and your itemized deductions are more than the greater of (1) $500 or (2) your earned income up to the amount of the standard deduction for your filing status. If you do itemize, complete Schedule A and enter the amounts on Form N-12, line 33a to 33f. You Do Not Itemize If your itemized deductions are less than the amount shown above for your filing status (or you choose not to itemize), enter zero on line 33g (unless you MUST itemize as described earlier) and go to line 34. Line 33g Total Itemized Deductions Note: People with higher incomes may not be able to deduct all of their itemized deductions. For the 1994 tax year, an individual whose adjusted gross income exceeds $100,000 ($50,000 if married filing separately) is required to reduce the amount allowable for itemized deductions by 3 percent of the excess over $100,000 ($50,000 if married filing separately). In no event may the reduction be more than 80 percent of allowable itemized deductions, not counting the deductions for medical expenses, investment interest, casualty losses, or wagering losses to the extent of wagering gains. If the amount on Form N-12, line 32, is less than $100,000 ($50,000 if married filing separately), add lines 33a to 33f and enter the result on Form N-12, line 33g and go to line 35. If the amount on Form N-12, line 32, is more than $100,000 ($50,000 if married filing separately), use the worksheet for Total Itemized Deductions below, to figure the amount you may deduct. Total Itemized Deductions Worksheet (Keep for your records) 1. Add the amounts on Form N-12, lines 33a thru 33f Add the amounts on Form N-12, lines 33a and 33e, any gambling losses included on line 33f, and the amount on Schedule A, line Caution: Be sure the gambling losses are clearly noted on the dotted lines for Schedule A (Form N-12), line Line 1 minus line 2 (If the result is zero or less, STOP HERE; enter the amount from line 1 above on Form N-12, line 33g) Multiply line 3 above by 80% (.80) Enter the amount from Form N-12, line Enter $100,000 ($50,000 if married filing separately) Line 5 minus line 6. (If the result is zero or less, STOP HERE; enter the amount from line 1 above on Form N-12, line 33g.) Multiply line 7 by 3% (.03) Compare the amounts on lines 4 and 8 above. Enter the SMALLER of the two amounts here Total itemized deductions. Line 1 minus line 9. Enter the result here and on Form N-12, line 33g and go to line Line 34 Standard Deduction Taxpayers who do not itemize their deductions may reduce their adjusted gross income by the amount of the standard deduction appropriate to their filing status. The amount of the standard deduction for each filing status is listed below: Filing Status Standard Deduction Single $1,500 Married filing jointly 1,900 Married filing separately 950 Head of Household 1,650 Qualifying Widow(er) 1,900 Standard Deduction for Dependents. If you do not itemize your deductions, your standard deduction is limited to the greater of $500 or your earned income (up to the full standard deduction for your filing status). The standard deduction for an individ-

92 ual who can be claimed as a dependent on the tax return of another taxpayer is computed as follows: A. Enter your earned income (defined below). If none, enter zero... A. B. Minimum amount... B C. Compare the amounts on lines A and B above. Enter the LARGER of the two amounts here... C. D. Maximum amount. Enter the full standard deduction for your filing status, shown in the chart above, here... D. E. Compare the amounts on lines C and D above. Enter the SMALLER of the two amounts here and on Form N-12, line E. Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amount(s) you reported on Form N-12, lines 7, 12, and 18, minus the amount, if any, on line 24. If you are not itemizing your deductions, enter the appropriate standard deduction amount on line 34. Note: Part-year residents may claim a full standard deduction provided that they are not claimed as a dependent on another person s return. They DO NOT have to prorate their standard deduction. Line 35 Line 32 minus line 33g or 34, whichever applies. Line 36 Exemptions Regular Exemptions Full and part-year residents are allowed $1,040 for each exemption they can claim. Multiply $1,040 by the total number of exemptions you claimed on line 6e. Remember, if you can be claimed as a dependent on another person s tax return, you may not claim an exemption for yourself. OR Blind, Deaf, or Totally Disabled ---- Definition, Certification, and Exemptions Check the appropriate box(es) on line 36 if you are blind, deaf or totally disabled and your impairment has been certified. The disability exemption will be disallowed and your return processed without the exemption(s) claimed if you have not qualified for this special exemption by completing Forms N-172 and N-857 prior to filing your return and you will be required to file an amended return AFTER submitting the Forms N-172 and N-857, in order to claim this exemption. Blind means a person whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or whose visual acuity is greater than 20/200 but is accompanied by a limitation in the field of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees. Deaf means a person whose average loss in the speech frequencies ( Hertz) in the better ear is 82 decibels, A.S.A., or worse. Person totally disabled means a person who is totally and permanently disabled, either physically or mentally, which results in the person s inability to engage in any substantial gainful business or occupation. It is presumed that a person whose gross income, before deductions and exemptions, exceeds $30,000 per year is engaged in a substantial, gainful business or occupation. The impairment of sight, deafness or disability shall be certified on the basis of a written report on an examination performed by a qualified ophthalmologist, qualified optometrist or a qualified otolaryngologist, or a qualified physician, as the case may be, on Form N-857. A blind, deaf or totally disabled person who qualifies, may be allowed a Disability Exemption of $7,000. The Disability Exemption is in lieu of the regular personal exemption of $1,040. The following maximum exemptions are allowed: Single ---- $7,000 Husband and Wife ---- $14,000 Husband or Wife (non-disabled spouse under 65) ---- $8,040 Husband or Wife (non-disabled spouse age 65 or over) ---- $9,080 For more information, see Tax Information Release No. 89-3, "State Tax Benefits Available to Persons with Impaired Sight, Impaired Hearing, or Who are Totally Disabled" and Tax Information Release No. 94-2, "State Tax Benefits Available to Persons Totally Disabled". Note: If you claim this special exemption you will not be able to claim the additional exemptions for your children or other dependents. Enter the appropriate amount on line 36. Line 37 Taxable Income Line 35 minus line 36, but not less than zero. Tax Line 38 To figure your tax, you will use one of the following methods. Read the conditions below to see which you should use. Tax Table If you do not use the Tax Rate Schedules, you MUST use the Tax Table to find your tax. Be sure you use the correct column in the Tax Table. After you have found the correct tax, enter that amount on line 38. There is an example at the beginning of the table to help you find the correct tax. Tax Rate Schedules You must use the Tax Rate Schedules to figure your tax if your taxable income is $100,000 or more. Alternative Tax from Schedule D If you have a net capital gain, you may be subject to the Alternative Tax computed on Schedule D. See Schedule D for more information. Form N-615 If a child under age 14 has investment income of more than $1,000, use Form N-615 to see if any of the child s investment income is taxed at the parent s rate and, if so, to figure the child s tax. See Form N-615 for more information. Additional Taxes Use this line to report any of the additional taxes listed below: Form N-2, Distribution from an Individual Housing Account. Form N-103, Sale of Your Home. Form N-152, Special 5-Year Averaging Method. Form N-312, Recapture of Capital Goods Excise Tax Credit. (See Form N-312 for more information). Form N-405, Tax on Accumulation Distribution of Trusts. Form N-586, Recapture of Low-Income Housing Tax Credit. (See Form N-586 for more information). Form N-814, Parent s Election to Report Child s Interest and Dividends. (See Form N-814 for more information). Credits Line 39 Credit Allowed Residents For Income Taxes Paid Other States and Countries A credit against income tax due Hawaii is allowed to the extent of net income taxes paid to another state, territory or possession of the U.S. or to a foreign country. If you have out-of-state income which is taxed by another state or foreign country and subject to taxation in Hawaii, you may be able to claim a credit against your Hawaii income for the net income tax you paid to the other state or foreign country provided the following conditions are met: The income was earned while you were a Hawaii resident; Some or all of your Hawaii taxable income, subject to Hawaii sourcing rules, must have been derived or received from sources outside Hawaii and taxed by another state, territory or foreign country under a net income tax law; The income is not from intangible personal property unless the property has acquired a business situs outside of Hawaii; You did not become a resident of Hawaii after attaining age 65 and before July 1, 1976; The income or tax is not eligible for exclusion, exemption, or credit under Subchapter N of the IRC. For example, you may not claim the credit for income taxes paid to the Common Wealth of the Northern Mariana Islands since the income is exempt from federal income taxes. See federal Form 1116 for more details. The income must be taxed by the other state or foreign country for the same taxable year for which the Hawaii credit is claimed. The tax imposed by the other state or foreign country must apply to both residents and nonresidents and be a net income tax. The credit cannot reduce your Hawaii income tax below what it would have been had you been taxed only on the income from property owned, services performed, trade or business carried on, and other sources in Hawaii. No credit is allowed against penalties or interest. The credit is limited to the excess of the federal Foreign Tax Credit claimed, if applicable. Page 13

93 Note: You must file a copy of the other state or foreign country s tax return AND a copy of your federal Form If applicable, federal Form 1116 must also be attached. The allowable credit is computed as follows: 1) Compute the amount of your Hawaii income tax liability excluding the income taxed by the other state or foreign country. (Suggestion: Complete another Form N-12, as a worksheet, up to line 38. Make sure you exclude the income taxed by the other state or foreign country.) 2) Subtract the tax computed above from your actual tax liability on line 38 of your Form N-12. This is your maximum allowable credit. 3) Compare your maximum allowable credit with your tax liability to the other state or foreign country. Enter the LESSER of the two amounts on line 39 of your Form N-12. Note: All reductions in tax paid to another state or country for which a credit was claimed MUST be reported to the Department of Taxation. The failure to make this report will be subject to penalties. For more information, see Tax Information Release No. 90-3, Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or Nonresident to Resident. Line 40 Energy Conservation Tax Credit Each individual resident taxpayer who files a net income tax return for 1994 may claim a tax credit against his or her income tax liability for a solar or wind energy system, heat pump, or ice storage system installed and placed in service in Additions to existing systems (e.g., additional solar energy panels) and systems for a second home qualify for this credit. The cost of repairs to existing systems (e.g., replacing solar energy panels), however, do not qualify for this credit. The tax credit shall apply only to the actual cost of the solar or wind energy system, heat pump, or ice storage system, including accessories and installation, and shall not include the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system or heat pump (such as free gifts, offers to pay electricity bills, or rebates). The tax credit may be claimed for the following energy conservation systems installed and placed in service after 12/31/89 (12/31/90 for ice storage systems), but before 1/1/99: Type of Energy Conservation System Tax Credit Rate 1. Wind energy systems 20% of the actual cost of the system. 2. Solar energy systems a. New and existing single family residential buildings. b. New and existing Multi-unit buildings used primarily for residential purposes. c. New and existing hotel, commercial and industrial facilities. 3. Heat pumps a. New and existing single family residential buildings. Page 14 The lesser of 35% of the actual cost of the system or $1,750. Per building unit: The lesser of 35% of each unit s actual cost of the system or $ % of the actual cost of the system. The lesser of 20% of the actual cost of the system or $400. b. New and existing Multi-unit buildings used primarily for residential purposes. c. New and existing hotel, commercial and industrial facilities. Per building unit: The lesser of 20% of each unit s actual cost of the system or $ % of the actual cost of the system. 4. Ice storage systems 50% of the actual cost of the system. In the event that tax credits claimed exceed the amount of the income tax payments due, the excess of credits may be carried over to subsequent years until used up. To determine this tax credit, use Form N-157 and attach the form to individual income tax return Form N-12, and enter on page 2, line 40, the amount of the credit claimed. For more information see Form N-157. Line 41 Enterprise Zone Tax Credit A qualified enterprise zone business is eligible to claim a credit for a percentage of net income tax due the State attributable to the conduct of business within a zone and a percentage of the amount of unemployment insurance premiums paid based on the payroll of employees employed at the business firm establishments in the zone. The applicable percentage is 80% the first year; 70% the second year; 60% the third year; 50% the fourth year; 40% the fifth year; 30% the sixth year; and 20% the seventh year. This credit is not refundable and any unused credit may NOT be carried forward. Attach Form N-756, Enterprise Zone Tax Credit, to support your claim for this credit. Line 42 Low-Income Housing Tax Credit Note: There is a permanent extension of the low-income housing tax credit to periods ending after June 30, Hawaii s low-income housing tax credit is equal to 30% of the federal credit for qualified buildings located within the State of Hawaii. The federal credit must be claimed in order to claim the Hawaii credit. Attach Form N-586, Tax Credit for Low-Income Housing, to the income tax return on which the credit is claimed. Contact the Housing Finance Development Corporation for qualifying requirements and further information. Line 43 Credit For Employment of Vocational Rehabilitation Referrals The amount of the tax credit for the taxable year shall be equal to 20% of the qualified first-year wages for that year. The amount of the qualified first-year wages which may be taken into account with respect to any individual shall not exceed $6,000. Qualified wages means the wages paid or incurred by the employer during the taxable year to an individual who is a vocational rehabilitation referral and more than one-half of the wages paid or incurred for such an individual is for services performed in a trade or business of the employer. Qualified first-year wages means, with respect to any vocational rehabilitation referral, qualified wages attributable to service rendered during the one-year period beginning with the day the individual begins work for the employer. The credit allowed shall be claimed against net income tax liability for the taxable year. A tax credit which exceeds the taxpayer s income tax liability may be used as a credit against the taxpayer s income tax liability in subsequent years until exhausted. Claims for this credit, including any amended claims thereof, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. For more information, see Form N-884. Line 44 Total Credits Add lines 39 through 43. Include any of the five credits above that you claimed. Enter the total on this line. Line 45 Line 38 minus line 44. Enter the result on this line, but not less than zero. Line 46 Total Hawaii Income Tax Withheld Add the Hawaii income tax withheld as shown on your Form N-2 and federal Form W-2. Enter the total on this line. Note: If you had taxes withheld on the sale of Hawaii real property, this tax withheld is considered ESTIMATED taxes. See instructions for line 47, 1994 Estimated Tax Payments. Line Estimated Tax Payments Enter on this line only your estimated Hawaii income tax payments you made on Form N-1 for Do not include your 1993 overpayment you requested to have applied to your 1994 estimated tax (this amount is to be reported on line 48). If you, as an individual, had taxes withheld on the sale of Hawaii real property, include the amount of taxes for each sale remaining in your account with the State on this line. If the tax was withheld for you through a partnership, estate, trust or S corporation, see the Instructions for Credit for Taxes Withheld on the Sale of Hawaii Real Property Interests on page 17. Note: If you filed a Form N-288C, Application for Tentative Refund of Withholding on Dispositions of Hawaii Real Property Interests, during 1994 for the amount of taxes overwithheld on the sale of Hawaii real property for which you are claiming this credit, BE SURE to claim ONLY the amount of estimated taxes remaining in your account on December 31, 1994 for that sale. If you and your spouse paid joint estimated tax but are now filing separate income tax returns, either of you can claim all of the amount paid or you can each claim a part of it. Please be sure to show both social security numbers on the separate returns. If you or your spouse paid separate estimated tax, but you are now filing a joint income tax return, add the amounts you each paid. Follow the above instructions even if your spouse died.

94 Line Overpayment Applied to 1994 Estimated Tax Enter on this line any overpayment from your 1993 return that you applied to your 1994 estimated tax as shown on line 62 of your 1993 Form N-12. Line 49 Amount Paid with Extension(s) If you filed Form N-101A and/or N-101B to get an extension of time to file Form N-12, enter the amount you paid on this line. Other Credits IMPORTANT!! The amount of any credit claimed on lines 50 through 58 which total more than your tax liability will be refunded to you provided the amount is not less than $1.00. It is very important that you carefully read the following instructions for each of these credits to ensure that you properly claim all the credits for which you are entitled. Line 50 Credit for Child and Dependent Care Expenses Certain payments made for child and dependent care may be claimed as a credit against your tax due. If you maintain a household that included a child under age 13 or a dependent or spouse incapable of self-care, you may be allowed a credit of up to 25% of employment related expenses. These expenses must have been paid during the taxable year in order to enable you to work either full or part time. Note: Payments made to the State of Hawaii A+ Program qualify for the credit. To Claim This Credit. Complete Form N-141 and attach this form to your tax return. For detailed information, see the instructions for Form N-141 which begin on page 29. Line 51 Food/Excise Tax Credit Note: Do not claim this credit if you are eligible to be or are being claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes. Each qualifying resident individual taxpayer who files an individual income tax return Form N-12 for 1994 and who is not claimed or is not otherwise eligible to be claimed as a dependent by any taxpayer for federal or Hawaii individual income tax purposes may claim the food/excise tax credit of a calculated amount per qualified exemption for What is a Qualified Exemption? A qualified exemption meets the following requirements: Those personal exemptions permitted under the Hawaii Income Tax Law (Form N-12, line 6e) EXCEPT the additional exemptions for deficiencies in vision, hearing, or other disabilities; Each person for whom this credit is being claimed MUST have been a resident of Hawaii and physically present in Hawaii for more than nine months during the taxable year; Birth or death of a dependent: ----Should a person who is a qualified exemption die during 1994, a credit may be claimed for the deceased person so long as the person was alive until after September 30, If a child is born during 1994, a credit may be claimed for the child provided the mother was physically present in the State while pregnant with the child and the total aggregate days of gestation and life after birth total at least nine months during the taxable year. In addition, for the purposes of claiming the food/excise tax credit and the general income tax credit, a minor child receiving support from the Department of Human Services of the State, social security survivor benefits, and the like, may be considered a dependent and an exemption of the parent or guardian for purposes of claiming the credit only. This credit is not available to: any person convicted of a felony who is confined in prison for the full taxable year; any person, who would otherwise qualify as a dependent, who is confined in a youth correctional facility for the full taxable year; OR any misdemeanant who is confined in jail for the full taxable year. Food portion of the tax credit. This refundable $55 credit is multiplied by the number of qualified exemptions to which the taxpayer is entitled regardless of adjusted gross income. For this portion of the tax credit, a qualified exemption does not include the additional exemptions for taxpayers age 65 or over. Excise portion of the tax credit. The excise portion of the tax credit, which is based upon adjusted gross income, is multiplied by the number of qualified exemptions to which the taxpayer is entitled. For this portion of the tax credit, a qualified exemption also includes the additional exemption for taxpayers age 65 or over. A husband and wife filing separate returns for 1994, where a joint return could have been made by them, shall claim only the tax credit to which they would have been entitled had a joint return been filed. In a case where a married person files a separate return because his or her spouse is a nonresident, their combined adjusted gross income must be used to determine the amount of the tax credit. Amount of Excise Tax Credit Read down the column in the table below until you find the amount of your Adjusted Gross Income. Then read across the line to the column headed Tax Credits. Multiply the amount indicated there by the number of qualified exemptions to which you are entitled. The resultant amount constitutes the tax credit. Adjusted Gross Income Tax (Form N-12, Line 32) Credit Under $ 6,000 $55 $ 6,000 under 8, ,000 under 10, ,000 under 12, ,000 under 15, ,000 under 20, ,000 under 30, ,000 and over 0 To Claim This Credit. Complete Form N-311 and attach that form to your return. Enter on line 51(i) the number of qualified food portion exemptions from Form N-311, Part II, line 1. On line 51(ii) enter the number of qualified excise portion exemptions from Form N-311, Part II, line 8. On line 51(iii) enter the number of qualified exemptions claimed for minor children receiving support from the Department of Human Services, social security survivor s benefits, etc. from Form N-311, Part II, line 10. If you file married filing separately, enter your spouse s adjusted gross income on line 51(iv). Enter the total amount of the credit claimed on line 51 from Form N-311, Part II, line 14. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 52 Credit for Low-Income Household Renters Each resident taxpayer who occupies and pays rent for real property within the State as his or her residence and who files an individual income tax return for the taxable year, including those who have no income or no income taxable under chapter 235, HRS, may claim a tax credit of $50 per qualified exemption, including the additional exemption for taxpayers age 65 or over, to which he or she is entitled (See What is a Qualifed Exemption on this page) provided the following three conditions are met: The taxpayer is not eligible to be claimed as a dependent for federal or State income tax purposes by another taxpayer; The taxpayer has adjusted gross income of less than $30,000; and The taxpayer has paid more than $1,000 in rent during the taxable year. Note: A minor child receiving support from the Department of Human Services of the State, social security survivor benefits, and the like, is NOT considered a qualified exemption for the purpose of claiming the credit for low-income household renters. A residence is defined as the dwelling place that constitutes the principal residence of the taxpayer or his or her immediate family in this State, and does not include a temporary dwelling which is used for vacation, educational, or other temporary purposes. For purposes of claiming this credit, RENT means: the amount paid in cash for the taxable year for the occupancy of a dwelling place which is NOT partially or wholly exempted from real property tax (e.g., county or State low-income housing projects, military housing, etc.); and the money paid for use of the dwelling only and does not include ground rent, utilities, goods, services, and the like. Rent DOES NOT include: any amounts claimed as a deduction from gross or adjusted gross income for income tax purposes, or any amount received as a rental allowance or rental subsidy from any source. Resident taxpayer shall be determined under the provisions of section 235-1, HRS, and any rules relating to that section. In the case where a rental unit is occupied by two or more individuals and more than one individual is able to qualify for this credit (i.e. more than one individual occupying the rental unit individually met all three requirements listed above), each qualifying individual may claim the credit in the amount of $50 per qualified exemption. Page 15

95 A husband and wife filing separate returns for a taxable year for which a joint return could have been made by them shall claim only the tax credit to which they would have been entitled had a joint return been filed. In a case where a married person files a separate return because his or her spouse is a nonresident, combined income must be used as a basis in determining the amount of low-income household renter credit. To Claim This Credit. Use Form N-153 and attach the form to your return. For detailed information to determine this tax credit, see the instructions on Form N-153. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 53 Fuel Tax Credit for Commercial Fishers Each principal operator of a commercial fishing vessel who files an individual income tax return may claim an income tax credit against their individual income tax for 1994 for certain fuel taxes paid during the year. A husband and wife filing separate returns for 1994 for which a joint return could have been filed, shall claim only the tax credit to which they would have been entitled to had a joint return been filed. To Claim This Credit. Use Form N-163 and attach the form to your return. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 54 Credit for General Income Tax Note: Do not claim this credit if you are being claimed or eligible to be claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes. This is a one-time $1.00 general income tax credit for qualifying resident taxpayers for the year The credit is multiplied by the number of qualified exemptions to which the taxpayer is entitled, with the exception of the exemptions for age, regardless of adjusted gross income (See What is a Qualifed Exemption on page 15). The credit is refundable regardless of income tax liability for Note: Taxpayers who have been residents of the State for nine months of the taxable year qualify for this credit even though not physically residing in the State for the nine-month period. The credit is not based on adjusted gross income. The credit is figured on a fixed amount of $1.00 per qualified exemption. This credit is not available to: 1) any person convicted of a felony who is confined in prison for the full taxable year; 2) any person, who would otherwise qualify as a dependent, who is confined in a youth correctional facility for the full taxable year; or 3) any misdemeanant who is confined in jail for the full taxable year. To Claim This Credit. There is no special form to be filed. All you need to do is multiply $1.00 by the number of your qualified exemptions. Enter the amount on line 54. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 55 Credit for Child Passenger Restraint System Each resident taxpayer who files an individual income tax return for the taxable year may claim a tax credit for 1994 for the purchase of one or more new child passenger restraint systems which can be shown to be in substantial conformity with specifications for such restraint systems set forth by the federal motor vehicle safety standards which were in effect at the time of such purchase. Note: This credit is $25 per return regardless of the cost or the number of restraint systems purchased. To Claim this Credit. Use Form N-165 and attach the form with a copy of the sales invoice, which states the type of child restraint system purchased, to your return. Deadline for claiming this credit. Claims for the tax credit, including any amended claims thereof, must be filed on or before December 31, Line 56 Capital Goods Excise Tax Credit A four percent credit is available to Hawaii businesses on the acquisition of qualifying business property which is purchased and placed in service in To Claim This Credit. Use Form N-312 and attach the form to your return. For more information, see the instructions for Form N-312 and Tax Information Release No.88-6, Capital Goods Excise Tax Credit, Tax Information Release No. 88-8, Capital Goods Excise Tax Credit Recapture, and Tax Information Release No. 89-4, The Taxpayer Who Is Entitled To The Capital Goods Excise Tax Credit When the Parties Characterize a Transaction As A Sale-Leaseback. Line 57 Medical Services Excise Tax Credit Each resident individual taxpayer who files an individual income tax return for 1994, whether or not he or she has no income or no income taxable under Chapter 235, HRS, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii individual net income tax purposes, may claim the medical services excise tax credit for The tax credit is four percent of qualified medical expenses paid by the resident individual during 1994, plus six percent of the nursing facilities expenses paid by the resident individual during The portion of the tax credit attributable to medical expenses claimed on each individual income tax return shall not exceed: $200; $400 for a resident individual sixty-five years of age or over; or $600 for a resident individual and spouse both sixty-five years of age or over. The preceding limitations shall not apply to the portion of the credit attributable to nursing facilities expenses; provided that a husband and wife filing separate returns for a taxable year for which a joint return could have been filed by them can claim only the credit to which they would have been entitled had a joint return been filed. The term qualified medical expenses is defined to include those medical expenses paid for the taxpayer or the taxpayer s dependent allowable as deductions for income tax purposes under IRC section 213, provided that the medical expense was subject to the imposition and payment of the general excise tax under Chapter 237, HRS. See Examples of Medical and Dental Payments You CAN Deduct on page 19. Nursing facility expenses are amounts actually paid by the taxpayer for services provided to the taxpayer or to any individual who bears a relationship to the taxpayer as described in IRC section 152(a) by a nursing facility licensed under section 321-9, HRS, and , HRS, and any intermediate care facility for mentally retarded persons under sections 321-9, HRS, and , HRS, provided that the nursing facility expense was subject to the imposition and payment of the nursing facility tax. Do not reduce the amount of medical expenses and nursing facility expenses paid during 1994 by any insurance reimbursements (including medicare) made either to you or directly to a medical services provider. Examples of qualified medical expenses include amounts you paid for: Doctors ---- Fees Paid to: Chiropodists Pediatricians Neurologists Ophthalmologists Dermatologists Chiropractors Osteopaths Anesthesiologists Dentists Podiatrists Gynecologists Optometrists Psychiatrists Obstetricians Psychologists Surgeons For-profit Institutions: Hospital Sanitarium* Rest Home* Convalescent Home* Nursing Home* *If availability of medical care is the principal reason for the individual s being there, the entire cost (including meals and lodging) is a medical expense. If a person is there for basically non-medical reasons, only that part of his costs which constitutes medical care is a medical expense. Others: Legal vasectomy or abortion Acupuncture Alcoholism: Payments to a treatment center for alcoholics or drug addicts (includes meals and lodging provided by the center during medical treatment) Ambulance services Braille books and magazines: The part of the cost of braille books and magazines for use by a blind or visually handicapped person that is more than the price for regular books and magazines. Car: The cost of special hand controls and other special equipment installed in a car for the use of a handicapped person. Also, the amount by which the cost of a car specially designed to hold a wheelchair is more than the cost of a regular car. Cosmetic surgery necessary to correct a deformity arising from or directly related to: ----a congenital abnormality; ----a personal injury resulting from an accident or trauma; or ---- a disfiguring disease. Page 16

96 Dental treatment: Includes x-rays, fillings, braces, extractions, dentures. Psychiatric care: Includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Electrolysis or hair removal: Must be performed by a licensed technician. Eyeglasses and contact lenses Eye examinations Hair transplant Hearing aids, including batteries Laboratory fees Legal fees: Paid to authorize treatment for mental illness. Medical information plan: Amounts paid to a plan that keeps your medical information that can be retrieved from computer data bank for your medical care. Mentally retarded, home for: The cost of keeping a mentally retarded person in a special home on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. Nursing services Operations Oxygen or oxygen equipment: When used to relieve breathing problems caused by a medical condition. Wigs Purchased upon the advice of a physician for a chemotherapy patient. Cassette books for a visually handicapped person: The difference in cost between the cassette and the book. Psychoanalysis Sterilization Therapy Transplants: Payments for surgical, hospital, laboratory, and transportation expenses for a donor or possible donor of a kidney or other organ. Transportation: Includes actual car expenses (e.g. gas, oil). X-ray fees Diagnostic fees Orthopedic shoes Artificial teeth Special diet: When prescribed as an addition to the regular diet, exclusively for the treatment of an illness. Special mattress: When prescribed for the relief of a specific condition (e.g. arthritis). Air conditioner: When used for relief of a specific illness or condition (e.g. allergy). The above is not an exclusive list of medical expenses allowed under Internal Revenue Code section 213. Qualified medical expenses DO NOT include the following: Capital improvements; Prescription drugs defined under section (23), HRS; Prosthetic devices defined under section (23), HRS; Amounts paid as premiums for medical insurance coverage; Amounts paid to non-profit institutions; and Amounts paid for any cosmetic surgery which is directed at improving the appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. To Claim This Credit. Complete Form N-858 and attach that form to your return. Deadline for claiming this credit. Claims for the tax credit, including any amended claims thereof, must be filed on or before December 31, For more information on the medical services excise tax credit, see Tax Information Release No. 90-2, "Medical Services Excise Tax Credit - Qualified Medical Expenses" and Tax Information Release No. 90-5, "Medical Services Excise Tax Credit - Health Maintenance Organizations (HMO)". Line 58 Other Credits Include on line 58 the sum of amounts allowed for the credits described below. Prepare a schedule and attach it to your return to support your credit claims. Credit From a Regulated Investment Company A shareholder of a regulated investment company is allowed a credit of 4.0 percent of the amount of capital gains which by section 852(b)(3)(D) of the Internal Revenue Code is required to be included in the shareholder s return and on which there has been paid to the State by the regulated investment company the tax of 4.0 percent. The regulated investment company will notify you of the undistributed capital gains amount and the tax paid, if any. Credit For Beneficiaries of Foreign Trusts Any resident beneficiary of a trust with a situs in another State may claim a credit for income taxes paid by the trust to such other State on any income received which is attributable to assets other than intangibles. Credit For Shareholders of S Corporations A shareholder of an S corporation shall be considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder s pro rata share of any net income tax paid by the S corporation to a state which does not measure the income of S corporation shareholders by the income of the S corporation. The term net income tax means any tax imposed on or measured by a corporation s net income. Credit for Taxes Withheld on the Sale of Hawaii Real Property Interests If you as an individual, had taxes withheld on the sale of Hawaii real property, see the Instructions for 1994 Estimated Tax Payments on page 14. If the tax was withheld for you through a partnership, estate, trust or S corporation, include ONLY the amount of your pro rata share of any net income taxes paid, for each sale, by the partnership, estate, trust or S corporation on this line. Note: If the partnership, estate, trust or S corporation filed a Form N-288C, Application for Tentative Refund of Withholding on Dispositions of Hawaii Real Property Interests, during 1994 for the amount of taxes overwithheld on the sale of Hawaii real property for which you are claiming this credit, BE SURE to claim ONLY your pro rata share of the amount of estimated taxes remaining in the partnership, estate, trust or S corporation account on December 31, 1994 for that sale. Line 59 Total Add lines 46 through 58. Enter the amount on this line. Refund or Balance Due Line 60 Amount Overpaid (If line 59 is larger than line 45) Line 59 minus line 45. You can choose to have all, or part, of this amount refunded to you (line 61). The remainder, if any, can be applied to your estimated tax for 1995 (line 62). If line 60 is under $1, we will send you a refund only on written request. Line 61 Refund Enter the amount from line 60 that you want refunded to you. Line 62 Applied to 1995 Estimated Tax Line 60 minus line 61. This is the amount that will be applied to your estimated tax for Enter this amount on line 62. We will apply amounts to your account unless you attach a request to apply it to your spouse s account. The request should include your spouse s social security number and full name. Line 63 Balance Due (If line 45 is larger than line 59) Attach your check or money order for the full amount when you file. Make it out to Hawaii State Tax Collector. Be sure to write your social security number and 1994 Form N-12" on it. Please pay in U.S. dollars. If line 63 is under $1, you do not have to pay. Note: If you include penalty and/or interest for the late filing of your return with your payment, identify and enter these amounts on a separate sheet of paper and attach to Form N-12. Do not include the penalty and/or interest amounts for the late filing of your return in the Balance Due on line 63. Line 64 Estimated Tax Penalty See the instructions for Penalties and Interest on page 18 and Form N-210 to see if you owe a penalty for the underpayment of estimated taxes. If you owe a penalty, enter the penalty amount on Form N-12, line 64. Add the penalty amount to any tax due and enter the total on line 63. If you have an overpayment, subtract the penalty amount from the overpayment you show on line 60. However, if your overpayment is less than the penalty amount, enter the difference as a balance due on line 63. Page 17

97 Line Forms If your Form N-12 is prepared by someone else, or if you do not need Hawaii income tax forms mailed to you next year, check the box at line 65, and you will receive a preprinted label only. Now continue with Step 5 below. Step 5 Check your return to make sure it is correct. Step 6 Sign and date your return. Form N-12 is not considered a valid return unless you sign it. Your spouse must also sign if it is a joint return. Step 7 Did you have someone else prepare your return? If you fill in your own return, the Paid Preparer s space should remain blank. If someone prepares your return and does not charge you that person should not sign your return. Generally, anyone who is paid to prepare your tax return must sign your return and fill in the other blanks in the Paid Preparer s Information area of your return. If you have questions about whether a preparer is required to sign your return, please contact your taxation district office. The preparer required to sign your return MUST complete the required preparer information and: Sign it, by hand, in the space provided for the preparer s signature. (Signature stamps or labels are not acceptable.) Give you a copy of your return in addition to the copy to be filed with your taxation district office. Step 8 Attachments Attach a copy of your Form(s) HW-2 and N-2, or federal Form W-2, to the front of Form N-12 in the area designated. Attach schedules in alphabetical order and other forms in numerical order to the back of Form N-12. If you need more space on forms or schedules, attach separate sheets and use the same arrangement as the printed forms. But show your totals on the printed forms. Please use sheets that are the same size as the forms and schedules. Be sure to put your name and social security number on these separate sheets. If you owe tax, be sure to attach your payment to the front of Form N-12. Reminders Refund Processing In general, refunds due to you are issued within 8 weeks from the date your return is filed with the Department of Taxation. However, it may take additional time if you filed your return close to the April 20 filing deadline, if errors were made in completing your return, or you moved and did not change your Page 18 address in writing with the district tax office with which you filed your return. Please do not contact the Department regarding the status of your refund until at least 8 weeks have passed from the date your return was filed with the Department. Penalties and Interest Late Filing of Return. The law provides a penalty of 5% of the tax due for each month, or part of a month, the return is late (maximum 25%) unless you can show reasonable cause for the delay. If you file a return late, attach a full explanation to your return. Interest. Interest will be charged on taxes not paid by their due date, even if an extension of time to file is granted. The interest rate for not paying tax when due is 2/3 of 1% of the unpaid amount for each month or part of a month it remains unpaid. Failure to pay tax after filing timely returns. If a return is timely filed and the tax due is not completely paid within 60 days of the due date of the return, an amount up to 20% of the unpaid tax will be added to the tax due. Underpayment of estimated taxes. Starting with taxable years beginning after December 31, 1992, the Department will be imposing the penalty for the underpayment of estimated tax as provided in section (f), HRS. If applicable, this penalty shall be added to the tax for the taxable year in an amount determined at the rate of eight percent (8%) a year upon the amount of the underpayment for the period of the underpayment. The amount of the underpayment is the excess of the required installment, over the amount, if any, of the installment paid on or before the due date for the installment. The period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier (1) the 20th day of the 4th month following the close of the taxable year (the due date of the income tax return withhout extension), or (2) with respect to any portion of the underpayment, the date on which the portion is paid. A payment of estimated tax on any installment date shall be credited against unpaid required installments in the order in which the installments are required to be paid. Generally, if at least: (1) 90% (66 2/3% for farmers and fishermen) of the 1994 tax liability; (2) 100% of the tax shown on the 1993 return (110% of that amount if the individual s adjusted gross income on that return is more than $150,000, and less than 2/3 of gross income for 1993 or 1994 is from farming or fishing); or (3) 90% of the tax figured by annualizing the taxable income, whichever is smallest, is not prepaid, a penalty for not paying enough estimated tax may be charged. For more information, see Form N-210. Change of Address If your mailing address changes after you file your return, you must notify the Department in writing of the change in addition to notifying the post office serving your former address. Failure to do so may prevent any refund due to you from being delivered (the postal service is not permitted to forward your State refund check), and delay important notices or correspondence to you regarding your return. Be sure to include your name(s) and social security number(s) as printed on your return in any correspondence with the Department. How Long Should Records Be Kept? Keep records of income, deductions, and credits shown on your tax return until the statute of limitations runs out for that return. Usually this is three years from the date the return was due or filed, or three years from the date the tax was paid, whichever is later. Also keep copies of your filed tax returns as part of your records. You should keep some records longer. For example, property records (including those on your own home) should be kept as long as they are needed to figure the basis of the original or replacement property. Amended Return If you file your income tax return and later become aware of any changes you must make to income, deductions, or credits, file Form N-188X, Amended Individual Income Tax Return, to change the Form N-12, Form N-13, Form N-13EZ, or Form N-15 you already filed. Change in Federal Taxable Income In general, a change to your federal return, whether it is made by you or by the Internal Revenue Service, must be reported to the State of Hawaii. (1) Section (b), HRS, requires a report to the Director of Taxation if the amount of IRC taxable income is changed, corrected, adjusted or recomputed as stated in (3). (2) This report must be made: (a) Within 90 days after a change, correction, adjustment or recomputation is finally determined. (b) Within 90 days after an amended return is filed. (3) A report within the time set out in (2) is required if: (a) The amount of taxable income as returned to the United States is changed, corrected, or adjusted by an officer of the United States or other competent authority. (b) A change in taxable income results from a renegotiation of a contract with the United States or a subcontract thereunder. (c) A recomputation of the income tax imposed by the United States under the Internal Revenue Code results from any cause. (d) An amended income tax return is made to the United States. (4) The statutory period for the assessment of any deficiency or the determination of any refund attributable to the report shall not expire before the expiration of one year from the date the Department is notified by the taxpayer or the Internal Revenue Service, whichever is earlier, of such a report in writing. Before the expiration of this one-year period, the Department and the taxpayer may agree in writing to the extension of this period. The period so agreed upon may be further extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. Instructions for Schedule A ---- Itemized Deductions Note: People with higher incomes may not be able to deduct all of their itemized deductions. If the amount on Form N-12, line 32, is more than $100,000 ($50,000 if married filing separately), complete Schedule A, then use the worksheet for Total Itemized Deductions on page 12, to figure the amount you may deduct. Purpose Some taxpayers must itemize their deductions and some should itemize because they will save

98 money. See You MUST Itemize Deductions and You Choose to Itemize on page 12. If you itemize, you can deduct part of your medical and dental expenses, and amounts you paid for certain taxes, interest, contributions, casualty and theft losses, and other miscellaneous expenses. These are explained on the pages that follow. Part-year Residents A part-year resident may deduct in full any allowable deduction attributable to the period he or she was a Hawaii resident. Deductions attributable to the period of nonresidency are not allowed if the income can be tied to a specific investment, property, or activity carried on outside of the State and not reportable by the taxpayer for Hawaii purposes. Deductions attributable to the period of nonresidency and connected to income arising from a specific investment, property, or activity with situs in Hawaii, are deductible in full if the income is reportable by the taxpayer for Hawaii purposes. A deduction which cannot be accurately attributed to either period of residency or nonresidency is allowed to the extent of the ratio of the total adjusted gross income attributable to Hawaii during the entire year to the total adjusted gross income attributable to worldwide sources during the entire year. Lines 1 through 4 Medical and Dental Expenses Before you can figure your total deduction for medical and dental expenses, you must complete your Form N-12 through line 32. Only that part of your medical and dental expenses that is more than 7.5% of your adjusted gross income on Form N-12, line 32, is deductible. Lines 1 through 4 of Schedule A explain how to deduct your medical and dental expenses. When you figure them, you can include medical and dental bills you paid for: Yourself; Your spouse; All dependents you list on your return; Your child whom you do not claim as a dependent because of the rules explained on page 8 for Children of Divorced or Separated Parents; and Any person that you could have listed as a dependent on your return if that person had not received $2,450 or more of gross income or had not filed a joint return. Example ---- You gave more than half of your mother s support but cannot list her as a dependent because she received $2,450 of wages during If part of your support was the payment of her medical bills, you can include that part in your medical expenses. You should include all amounts you paid during 1994, but do not include amounts repaid to you, or paid to anyone else, by hospital, health or accident insurance, or your employer. Examples of Medical and Dental Payments You CAN Deduct To the extent you were not reimbursed, you can deduct what you paid for: Hospital, medical, dental, and extra Medicare (Medicare B) insurance. Prescription drugs and insulin. Medical doctors, dentists, eye doctors, gynecologists, chiropractors, osteopaths, podiatrists, psychiatrists, psychologists, physical therapists, acupuncturists, and psychoanalysts (medical care only). Medical examinations, X-ray and laboratory services, insulin treatment, and whirlpool baths the doctor ordered. Nursing help. If you pay someone to do both nursing and housework, you can deduct only the cost of nursing help. Hospital care (including meals and lodging), clinic costs, lab fees. Medical treatment at a center for drug addicts or alcoholics. Medical aids such as hearing aids (and batteries), false teeth, eyeglasses, contact lenses, braces, orthopedic shoes, crutches, wheelchairs, guide dogs and the cost of maintaining the dogs. Ambulance service and other travel costs to get medical care. If you used your own car, you can claim what you spent for gas and oil to go to and from the place you received medical care; or you can claim 9 cents a mile. Add parking and tolls to the amount you claim under either method. Cosmetic surgery or procedure that is necessary to correct a deformity arising from, or directly related to: ----A congenital abnormality; ----a personal injury resulting from an accident or trauma; or ----a disfiguring disease. Examples of Medical and Dental Payments You CANNOT Deduct You cannot deduct the following: The basic cost of Medicare Insurance (Medicare A). Note: If you are 65 or over and are not entitled to social security benefits, you may deduct premiums you voluntarily paid for Medicare A coverage. Life insurance or income protection policies. The 1.45% hospital insurance benefits tax withheld from your pay as part of the social security tax or paid as part of social security self-employment tax. Nursing care for a healthy baby. (You may qualify for the child care credit; see Form N- 141.) Illegal operations or drugs. Nonprescription medicines or drugs. Travel your doctor told you to take for rest or change. Funeral, burial, or cremation costs. Amounts paid for cosmetic surgery which is directed at improving the appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Note: If expenses for cosmetic surgery are NOT deductible as medical expenses, then amounts paid for insurance coverage for such expenses are NOT deductible AND reimbursements for such expense are not excludible from the gross income of the individual if under a health plan provided by the employer. Lines 5 through 8 Taxes Taxes You CAN Deduct State and local income taxes (line 5). Include on this line state and local income taxes that were withheld from your salary and any estimated tax payments made in 1994, including payments for a prior year. Also include any part of a prior year refund of state or local income taxes that you chose to have credited to your 1994 estimated state or local income taxes, and the NET amount of taxes withheld from the sale of Hawaii real property interests. If you received a refund of (or credit for) prior year taxes in 1994, see the instructions for Form N-12, line 10, on page 9. Do not reduce your itemized deductions by this amount. For more information about the treatment of taxes withheld from the sale of real property interests, contact your district tax office. Real estate taxes (line 6). Include taxes that you paid on property you own that was not used for business. If you pay your real estate taxes as part of your mortgage payments, do not take a deduction for that amount. Deduct the taxes in the year the mortgage company actually paid them to the taxing authority. Other (line 7). If you had any deductible tax not listed on Schedule A, lines 5 or 6 (such as personal property taxes or foreign income taxes), describe the tax and show the amount on line 7. Taxes You CANNOT Deduct Federal income tax. Social security tax (FICA). Medicare tax. Railroad retirement tax (RRTA). Federal excise tax on personal property, transportation, telephone, and gasoline. Customs duties. Federal estate and gift taxes. (However, see Miscellaneous Deductions on page 21.) Certain state and local taxes, including: a. General sales taxes. b. Tax on gasoline. c. Car inspection fees. d. Tax on liquor, beer, wine, cigarettes, and tobacco. e. Assessments for sidewalks or other improvements to your property. f. Taxes paid for your business or profession. (Use Schedule C, E, or F of Form N-12 to deduct these business taxes.) g. Tax you paid for someone else. h. License fees. (Marriage, driver s, dog, hunting, auto, etc.) i. Inheritance tax. j. Taxes paid to other states on pension income. Various states tax nonresidents who derive pension income from their state. The affected Hawaii residents are required to file nonresident tax returns to report the pension income and pay the tax to these states. Since Hawaii does not tax pension and similar state retirement income, taxes paid to these states are not allowed as a deduction. Lines 9a through 12 Interest Expense You should show on Schedule A interest on non-business items only. Except for certain mortgage interest, the amount of your personal interest expense is not allowed as an itemized deduction on Schedule A. Page 19

99 Home Mortgage Interest In most cases, you will be able to deduct all of your home mortgage interest. The following rules apply to any loans secured by your main home, including first and second mortgages, home equity loans and refinanced mortgages. Whether your home mortgage interest is deductible depends on the date you took out the mortgage, the amount of the mortgage and your use of its proceeds. If ALL of your mortgages fit into one or more of categories a., b., and c. below, you can deduct all of the interest on those mortgages and report it on Schedule A, line 9a or 9b, whichever applies. If one or more of your mortgages does not fit into any of the categories below, get federal Publication 936, Limits on Home Mortgage Interest Deduction, to figure the amount of interest you can deduct. a. Mortgages you took out on your main home ON or BEFORE October 13, These mortgages also include line-of-credit mortgages you had on October 13, 1987, and mortgages you had on October 13, 1987, that you refinanced after that date. But see Special Rules if you refinanced or borrowed additional amounts on a line-of-credit mortgage after October 13, b. Mortgages you took out on your main home AFTER October 13, 1987, to buy, build, or improve your home, but only if these mortgages plus any mortgages in a. above totaled $1 million or less throughout The limit is $500,000 or less if married filing separately. c. Mortgages you took out AFTER October 13, 1987, on your main home, OTHER THAN to buy, build, or improve your home, but only if these mortgages totaled $100,000 or less throughout The limit is $50,000 or less if married filing separately. An example of a mortgage used for purposes other than to buy, build, or improve your home is a home equity loan you used to pay off credit card bills, to buy a car, or to pay tuition costs. Special Rules Refinanced Mortgages If you had a mortgage on your home on October 13, 1987, and refinanced it after that date for no more than the balance of the existing mortgage, all of the new mortgage is treated as a mortgage described in a. above. But, if you refinanced it for more than the balance of the existing mortgage, only the part of the new mortgage equal to the amount you owed on the mortgage at the time you refinanced is treated as a mortgage described in a. The part of the new mortgage that is more than the balance of the existing mortgage is a mortgage described in b. or c. (or b. and c. if a mixed-use mortgage ---- see below). Line-of-Credit Mortgages If you had a lineof-credit mortgage on your home on October 13, 1987, and you borrowed additional amounts on this line of credit after that date, the additional amounts borrowed are treated as a mortgage taken out after October 13, 1987, and are subject to the rules under b. or c. (or b. and c. if a mixed-use mortgage ---- see below). Mixed-Use Mortgages If you took out a new mortgage after October 13, 1987, (including refinancing for more than what you owe or borrowing additional amounts on a line-of-credit mortgage you had on October 13, 1987), for purposes described in both b. and c. above, you have a mixed-use mortgage. The mortgage proceeds used to buy, build, or improve the home fit into category b. and the rest of the proceeds fit into category c. Example. You took out a mortgage on your home for $200,000 in You file as single for In March 1994, when the home had a fair market value Page 20 of $400,000, and you owed $195,000 on the mortgage, you took out a home equity loan for $120,000. In 1994, you used $90,000 of the home equity loan proceeds for home improvements, and $30,000 for other purposes. You can deduct all of the interest on both mortgages. The first mortgage qualifies because it was taken out on or before October 13, The home equity loan qualifies under the dollar limits in b. and c. The part of the mortgage subject to the dollar limit in b. ($90,000) plus the first mortgage of $195,000 totaled less than $1 million. The part of the mortgage subject to the dollar limit in c. ($30,000) was less than $100,000. Note: Additional limits apply if the total amount of all mortgages exceeds the fair market value of the home. See federal Publication 936. What is a Home A home may be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations including sleeping space, a toilet, and cooking facilities. More Than One Home If you had a main home and a second home, the dollar limits explained in b. and c. above apply to the total mortgages on both homes. Investment interest deduction Investment interest is interest paid on money you borrowed that is allocable to property held for investment. It does not include any interest allocable to a passive activity. Complete and attach Form N-158, Investment Interest Expense Deduction, to figure your deduction. Exception. You do not have to file Form N-158 if ALL of the following apply: Your only investment income was from interest or dividends, You have no other deductible expenses connected with the production of the interest or dividends, Your investment interest expense is not more than your investment income, You have no carryovers of investment interest expense from 1993, and You have no passive activity losses. For more details, get federal Publication 550, Investment Income and Expenses. Interest Expense You CANNOT Deduct Do not include the interest you paid for ---- Personal Interest. Indebtedness of another person, when you are not legally liable for payment of the interest. A gambling debt or other nonenforceable obligation. A life insurance loan, if interest is added to the loan and you report on the cash basis. Money you borrowed to buy tax-exempt securities or single-premium life insurance. Any kind of business transaction. Use Schedule C, E, or F to report business interest expenses. See the instructions for federal Form 1040, Schedule A----Interest Expense for more information. Lines 13 through 16 Gifts to Charity You can deduct what you gave to organizations that are religious, charitable, educational, scientific, or literary in purpose. You can also deduct what you gave to organizations that work to prevent cruelty to children or animals. Examples of these organizations are: Churches, temples, synagogues, Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girl Scouts, Boys Club of America, etc. Fraternal orders, if the gifts will be used for the purposes listed above. Veterans and certain cultural groups. Nonprofit schools, hospitals, and organizations whose purpose is to find a cure for or help people who have arthritis, asthma, birth defects, cancer, cerebral palsy, cystic fibrosis, diabetes, heart disease, hemophilia, mental illness or retardation, multiple sclerosis, muscular dystrophy, tuberculosis, etc. Federal, State, and local governments if the gifts are solely for public purposes. If you contributed to a charitable organization and also received a benefit from it, you can deduct only the amount that is more than the benefit you received. If you do not know whether you can deduct what you gave to an organization, check with that organization or with your taxation district office. Contributions You CAN Deduct Contributions can be cash (including checks and money orders), property, or out-of-pocket expenses you paid to do volunteer work for the kinds of organizations described above. If you drive to and from the volunteer work, you can take 12 cents a mile or the actual cost of gas and oil. Add parking and tolls to the amount you claim under either method. (But don t deduct any amounts that were repaid to you.) Note: For contributions made on or after January 1, 1994, charitable contributions of $250 or more must be substantiated by a written acknowledgement from the donee organization to be deductible. Line Enter the total contributions you made in cash or by check (including out-of-pocket expenses). Line If you gave property, state the kind of property you gave and the name of the organization you gave it to. Include the date you gave it, show how you figured its value at the time you gave it, and state whether it was capital gain or ordinary income property. If you determine the value of a gift by an appraisal, attach a signed copy of it. For gifts valued at over $500, also attach a statement showing: a. The address of the organization. b. A description of the property. c. Any condition attached to the gift. d. How you got the property. e. The cost or other basis of the property if: 1. You owned it less than five years, or 2. You must reduce it by any ordinary income or capital gain that would have resulted if the property had been sold at its fair market value. f. How you figured your deduction if you choose to reduce your deduction for contributions of capital gain property. g. If the gift was a qualified conservation contribution under IRC section 170(h), also include the fair market value of the underlying property before and after the gift, the type of legal interest donated, and describe the conservation purpose furthered by the gift. Federal Form 8283 may be used for this purpose.

100 If you donate property to an organization for which you claim a deduction of over $5,000 ($10,000 for stock except publicly traded stock) for a single item (plus all similar items donated to one or more organizations), you must attach an appraisal of the donated property s fair market value to your return. The appraisal must be obtained from a qualified independent appraiser. If you gave used items, such as clothing or furniture, deduct their fair market value at the time you gave them. Fair market value is what a willing buyer would pay a willing seller when neither has to buy or sell and both are aware of the conditions of the sale. Special rules apply if your contributions are more than 20% of Form N-12, line 32. If you gave gifts of property that increased in value, made bargain sales to charity, or gave gifts of the use of property, other rules apply. See federal Publication 526 for more information. Contributions You CANNOT Deduct Political contributions (but see instructions for Miscellaneous Deductions, lines 18 through 25). Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups. Cost of raffle, bingo, or lottery tickets. Tuition to a private school. The value of your time or services. Value of blood given to a blood bank. The transfer of a future interest in tangible personal property (generally until the entire interest has been transferred). Gifts to: a. Individuals. b. Foreign organizations. c. Groups that are run for personal profit. d. Groups whose purpose is to lobby for changes in the law. e. Civic leagues, social and sports clubs, labor unions, and chambers of commerce. Line 17 Casualty and Theft Losses Use line 17 to report casualty or theft loss(es) of property that is not trade, business, or rent or royalty property. Complete Form N-184, Casualties and Thefts, to figure your loss. Enter on line 17 of Schedule A the amount of loss from Form N-184. Attach Form N-184. Losses You CAN Deduct You may be able to deduct all or part of each loss caused by theft, vandalism, fire, storm, and car, boat, and other accidents or similar causes. If you have a nonbusiness casualty loss that is covered by insurance, you cannot take the casualty loss deduction unless you file a timely insurance claim for that loss. You can deduct nonbusiness casualty or theft losses only to the extent that: a. The amount of EACH separate casualty or theft loss is more than $100, and b. The total amount of ALL losses during the year is more than 10% of your adjusted gross income on Form N-12, line 32. Losses You CANNOT Deduct Money or property misplaced or lost. Breakage of china, glassware, furniture, and similar items under normal conditions. Progressive damage to property (buildings, clothes, trees, etc.) caused by termites, moths, other insects, or disease. Use line 19 of Schedule A to deduct the costs of proving that you had a property loss. Examples of these costs are appraisal fees and photographs used to establish the amount of your loss. Lines 18 through 25 Miscellaneous Deductions Most miscellaneous deductions cannot be deducted in full. You must subtract 2% of your adjusted gross income from the total. You figure the 2% limit on line 21. Generally, the 2% limit applies to job expenses you paid for which you were not reimbursed (line 18). The limit also applies to certain expenses you paid to produce or collect taxable income (line 19). See the instructions for lines 18 and 19 for examples of expenses to claim on these lines. The 2% limit does not apply to certain other miscellaneous expenses that you may deduct. These expenses can be deducted in full on lines 23 and 24. Moving expenses incurred before 1994 can be deducted on line 23 and gambling losses (to the extent of winnings) and certain job expenses of handicapped employees can be deducted on line 24. See federal Publication 529, Miscellaneous Deductions, for more information. Expenses Subject to the 2% Limit (Lines 18 and 19) Line Use this line to report job expenses you paid for which you were not reimbursed. In some cases, you must first fill out Form N-106, Employee Business Expenses. Fill out Form N-106 if: 1. You claim any travel, transportation, meal, or entertainment expenses for your job; or 2. Your employer paid you for any of your job expenses reportable on line 18. If 1 or 2 above applies, enter the amount from line 11 of Form N-106 on line 18 of Schedule A. If you don t have to fill out Form N-106, just list the type and amount of your expenses on the dotted line for line 18. If you need more space, attach a statement showing the type and amount of the expense. Enter one total in the amount space for line 18. Examples of expenses to include on line 18 are: Travel, transportation, meal, or entertainment expense. (Note: If you have any of these expenses, you must use Form N-106 for all of your job expenses). Union dues. Safety equipment, small tools, and supplies you needed for your job. Uniforms your employer said you must have, and which you may not usually wear away from work. Protective clothing, required in your work, such as hard hats and safety shoes and glasses. Physical examinations your employer said you must have. Dues to professional organizations and chambers of commerce. Subscriptions to professional journals. Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new job. Business use of part of your home but only if you use that part exclusively and on a regular basis in your work and for the convenience of your employer. For details, including limits that apply, see federal Publication 587, Business Use of Your Home. Education expenses you paid that were required by your employer, or by law or regulations, to keep your salary or job. In general, you may also include the cost of keeping or improving skills you must have in your job. For more details, see federal Publication 508, Educational Expenses. Some education expenses are not deductible. See Expenses You MAY NOT Deduct on page 22. Deduction for repayment of amounts under a claim of right if $3,000 or less. See Repayments in federal Publication 525, Taxable and Nontaxable Income, for more information. Line Use this line for amounts you paid to produce or collect taxable income, manage or protect property held for earning income, and for tax preparation fees. List the type and amount of each expense on the dotted lines for line 19. If you need more space, attach a statement showing the type and amount of each expense. Enter one total in the amount space for line 19. Examples of these expenses are: Tax return preparation fee. Safe deposit box rental. Certain legal and accounting fees. Clerical help and office rent. Custodial (e.g. trust account) fees. Your share of the investment expenses of a regulated investment company. Certain losses on nonfederally insured deposits in an insolvent or bankrupt financial institution. Deduction for the cost of any qualified clean-fuel vehicle property and any qualified clean-fuel vehicle refueling property placed in service after June 30, For more information (including limits on the amount you can deduct), see federal Publication 529. Expenses NOT Subject to the 2% Limit (Lines 23 and 24) Use these lines to report miscellaneous deductions that are not subject to the 2% AGI limit. Although these expenses are not subject to the 2% limit, these expenses are subject to the 3% limitation on itemized deductions for taxpayers with AGI of more than $100,000 ($50,000 if married filing separately). Line Use this line to report moving expenses incurred before 1994, but reimbursed by your employer in Line Only the expenses listed below can be deducted on line 24: Contributions to candidates for public office. You may deduct political contributions not in excess of $100 in the year (up to $200 on a joint return) to a central or county committee of a political party whose candidate shall have qualified by law to be voted for at the immediately previous general election. In addition, you may deduct contributions to candidates who have agreed to abide by the campaign expenditure limits set by law. The contribution is deductible in an aggregate amount not to exceed $500 in any year (up to $1,000 on a joint return); however, not more than $100 ($200 on a joint return) of the total contribution to any single candidate shall be deductible. Page 21

101 Gambling losses to the extent of gambling winnings. Report gambling winnings on Form N- 12, line 20. Federal estate tax on income in respect of a decedent. Amortizable bond premium on bonds acquired before October 23, Deduction for repayment of amounts under a claim of right if more than $3,000. See federal Publication 525. Impairment-related work expenses of a handicapped person. List the type and amount of each expense. Enter one total in the amount space for line 24. For more information on these expenses, get federal Publication 529. Expenses You MAY NOT Deduct Some expenses are not deductible at all. Examples are: Political contributions (except certain contributions to candidates for public office as noted above). Personal legal expenses. Lost or misplaced cash or property (but see casualty and theft losses). Expenses for meals during regular or extra work hours. The cost of entertaining friends. Expenses of going to or from work. Education that you need to meet minimum requirements for your job or that will qualify you for a new occupation. Expenses of: a. Travel as a form of education. b. Attending a seminar, convention, or similar meeting unless it is related to your employment. c. Adopting a child, including a child with special needs. Fines and penalties. Expenses of producing tax-exempt income. Instructions for Schedule B ---- Interest and Dividend Income Purpose Use Schedule B to list interest and dividend income. You must use Schedule B if you are filing Form N-12 and: Had more than $400 in interest, or Had more than $400 in dividends. Please follow the instructions. Note: You must report all taxable interest and dividends on Form N-12, even if you are not required to complete Schedule B. Part I Interest Income To see what interest income you must report, read the instructions for Form N-12, line 8 on page 9. The payer will usually send you a federal Form 1099-INT or similar statement showing interest you must report. If the total taxable interest from all payers is over $400, fill in Part I of this schedule. Line 1 Report on line 1 the interest portion of any payments you received from an individual, based on a take-back mortgage or other form of seller financing that resulted from the sale of your home or other property. Show the payer s name and the amount. Line 2 Report on line 2 ALL interest that you received or that was credited to your account so you could withdraw it. List each payer s name and show the amount. Nominee and Accrued Interest and Tax-Exempt Interest. When you buy bonds between interest payment dates and pay accrued interest to the seller, this interest is taxable to the seller. Note: If you received interest as a nominee for the actual owner, give that person a federal Form 1099-INT. Include on line 2 interest you received as a nominee in your name for someone else or as a purchaser of a bond with accrued interest. If you received a federal Form 1099-INT for tax-exempt interest, such as from municipal bonds, also include this interest on line 2. Several lines above line 3, put a subtotal of all interest income listed on line 2. Below this subtotal, write Nominee Distribution or Accrued Interest as appropriate and show the interest amounts you paid to others. If you received a federal Form 1099-INT for tax-exempt interest, write Tax-Exempt Interest on the line below the subtotal and show the amount of this interest. Subtract these amounts from the subtotal and write the result plus the amount from line 1 on line 3. If you are reporting Original Issue Discount (OID) in an amount less than the amount shown on federal Form 1099-OID, follow the above rules for nominee interest to see how to report the OID on Schedule B. Line 3 Add lines 1 and 2. Enter the total on line 3 and on Form N-12, line 8. Part II Dividend Income To see what dividend income you must report, read the instructions for Form N-12, line 9 on page 9. The payer will usually send you a federal Form 1099-DIV or similar statement showing dividends you must report. If the total dividends are over $400, fill in Part II of this schedule. Line 4 Report all of your dividend income, including capital gain distributions, nontaxable distributions, etc., on this line. Include cash and the value of stock, property, or merchandise you received as a dividend. List the names of each payer. If the securities are held in a brokerage account, list the name of the brokerage firm as the payer. Next to each name, show the amount of income. Be sure to include capital gain and nontaxable distributions on this line. They will be deducted on lines 6 and 7. Nominees. List on line 4 all dividends you received, including dividends you received as a nominee, even if you later distributed some or all of this income to others. Several lines above line 5, enter a subtotal of all dividend income. Below this subtotal write Nominee Distribution and enter the amounts distributed. Subtract these distributions from the subtotal and enter the result on line 5. Note: If you received dividends as a nominee for the actual owner, give that person a federal Form 1099-DIV. Line 5 Add the amounts you listed on line 4 except as noted above in Nominees. Enter the total on this line. Line 6 If you listed any capital gain distributions on line 4, add those amounts. Enter the total on this line. Line 7 Enter the total of your nontaxable distributions on this line. Line 8 Add lines 6 and 7. Enter the total on this line. Line 9 Line 5 minus line 8. Enter the result on line 9 and on Form N-12, line 9. Instructions for Schedule C ---- Profit or (Loss) From Business or Profession Note: In place of Hawaii s Schedule C, you may use a copy of your federal Schedule C or federal Schedule C-EZ with the addition of your Hawaii General Excise ID Number. Purpose If you operated a business or practiced a profession as a sole proprietorship, complete Schedule C. If you had more than one business, or if you and your spouse had separate businesses, you must complete a Schedule C for each business. Farmers should use Schedule F. For expenses that are part business and part personal, deduct only the business part. For example, if only half of your car usage was for business, deduct only half of the cost of operating the car. Deduct interest, taxes, and casualty losses not related to your business as itemized deductions on Schedule A. Report sales, exchanges, and involuntary conversions (other than casualty or theft) of trade or business property on Schedule D-1, Sales of Business Property. Use Form N-184, Casualties and Thefts, to report a casualty or theft involving trade or business, or income-producing property. Information Returns You may have to file information returns for wages paid to employees, certain payments of fees and other non-employee compensation, interest, rents, royalties, annuities, and pensions. For more information, see instructions for Form HW-3, Employer s Return and Reconciliation of Hawaii Income Tax Withheld from Wages, and N-196, Hawaii Annual Information Return. Page 22

102 Item A Main Business Activity and Product Report the business activity that accounted for the most income included in Schedule C, Part I, line 1. Give the general field as well as the product or service. For example, wholesale - groceries or retail - hardware. Item C Hawaii G.E./Use Tax Identification Number Enter your Hawaii General Excise/Use Tax Identification Number. Item D Business Address Use your home address only if you actually conducted the business from your home. You should show a street address instead of a box number. Item E Accounting Method You must use the cash method on your return unless you kept account books. If you kept such books, you can use the cash method, accrual method, or in some cases, the completed contract or percentage of completion method. The method used must clearly reflect your income. If you want to change your accounting method (including the treatment of any item such as inventories or bad debts), you must usually first get the permission of the Income Tax Assessor. If you use the cash method, show all items of taxable income actually or constructively received during the year (in cash, property, or services). Also show amounts actually paid during the year for deductible expenses. Income is constructively received when it is credited to your account or set aside for you to use. If you use the accrual method, report income when you earn it and deduct expenses when you incur them, even if you do not pay them during the tax year. Item F Valuation Methods Your inventories can be valued at: cost cost or market value, whichever is lower, or any other method approved by the Income Tax Assessor. Item I Material Participation For purposes of the passive activity rules, you materially participated in the operation of this trade or business activity during 1994 if you meet any of the following tests: 1. You participated in the activity for more than 500 hours during the tax year. 2. Your participation in the activity for the tax year was substantially all of the participation in the activity of all individuals (including individuals who do not own any interest in the activity) for the tax year. 3. You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other person for the tax year. This includes individuals who do not own any interest in the activity. 4. The activity is a significant participation activity for the tax year, and you participated in all significant participation activities during the year for more than 500 hours. An activity is a significant participation activity if it involves the conduct of a trade or business, you participated in the activity for more than 100 hours during the tax year, and you do not materially participate in the activity under tests 1, 2, 3, 5, 6, or You materially participated in the activity for any five (whether or not consecutive) of the prior ten tax years. 6. The activity is a personal service activity in which you materially participated for any three (whether or not consecutive) prior tax years. A personal service activity is an activity that involves performing personal services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting, or any other trade or business in which capital is not a material income-producing factor. 7. Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the tax year. You do not materially participate in an activity under this test, however, if---- a. You participated in the activity for 100 hours or less during the tax year, or b. Any person besides yourself received compensation for performing management services in connection with the activity, or c. Any individual besides yourself spent more hours during the tax year than you spent performing management services in connection with the activity (regardless of whether the individual was compensated for the management services). If you meet any of the above tests, check the Yes box. If you do not meet any of the above tests, check the No box. This business is a passive activity. If you have a loss from this business, see Limit on Losses, below. If you have a profit from this business activity but have losses from other passive activities or you have prior-year unallowed passive activity losses, see the instructions for federal Form 8582, Passive Activity Loss Limitations. Exception for oil and gas. If you are filing Schedule C to report income and deductions from an oil or gas well in which you own a working interest directly or through an entity that does not limit your liability, check the Yes box. The activity of owning the working interest is not a passive activity regardless of your participation in the activity. Limit on losses. If you checked the No box and you have a loss from this business, you must use federal Form 8582 to figure your allowable loss, if any, to enter on Schedule C, line 32. Generally, you can deduct losses from passive activities only to the extent of income from passive activities. For more details, get federal Publication 925, Passive Activity and At-Risk Rules. Part I Income (Lines 1 through 7) Line 1 Gross Receipts or Sales Enter gross receipts or sales from your business. Installment Sales. If you use the installment method of reporting sales income, please attach a schedule showing separately for 1994 and the three preceding years: gross sales; cost of goods sold; gross profit; percentage of gross profits to gross sales; amounts collected; and gross profits on amounts collected. Line 2 Returns and Allowances You should enter on line 2 such items as returned sales, rebates, and allowances from the sales price. Line 4 Cost of Goods Sold and/or Operations Cost of Goods Sold. If you are engaged in a trade or business in which the production, purchase, or sale of merchandise was an income-producing factor, merchandise inventories must be taken into account at the beginning and end of your tax year. Enter the amount from Part III, line 41. Cost of Operations. (Inventories Not an Income- Producing Factor). If the amount on line 4 includes the cost of operations, complete the appropriate lines in Part III. Line 6 Other Income Include finance reserve income, scrap sales, amounts recovered from bad debts, interest, and other kinds of miscellaneous income from the business or profession. Attach a separate schedule of this income. Part II Expenses (Lines 8 through 29) Line 9 Bad Debts from Sales or Services Include debts and partial debts arising from sales or services that were included in income and are definitely known to be worthless. Cash method taxpayers normally do not report the income that is due them until they actually receive payment. Therefore, they may not take a bad debt deduction on payments they have not received or cannot collect. If you later collect a debt that you deducted as a bad debt, include it as income in the year you collect it. Page 23

103 Line 10 Car and Truck Expenses You can deduct the actual cost of running your car or truck, or take the fixed mileage rate. You must use actual costs if you use more than one car or truck in your business. If you deduct actual cost, show depreciation on line 13. The fixed rate is figured at 29 cents a mile for each mile of business use in Add to this amount your parking fees and tolls. Note: If you place a car or truck in service after December 31, 1980, and take the fixed mileage rate, you are treated as having elected to exclude this vehicle from ACRS. Line 12 Depletion Enter your total deduction for depletion on this line. Line 13 Depreciation You can deduct an amount each year for assets you buy to use in your business. The deduction for depreciation does not apply to stock in trade, inventories, land, and personal assets. You may also choose under IRC section 179 to expense part of the cost of certain depreciable property you bought in 1994 for use in your business. Figure your depreciation deduction, including the IRC section 179 expense deduction, on Form N-164 or federal Form The depreciation deduction for cars, including any IRC section 179 deduction, is limited. The allowable amounts are further limited if your business use is less than 100%. If you claim depreciation for any cars or other listed property, you must complete Part III of Form N-164. See the instructions for Form N-164. Also, get federal Publication 534 for more details. If you have listed property (such as a car or light truck) that you placed in service after June 18, 1984, and the business use percentage of the property decreased to 50% or less during 1994, you may have to recapture excess depreciation, including any IRC section 179 expense deduction. Get Schedule D-1 and its instructions for details. If you took the capital goods excise tax credit on property that you dispose of before the end of three full years, the business use percentage decreases, or the property use otherwise changes so that it no longer qualifies, you may have to refigure the credit. See Form N-312 and its instructions for details. Line 14 Employee Benefit Programs Enter the amount of your contributions that are not an incidental part of a pension or profit-sharing plan included on line 20. Also include here contributions to insurance, health, and welfare programs. Line 16 Insurance (other than health) Deduct premiums paid for business insurance on line 16. Deduct on line 14 amounts paid for employee accident and health insurance. Do not deduct amounts credited to a reserve for self-insurance or premiums paid for a policy that pays for your lost earnings due to sickness or disability. For more details, see federal Publication 535. Lines 17a and 17b Interest on Business Indebtedness Interest Allocation Rules. The tax treatment of interest expense differs depending on its type. For example, personal interest, home mortgage interest, and investment interest are all treated differently. Interest allocation rules require you to allocate (classify) your interest expense so it is deducted on the right place of your return (or capitalized) and gets the proper tax treatment. These rules could affect how much interest you deduct on Schedule C. Generally, you allocate interest expense by tracing how the proceeds of the loan are used. If you paid interest for years after 1994, deduct only the part you paid for Don t take a deduction on Schedule C for interest you paid or accrued on debts from buying or carrying investment property. Deduct this interest on Schedule A. Line 20 Pension and Profit-Sharing Plans You should enter the amount you claim as a deduction for contributions to a pension, profit- sharing, or annuity plan, or plans for the benefit of your employees. If the plan includes you as a self-employed person, you should enter contributions made as an employer on your behalf (but not voluntary contributions you made as an employee) on Form N-12, line 25, instead of on Schedule C, line 20. Line 22 Repairs and Maintenance You can deduct the cost of repairs including labor, supplies, and other items that do not add to the value or increase the life of the property. Do not deduct the value of your own labor. And do not deduct amounts you spent to restore or replace property. They are chargeable to capital accounts or to depreciation reserve, depending on how depreciation is charged on your books. Line 24 Taxes and Licenses You can deduct the following taxes: Real estate and personal property taxes on business assets. Social security taxes paid to match required withholding from your employees wages. Also, State and Federal unemployment taxes paid. General excise/use taxes paid. Do not deduct: Federal income taxes. Estate and gift taxes. Taxes assessed to pay for improvements, such as paving and sewers. Taxes on your home or personal property. State and local sales taxes (treat instead as part of the cost of the property). Other taxes not related to your business. Note: Since the one-time $20 Hawaii General Excise Tax license fee covers an indefinite period of time, it is only deductible in the year the general excise tax license is cancelled. Lines 25a through 25d Travel and Entertainment You may deduct, in general, only 50% of your business-related meal and entertainment expenses, including any meals and entertainment expenses incurred while traveling away from home. You must show that the meal or entertainment expense is directly related to the active conduct of your trade or business or, in the case of a meal that precedes or follows a substantial and bona fide discussion, that the discussion was associated with the active conduct of your trade or business. No deduction will be allowed if you (or your employee) are not present at the meal or entertainment. The deduction for these expenses will not be allowed if they are lavish or extravagant under the circumstances. See instructions for federal Form 1040 for more information. Line 26 Utilities Deduct only utility expenses incurred for your trade or business. If you use your home phone for business, do not deduct the base rate (including taxes) of the first telephone line into your residence. It is a nondeductible personal expense. Line 27 Wages Enter on line 27 the total salaries and wages (other than salaries and wages deducted elsewhere on your return) paid or incurred for the tax year, less any jobs tax credit claimed on Form N-884. Do not include any amount paid to yourself. If you provided taxable fringe benefits to your employees, such as personal use of a car, do not deduct as wages the amount applicable to depreciation and other expenses that you claimed elsewhere. Line 28 Other Expenses Enter the amount from Part V, line 47. Include all ordinary and necessary business expenses not deducted elsewhere on Schedule C. Do not include the cost of business equipment or furniture, replacements or permanent improvements to property, or personal living and family expenses. Any loss from this activity that was not allowed as a deduction last year because of the at risk provisions, is treated as a deduction allocable to this activity in If any loss from this activity was not allowed last year because of the passive loss limitations, see the Instructions for federal Form Line 31 Expenses for Business Use of Your Home You may be able to deduct certain expenses for business use of your home, subject to limitations. Generally, any amount not allowed as a deduction for 1994 because of the limitations can be carried over to You must attach federal Form 8829, Expenses for Business Use of Your Home, if you claim this deduction. For details, see the instructions for federal Form 8829, and see federal Publication 587, Business Use of Your Home. Page 24

104 Line 32 Net Profit or (Loss) If you have a profit, stop here. Enter the amount here and combine this amount with the profit or (loss) from your other businesses, if any. Enter the total on Form N-12, line 12, Form N-15, line 12, or Form N-40, line 5. If you have a loss, go on to line 33 before entering your loss on line 32. Lines 33a and 33b At-Risk Rules Deductions for losses by persons who are engaged in a trade or business including real estate (other than mineral property) or an activity for the production of income are limited to the amount they have at risk in the business. You are at risk for an activity for the cash and adjusted basis of property you contributed to the activity and any amount borrowed for use in the activity for which you are personally liable. You are also at risk to the extent of the net fair market value of your own property (not used in the activity) that secures borrowed amounts for which you are not liable. Check box 33b, if you have amounts for which you are not at risk for this business, such as the following: 1. nonrecourse loans used to finance your business, to acquire property used in your business, or to acquire your interest in the business, unless they are secured by property not used in your business or by certain real property used in an activity of holding real property; or 2. amounts protected against loss by a guarantee, stop-loss agreement, or similar arrangement; or 3. loans from someone who has an interest in your business, other than as a creditor, or who is related, under IRC section 465(b)(3)(C), to a person (other than yourself) having such an interest; or 4. amounts contributed to your business, or to your interest in the business that is covered by: ----nonrecourse loans or protected against loss by a guarantee, stop-loss agreement, or similar arrangement; or ----loans from a person described in 3 above. If you do not have any of these kinds of amounts for which you are not at risk in this business, check box 33a and enter your loss on line 32 unless you answered No to Question I. In this case, you must complete federal Form 8582 to figure your allowable loss to enter on line 32. If you checked box 33b, get federal Form 6198 to determine the amount of your deductible loss and enter that amount on line 32. But if you answered No to Question I, your loss may be further limited. See federal Form If your at-risk amount is zero or less, enter zero on line 32. Be sure to attach federal Form 6198 to your return. If you checked box 33b and you fail to attach federal Form 6198, processing of your tax return may be delayed. If, in addition to the amount that you report on Schedule C, you dispose of an asset used in an activity to which the at-risk rules apply and you have amounts in the activity for which you are not at risk, see the instructions for federal Form Any loss from this business not allowed for 1994 because of the at-risk rules is treated as a deduction allocable to the business in Part IV Information on Your Vehicle (Lines 42 through 46b) Part IV has been added to Schedule C to simplify the reporting of business vehicle information for sole proprietors by eliminating the requirement to file Form N-164 for this purpose. You can use Part IV instead of Form N-164 if you are claiming the standard mileage rate, you lease your vehicle, or your vehicle is fully depreciated. However, if Form N-164 must be filed for any other reason, you must continue to use Part V of Form N-164 to report vehicle information. Instructions for Schedule D ---- Capital Gains and Losses Purpose Use Schedule D (Form N-12) to: Report a sale of a capital asset. Report gains from involuntary conversions of capital assets not held for business or profit. In the following cases you have to use Schedule D-1, Sales of Business Property, instead of Schedule D: The sale, exchange, or involuntary conversion (other than casualty or theft) of business property, certain depreciable and amortizable property, certain oil, gas and geothermal property, and IRC section 126 property. The involuntary conversion (other than casualty or theft) of capital assets held for business or profit. The disposition of other noncapital assets not mentioned above. If property is involuntarily converted because of a casualty or theft, use Form N-184, Casualties and Thefts. Capital Asset Most property you own and use for personal purposes, pleasure, or investment is a capital asset. For example, your house, furniture, car, stocks and bonds are capital assets. A transfer of patent rights is generally considered a sale or exchange of a capital asset held for more than one year. A nonbusiness bad debt must be treated as a short-term capital loss. A capital asset as defined by law is any property held by a taxpayer except: a. Stock in trade or other property included in inventory or held for sale to customers. b. Accounts or notes receivable you received for services in the ordinary course of your trade or business or from the sale of any property described in a. or for services you performed as an employee. c. Depreciable property used in your trade or business even if it was fully depreciated. d. Real property (real estate) used in your trade or business. e. A copyright, literary, musical or artistic composition, letter, memorandum, or similar property, 1. created by your personal efforts, or 2. prepared or produced for you (in the case of a letter, memorandum, or similar property), or 3. that you received from a taxpayer mentioned in 1 or 2, in a way (such as by gift) that entitled you to the basis of the previous owner. f. U.S. Government publications (including the Congressional Record) that you received from the government other than by purchase at the normal sales price, or that you got from another taxpayer who had received it in a similar way if your basis is determined by reference to the previous owner. Short-Term or Long-Term Separate your capital gains and losses according to how long you held or owned the property. The holding period for long-term capital gains and losses is more than 1 year. The holding period for shortterm capital gains and losses is 1 year or less. To figure the holding period, begin counting on the day after you received the property and include the day you disposed of it. Use the trade dates for date acquired and date sold for stocks and bonds on an exchange or over-the-counter market. Limits on Capital Losses The limit on capital losses that can be applied against other income after offsetting capital gains is $3,000. If you are married and filing separately, the limit is $1,500. Unused capital losses are carried over to later years until fully used. Your capital loss carryover is computed on Schedule D. The amount of your capital loss carryover is the amount of your capital loss that exceeds the lesser of: (1) Your allowable capital loss deduction for the year, or (2) Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions. If your deductions exceed your gross income for the tax year, use your negative taxable income in computing the amount in item (2). Losses That Are Not Deductible Do not deduct a loss from the sale or exchange of property directly or indirectly between any of the following: Members of a family. A corporation and an individual or a fiduciary owning more than 50 percent of the corporation s stock (not counting liquidations). A grantor and a fiduciary of a trust. A fiduciary and a beneficiary of the same trust. A fiduciary and a fiduciary or beneficiary of another trust created by the same grantor. An individual and a tax-exempt organization controlled by the individual or the individual s family. A partnership and a corporation if the same taxpayers own directly or indirectly more than 50% of the capital interest, or profits interest, in the partnership and corporation. If you sell or otherwise dispose of (1) an asset used in an activity to which the at risk rules apply or (2) any part of your interest in an activity to which the at risk rules apply (see IRC section 465), combine the gain or loss on the disposition with the profit or loss from the activity. If you have a net loss, you may be subject to the at risk provisions. Page 25

105 Items for Special Treatment and Special Cases The following items may require a special treatment: Transactions by a securities dealer. Wash sales of stock or securities. Bonds and other evidence of indebtedness if an original issue discount is a factor. Gain on the sale of qualified reinvested dividends from a qualified public utility. Certain real estate subdivided for sale which may be considered a capital asset. Distributions received from an employee pension, profit-sharing, or stock bonus plan, (Please see Form N-152, Special 5-Year Averaging Method.) Gain on the sale of depreciable property between husband and wife or between shareholder and a controlled corporation treated as ordinary gain. Gain on disposition of stock in a Domestic International Sales Corporation. Gain or loss on options to buy or sell, including closing transactions. Transfer of property to a foreign corporation as paid-in surplus or as a contribution to capital, or to a foreign trust or partnership. Transfer of property to a partnership which would be treated as an investment company if the partnership was incorporated. Transfer of Appreciated Property to a Political Organization If you transfer property to a political organization when the fair market value of the property is more than your adjusted basis, treat the transaction as a property sale on the transfer date. Report the fair market value of the property at the time of the transfer as the sales price. Ordinary income or capital gains provisions apply as if a sale took place. Exchange of Like-Kind Property Report the exchange of like-kind property on federal Form 8824, Like-Kind Exchanges. You must report it even though no gain or loss is recognized when you exchange business or investment property for property of like-kind. (This does not include stock in trade or other property held primarily for sale. It also does not include stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest.) Sale or Exchange (Other Than Involuntary Conversion) of Capital Assets Held for Personal Use This type of gain is a capital gain. Report it on Schedule D Part I or Part II. Loss from the sale or exchange of this property is not deductible. Small Business Stock Subject to limitations, you may deduct the loss on the sale, exchange, or worthlessness of Small Business (IRC section 1244) stock as an ordinary loss on Schedule D-1. However, gains are reported as capital gains on Schedule D. Disposition of Partnership Interest A sale or other disposition of an interest in a partnership may result in ordinary income. Sale of Your Home Use Form N-103 to determine the gain or loss from the sale of your main home whether or not you bought another one. Report a taxable gain from the sale of your main home on Schedule D, line 4 or line 12. A loss from such sale is not deductible. Tax on a portion or all of the gain from the sale of your principal residence may be deferred if: (1) within 24 months after or before the sale, you purchase another principal residence and use it as such; or (2) before the sale or within 24 months after the sale, you begin construction of a new principal residence and use it as such not later than two years after the sale. If you sold your principal residence after attaining the age of 55, you may exclude from gross income, on a one-time elective basis, $125,000 of gain ($62,500 if you are married filing separately) from the sale or exchange of your principal residence after July 20, The exclusion is available only if you owned and used it as your principal residence for at least 3 out of 5 years which precede the sale. Contact your nearest taxation district office for more details or to obtain Form N-103 which is used to report the sale or exchange or to figure your new basis. Note: The deferment of the gain from the sale on your personal residence will not apply if your new residence is located outside of Hawaii and at the time of replacement you establish a domicile outside of Hawaii. Long-term Capital Gains from Regulated Investment Companies Include in income as a long-term capital gain the amount which constitutes your share of the undistributed capital gains of a regulated investment company. You are entitled to a credit of 4 percent of this amount provided the regulated investment company has paid to the State of Hawaii the 4 percent tax. This credit should be claimed on Form N-12, page 2, line 58. The remaining 96 percent should be added to the basis of your stock. Installment Sales If you sold property at a gain, and are to receive any payment in a tax year after the year of sale, you must use the installment method and Form N-171, Computation of Installment Sale Income, unless you elect not to. Also use Form N-171, if you received a payment in 1994 from a sale made in an earlier year on the installment method. You may not use the installment method to report income from the sale of stock or securities traded on an established securities exchange. All payments to be received under this type of sale are treated as received in the year of sale. If you want to elect out of the installment method, you must report the full amount of the sale on Schedule D on a timely filed return (including extensions). Gains and Losses from Section 1256 Contracts and Straddles For information on how to report gains and losses from regulated futures contracts and straddles, see Schedule D-3, Gains and Losses from Section 1256 Contracts and Straddles. Capital Gain Distributions Enter on line 14 capital gain distributions paid to you during the year as a long-term capital gain, regardless of how long you held your investment. See federal Publication 550 for more details. Specific Instructions Parts I and II Column (b) Date Acquired Enter in this column the date the asset was acquired. Use the trade date for stocks and bonds traded on an exchange or over-the-counter market. For stock or other property sold short, enter the date the stock or property was delivered to the broker or lender to close the short sale. If you disposed of property that you acquired by inheritance, report it on line 9 and write "INHER- ITED" in column (b) instead of the date you acquired the property. If you sold a block of stock (or similar property) that was acquired through several different purchases, you may report the sale on one line and write "VARIOUS" in column (b). However, you still must report the short-term gain or loss in Part I and the long-term gain or loss on the sale in Part II. Column (c) Date Sold Enter in this column the date the asset was sold. Use the trade date for stocks and bonds traded on an exchange or over-the-counter market. For stock or other property sold short, enter the date you sold the stock or property you borrowed to open the short sale transaction. Column (d) Sales Price Enter in this column either the gross sales price or the net sales price from the sale. If you sold stocks or bonds and you received a federal Form 1099-B or similar statement from your broker that shows gross sales price, enter that amount in column (d). However, if the broker advised you that gross proceeds (gross sales price) less commissions and option premiums were reported to IRS, enter that net amount in column (d). If the net amount is entered in this column, do not include the commissions and option premiums in column (e). Caution: Be sure to add all sales price entries on lines 1 and 9, column (d), to amounts on lines 2 and 10, column (d). Enter the totals on lines 3 and 11. Column (e) Cost or Other Basis, As Adjusted In general, the cost or adjusted basis is the cost of the property plus purchase commissions, improvements, minus depreciation, amortization, and depletion. If you inherited the property or got it as a Page 26

106 gift, tax-free exchange, involuntary conversion, or wash sale of stock, you may not be able to use the actual cash cost as the basis. If you do not use cash cost, attach an explanation of your basis. When selling stock, adjust your basis by subtracting all the nontaxable distributions you received before the sale. This includes nontaxable dividends from utility company stock and mutual funds. Also adjust your basis for any stock splits. The basis of property acquired by gift made before 1977, generally is the basis of the property in the hands of the donor plus any gift taxes paid on the gift. For gifts made after 1976, only the gift tax on the appreciation in value to the time of the gift is added to the basis of the property in the hands of the donor. The basis of property acquired from a decedent is generally the fair market value at the date of death. If a charitable contribution deduction is allowed because of a sale of property to a charitable organization, the adjusted basis for determining gain from the sale is an amount which has the same ratio to the adjusted basis as the amount realized has to the fair market value. Increase your cost or other basis by any expense of sale, such as broker s fees, commissions, state and local transfer taxes, and option premiums before making an entry in column (e), unless you reported net sales price in column (d). Lines 1 and 9 Enter all sales and exchanges of capital assets, including stocks, bonds, etc., and real estate (if not reported on Forms N-103, N-171, N-184, Schedules D-1, D-3, or federal Form 8824). Include these transactions even if you did not receive a federal Form 1099-B or 1099-S (or substitute statement) for the transaction. You can use abbreviations to describe the property as long as the abbreviations are based on the descriptions of the property as shown on federal Form 1099-B or 1099-S (or substitute statement). Use lines 45 and 47 on page 2 of Schedule D if you need more space to list transactions for lines 1 and 9. You may use as many copies of page 2 of Schedule D as you need. Enter on Schedule D, lines 2 and 10, columns (d), (f), and (g) the combined totals of all your copies of page 2 of Schedule D. Caution: Add the following amounts reported to you for 1994 on federal Forms 1099-B and 1099-S (or on substitute statements): 1. Proceeds from transactions involving stocks, bonds, and other securities, and 2. Gross proceeds from real estate transactions not reported on another form or schedule. If this total is more than the total of lines 3 and 11, attach a statement explaining the difference. Part IV Your capital gains are taxed at a maximum rate of 7.25% even if you have ordinary income that is taxed at a higher rate. To qualify for the 7.25% maximum tax rate on capital gains, you must: 1. Have a net long-term capital gain that is more than any net short-term capital loss you may have (this difference is your net capital gain), and 2. Have taxable income that is subject to a tax rate higher than 7.25%. If both lines 17 and 18 of Schedule D are net gains and your taxable income, as shown on line 37 of Form N-12, is subject to a tax rate higher than 7.25%, you can use Part IV to figure your tax. Instructions for Schedule D Sales of Business Property In general, use Schedule D-1, Sales of Business Property, to report (1) the sale, exchange, or involuntary conversion (other than casualty or theft) of trade or business property, certain depreciable and amortizable property; (2) the involuntary conversion (other than casualty or theft) of capital assets held for business or profit; and (3) the disposition of other noncapital assets not mentioned above. FOR DETAILED INFORMATION SEE SEPA- RATE INSTRUCTIONS FOR SCHEDULE D-1. Instructions for Schedule E ---- Supplemental Income Note: In place of Hawaii s Schedule E, you may use a copy of your federal Schedule E with the addition of your Hawaii General Excise ID Number where appropriate. For limitations on losses from passive activities, see instructions for federal Form You may need to file federal Form 8582 with your Hawaii return. Purpose Use Schedule E to report income or loss from rents, royalties, partnerships, S corporations, estates, trusts, and REMICs. Note: If you attach your own schedule(s) to report income or loss from any of these sources, use the same format as on Schedule E. Enter separately on Schedule E the total income and the total loss for each part. Enclose loss figures in (parentheses). At-Risk Rules (Parts I and II) If you have (1) a loss from any activity that you, your partnership, or S corporation engaged in as a trade or business or for the production of income, including the holding of real property (other than mineral property) placed in service after December 31, 1987, and (2) amounts for which you are not at risk in the activity, use federal Form 6198, At-Risk Limitations, to determine the allowable loss to report on Schedule E. For more details, get federal Publication 925, Passive Activity and At-Risk Rules. The at-risk rules may apply to an individual, a member of a partnership or joint venture, shareholder in an S corporation, or lessor of certain property. Generally, the amount you have at risk limits the loss you can deduct for any tax year. If, in addition to the amount that you report on Schedule E, you sell or otherwise dispose of (1) an asset used in an activity to which the at-risk rules apply, or (2) any part of your interest in an activity to which the at-risk rules apply, and you have amounts in the activity for which you are not at risk, see the instructions for federal Form Any loss from an activity not allowed for the tax year is treated as a deduction allocable to the activity in the next tax year. Passive Activity Loss Rules (Parts I - III) The passive activity loss rules may limit the amount of losses you can deduct. They apply to losses in Parts I, II, and III of Schedule E. You can generally deduct losses from passive activities only to the extent of income from passive activities. Exceptions apply to some activities, such as rental real estate (see the instructions for line 3). Losses from passive activities may be first subject to the at-risk rules. Losses deductible under the at-risk rules are then subject to the passive activity rules. A passive activity is any business activity in which you DO NOT materially participate and any rental activity regardless of participation. See the instructions for federal Form 8582 to determine whether you materially participated in an activity. If you are a limited partner, you are generally not treated as having materially participated in the partnership s activity for the year. The rental of real or personal property is generally a rental activity, but exceptions apply to this rule. If your rental of property is not a rental activity, you must determine whether it is a trade or business activity, and, if so, whether you materially participated in the activity for the tax year. See the instructions for federal Form 8582 for the material participation tests and the definition of rental activity. See federal Publication 925 for special rules that apply to rentals of: (1) substantially nondepreciable property, (2) property incidental to development activities, and (3) property to activities in which you materially participate. The rental of your home that you also used for personal purposes is not a passive activity. See Renting Out a Dwelling Unit That Is Also Used For Personal Purposes on this page. A working interest in an oil or gas well that you hold directly or through an entity that does not limit your liability is not a passive activity even if you do not materially participate. Royalty income not derived in the ordinary course of a trade or business reported on Schedule E is generally not considered income from a passive activity. For more information on passive activities, see the instructions for federal Form 8582 and federal Publication 925. Part I Income or Loss From Rentals and Royalties Use Part I to report rental and royalty income and expenses. If you own a part interest in rental property, you may report your part on Schedule E. See the instructions for lines 4 and 5 to determine when rental and royalty income should be reported on Schedule C instead. If you have more than three rental or royalty properties, complete and attach as many Schedules E as you need to list them. Complete lines 1, 2, and 3 for each property. But fill in column D only on one Schedule E. The figures in column D on that Schedule E should be the combined totals of all the schedules. If you also need to use page 2 of Schedule E, use the same Schedule E on which you entered the combined totals in Part I. Lines 1 through 3 Line Show the kind of property you rented out, for example, brick duplex. Give the street Page 27

107 address, city or town, and state. You do not have to give the ZIP code. Line Renting Out a Dwelling Unit That Is Also Used For Personal Purposes If you rented out a dwelling unit and also used it as a home during the year, you may not be able to deduct all the expenses for the rental part. A dwelling unit (unit) means a house, apartment, condominium, mobile home, boat, or like property. Check the Yes or No box on line 2, whichever applies, to show whether you or your family used the property for personal purposes in If the property is not a dwelling unit, check No. If the property is a dwelling unit, check Yes if you or your family used the unit for personal use more than the greater of: days, or 2. 10% of the total days it was rented to others at a fair rental price. What is personal use? A day of personal use is any day, or part of a day, that the unit was used by: you for personal purposes. any other person for personal purposes, if that person owns part of the unit (unless rented to that person under a shared equity financing agreement). anyone in your family or in the family of someone else who owns part of the unit. The day is not treated as personal if the unit is rented at a fair rental price to that person as his or her main home. anyone under an agreement that lets you use some other unit. anyone who pays less than a fair rental price for the unit. If you checked No, you can deduct all your expenses for the rental part, subject to the at-risk and passive activity loss rules. If you checked Yes and rented the unit out for less than 15 days, you may not deduct any rental expenses. But if you itemize deductions on Schedule A, you may deduct interest, taxes, and casualty losses. You do not have to report the rental income. If you checked Yes and rented the unit out for at least 15 days, you may not be able to deduct all your rental expenses. You can deduct your mortgage interest, real estate taxes, and casualty losses for the rental part on Schedule E. You can also deduct your other rental expenses that are not related to your use of the unit as a home, such as advertising expenses and realtors fees. If any income is left after deducting these expenses, you can then deduct other expenses. But you cannot deduct more than the income that is left. Carry amounts you cannot deduct to See federal Publication 527, Residential Rental Property (Including Rental of Vacation Homes), for more details. Also, get federal Publication 545, Interest Expense, to see how much interest you can deduct. Line Rental Real Estate Properties with Active Participation A rental real estate activity is generally a passive activity subject to the limitation on losses from passive activities. See the instructions for line 24 and the Passive Activity Loss Rules on page 27 for more details. However, a special rule applies if you actively participated in rental real estate activities and had losses from them. In general, you may be able to deduct up to $25,000 in losses from all rental real estate activities in which you actively participated. However, other amounts apply if you are married filing separately. Check the Yes or No box on line 3, whichever applies, to indicate whether you actively participated Page 28 in 1994 in each rental real estate activity listed on line 1. Active Participation. The active participation requirement can be met without regular, continuous, and substantial involvement in operations. But you must have participated in making management decisions or arranging for others to provide services (such as repairs), in a significant and bona fide sense. Management decisions that are relevant in this context include approving new tenants, deciding on rental terms, approving capital or repair expenditures, and other similar decisions. You are not considered to actively participate if, at any time during the tax year, your interest (including your spouse s interest in the activity) was less than 10% (by value) of all interests in the activity. For more information, see the instructions for federal Form 8582, Passive Activity Loss Limitations, and federal Publication 925, Passive Activity and At-Risk Rules. Line 4 If you were not in the real estate sales business but received rent from property you own or control, report it on line 4. Include room and other space rentals. If you received services or property instead of money as rent, report its fair market value. If you received farm rental income, report it on federal Form 4835, Farm Rental Income and Expenses. See Rental Income From Farm Production or Crop Shares, below. If you provided significant services to the renter or sold real estate as a business, do not report the income on line 4. Instead, report it on Schedule C. Rental Income From Farm Production or Crop Shares. Report farm rental income and expenses on federal Form 4835 if (1) you received rental income based on crops or livestock produced by the tenant, and (2) you did not manage or operate the farm to any great extent. Note: A loss from this kind of activity may be subject to the passive activity loss rules. See federal Publication 925 for more information. If you use federal Form 4835, enter on line 28 of Schedule E the net farm rental income or loss from federal Form Line 5 Report on line 5 royalties from oil, gas, or mineral properties (not including operating oil, gas, or mineral interests); copyrights; and patents. If you received $10 or more in royalties, by January 31, 1995, you should receive a federal Form MISC, or similar statement, showing them. If you are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C. You may be able to treat amounts received as royalties for transfer of a patent or amounts received on the disposal of coal and iron ore as the sale of a capital asset. For details, see federal Publication 544, Sales and Other Dispositions of Assets. If state or local taxes were withheld from oil or gas payments you received, enter on line 5 the gross amount of royalty. Include the taxes withheld by the producer on line 17. Lines 6 through 22 Enter your rental and royalty expenses for each property in the appropriate columns. You can deduct an amount for the depreciation of rental property and all normal expenses, such as taxes, interest, repairs, insurance, maintenance, and agents commissions. Do not deduct the value of your own labor, capital investments, or capital improvements. Renting Out Part of Your Home. If you rent out only part of your home or other property, deduct the part of your expenses that apply to the rented part. Expenses To Rehabilitate Low-Income Housing. You may amortize part of the costs you paid or incurred to rehabilitate qualified low-income housing if the rehabilitation began before January 1, If it began after 1987, you may be able to take a tax credit. See Form N-586, Tax Credit For Low-Income Housing. Lines 13 and 14 In general, to determine the interest expense allocable to your rental activities, you will have to keep records to show how the proceeds of each debt were used. Specific tracing rules apply for allocating debt proceeds and repayment of the debt. See federal Publication 545 for details. If you have a mortgage on your rental property, enter on line 13 the interest you paid for 1994 to banks or other financial institutions. Be sure to fill in column D. Note: If the recipient was not a financial institution or you did not receive a federal Form 1098, Mortgage Interest Statement, from the recipient, report your deductible mortgage interest on line 14. Line 18 The base rate (including taxes) for local telephone service for the first telephone line to any residence is a personal expense and is not deductible. Line 21 You may take a depreciation deduction each year for rental property. The deduction does not apply to land and personal-use property. If you placed any property in service after 1980, complete and attach Form N-164, Depreciation and Amortization. Enter on line 21 the amount from Form N-164, Part I. If you are depreciating only property placed in service before 1981, you do not need Form N-164. Figure depreciation on a worksheet from your own books and records. Enter the total depreciation on line 21. You do not need to attach the worksheet to your return. Line 23 If you have a loss from the activity, you may be subject to the At-Risk Rules explained on page 27. If you are, you must file federal Form 6198, At-Risk Limitations, to figure the loss to enter on line 23. If you must file federal Form 6198 and the deductible loss from line 21 of that form is less than the loss shown on line 23 of Schedule E, enter the amount from federal Form 6198 in the appropriate column(s) on line 23 of Schedule E. In the space to the left of line 23, write Federal Form Line 24 Enter on line 24 the amount of your deductible rental loss. If your rental loss is from a passive activity, your loss may be further limited under the Passive Activity Loss Rules explained on page 27. If the loss is from a passive activity, you generally need to complete federal Form 8582 to figure the amount of loss, if any, after applying the passive activity loss limits. But you do not have to complete federal Form 8582 to figure the amount of loss you can deduct on line 24 if you meet ALL 3 of the following conditions: 1. Rental real estate activities are your only passive activities; and 2. You do not have any prior year unallowed losses from any passive activities; and 3. All of the following apply if you have an overall net loss from these activities:

108 ----You actively participated in all of the rental real estate activities (see line 3 above for details on active participation); and ----Your total losses from these activities are $25,000 or less ($12,500 or less if married filing separately and you lived apart from your spouse all year); and ----You have no current or prior year unallowed credits from passive activities; and ----Your modified adjusted gross income, defined below, is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). If you meet ALL 3 of the conditions listed above, your rental real estate losses are not limited by the passive activity rules. Enter the amount of the loss from line 23 on line 24. Write at the top of Schedule E, Federal Form 8582 not required because of $25,000 special allowance. If you do not meet ALL 3 of the conditions listed above, you MUST complete and attach federal Form Modified adjusted gross income is your adjusted gross income from federal Form 1040, line 31, without taking into account any passive activity loss, any taxable social security or equivalent railroad retirement benefits, or any deductible contributions to an IRA or certain other qualified retirement plans under IRC section 219. Caution: Passive activity income does not include income from renting: (1) substantially nondepreciable property, (2) property incidental to a development activity, and (3) property to a trade or business activity in which you materially participate. See federal Publication 925 for details. Part II Income or Losses from Partnerships and S Corporations Partnerships If you are a member of a partnership or joint venture, include in this part your share of the partnership income (whether you received it or not) or net loss for the partnership tax year that ends during the year covered by your return. Nonresident partners must report their share of partnership income or net loss from Hawaii sources. You should receive a Schedule K-1 (Form N-20) from the partnership. Do not attach the schedule to your return. Keep it for your records. Your copy of Schedule K-1 and its instructions will tell you where on your return to report your share of the items. If you have a current year loss or a prior year unallowed loss from a partnership, see the At-Risk Rules and the Passive Activity Loss Rules on page 27. The maximum you can deduct on your return for recovery property (IRC section 179) is $17,500. This limit is reduced if the total cost of the IRC section 179 property is more than $200,000. Your deduction is also limited to the total taxable income from all your trades or businesses. If you have other partnership items, such as depletion, from a nonpassive activity, show each item on a separate line in Part II. Show unreimbursed partnership expenses from nonpassive activities on a separate line in column (i) of Part II. Unreimbursed expenses that are itemized deductions are entered on Schedule A (Form N-12). If you have losses or deductions from a prior year that you could not deduct because of the at-risk or basis rules, and the amounts are now deductible, do not combine the prior-year amounts with any current-year amounts to arrive at a net figure to report on Schedule E. Instead, report on separate lines on Schedule E prior-year amounts and current-year amounts. S Corporations If you are a shareholder of any S corporation, you should receive a Schedule K-1 (Form N-35) from the S corporation. Do not attach the schedule to your return. Keep it for your records. Your copy of Schedule K-1 and its instructions will tell you where on your return to report your share of the items. Report your share of the income (whether you received it or not) or net loss of the corporation on Schedule E in the same manner as the income or loss of a partnership. Nonresident shareholders must report their share of S corporation income or net loss from Hawaii sources. If you have a current year loss or a prior year unallowed loss from an S corporation, see the At-Risk Rules and the Passive Activity Loss Rules on page 27. The maximum you can deduct on your return for recovery property (IRC section 179) is $17,500. This limit is reduced if the total cost of the IRC section 179 property is more than $200,000. Your deduction is also limited to the total taxable income from all your trades or businesses. Distributions of prior-year accumulated earnings and profits of S corporations are dividends and are reported on Schedule B (Form N-12). As a shareholder in an S corporation, your share of the corporation s aggregate losses and deductions (combined income, losses, and deductions) is limited to the adjusted basis of your corporate stock and any debt the corporation owes you. Any loss or deduction not allowed this year because of the basis limitation may be carried forward and deducted in a later year subject to the basis limitation for that year. If you are claiming a deduction for your share of an aggregate loss, attach to your return a computation of the adjusted basis of your corporate stock and of any debt the corporation owes you. See federal Publication 589 for more information. After applying the basis limitation, the deductible amount of your aggregate losses and deductions may be further reduced by the at-risk rules and the passive activity loss rules. If you have losses or deductions from a prior year that you could not deduct because of the basis, at-risk, or passive activity loss limitations, and the amounts are now deductible, do not combine the prior-year amounts with any current-year amounts to arrive at a net figure to report on Schedule E. Instead, report the prior-year amounts and the current-year amounts on separate lines of Schedule E. Part III Income or Losses from Estates and Trusts If you are a beneficiary of an estate or trust, use Part III to report your part of the income (even if not received) or loss. You should receive a Schedule K-1 (Form N-40) from the fiduciary. Do not attach that schedule to your return. Keep it for your records. Your copy of Schedule K-1 and its instructions will tell you where on your return to report the items from Schedule K-1. Part IV Income or Losses from Real Estate Mortgage Investment Conduits (REMICs) See instructions for federal Schedule E, Form Instructions for Schedule J ---- Annuities, Benefits Under Pension and Profit-Sharing Plans, Death Benefits and Pensions In General ---- If you are receiving an annuity, you must complete Schedule J and carry the returnable income to Form N-12, page 1, lines 16a and 16b. (See reverse side of Schedule J for more specific instructions.) General Rule for Annuities Amounts received by you, based on life expectancy under an annuity contract must be included in your gross income. The computation and life expectancy multiple can be found by referring to IRC Income Tax Regulations and Annuity Tables. Once you have obtained the multiple, it remains unchanged and it will not be necessary to recompute your taxable portion each year unless the payments you receive change in amount. In making this computation, you can get help from insurance companies. However, do not report amounts received from the Hawaii Retirement System or the Federal Retirement System as such amounts are excluded under Hawaii Income Tax Law. Note: If you did not contribute to the cost of your annuity or you recovered your entire cost before January 1, 1994, report your annuity on Form N-12, lines 16a and 16b, instead of on Schedule J. If you receive pension or annuity payments as a beneficiary of a deceased employee and the employee received no retirement pension or annuity payments, you may be entitled to a death benefit exclusion of up to $5,000. Instructions for Form N Credit for Child and Dependent Care Expenses NOTE: This credit is not available to the nonresident taxpayer. However, should a nonresident taxpayer be receiving Employer-Paid Dependent Care benefits, he or she must compute the taxable portion of the benefit in Part III, include this amount on line 7 of Form N-15, and write DCB on the dotted line next to line 7. Who May Claim the Credit If you are a resident taxpayer who files an individual income tax return for a taxable year, and you are not claimed or eligible to be claimed as a dependent on another taxpayer s federal or Hawaii income tax return, and you maintain a household which includes as a member one or more qualifying individuals, you may be allowed a credit against your income tax. The credit ranges from 15% to 25% of employment-re- Page 29

109 lated expenses (up to certain limitations) PAID during the taxable year in order to enable you to work either full or part time for an employer or as a self-employed individual. You will be treated as maintaining a household for any period only if you furnish over half the cost of maintaining the household for that period. If you are married during such period, you and your spouse must provide over half the maintenance cost for the period. The expenses of maintaining a household include property taxes, mortgage interest, rent, utility charges, upkeep and repairs, property insurance, and food consumed on the premises. They do not include the cost of clothing, education, medical treatment, vacations, life insurance and transportation. Who is a Qualifying Person? A qualifying person is any one of the following persons: a. Any person under age 13 whom you claim as a dependent (but see the special rule for Children of Divorced or Separated Parents). b. Your disabled spouse who is mentally or physically unable to care for himself or herself. c. Any disabled person who is mentally or physically unable to care for himself or herself and whom you claim as a dependent, or could claim as a dependent except that he or she had income of $2,450 or more. Employment-related Expenses Employment-related expenses are those paid for the following, but only if paid to enable you to be gainfully employed: (1) Expenses for Household Services Expenses will be considered for household services in your home if they are for the ordinary and usual services necessary for the operation of the home, and bear some relationship to the qualifying individual. Thus, payment for services of a domestic maid or cook will ordinarily be considered expenses for household services if performed at least partially for the benefit of the qualifying individual. (2) Expenses for the Care of a Qualifying Individual Expenses will be considered for the care of one or more qualifying individuals if their main purpose was to assure that individual s well-being and protection. Payments for food, clothing or education are not such expenses. However, if the care provided includes expenses that cannot be separated, the full amount paid will be considered for the qualifying individual s care. Thus, the full amount paid to a nursery school will be considered for the care of a child even though the school also furnishes lunch. Educational expenses for a child in the first or higher-grade level are not expenses for the child s care. You may NOT include any amount paid for services outside your household at a camp where the qualifying individual stays overnight. Do not include services outside your household as employment-related expenses for your spouse or a dependent age 13 or older. However, services outside your household are employment-related expenses for a dependent who has not reached his or her 13th birthday or for an individual who regularly spends at least eight hours each day in your household. You may include expenses incurred for qualified dependent care centers as employment-related expenses. The dependent care center must comply with all applicable laws, rules, and regulations of Hawaii if the center is located within the jurisdiction of Hawaii. If the center is located outside Hawaii, the center must comply with all applicable laws, Page 30 rules, and regulations of the jurisdiction in which the center is located. Furthermore, these centers must provide care for more than six individuals (other than individuals who reside at the center), and must receive a fee, payment, or grant providing services for any of the individuals (regardless of whether such center is operated for profit). Note: Payments made to the State of Hawaii A+ Program qualify for the credit. Medical Expenses Some dependent care expenses may qualify as medical expenses. If you itemize deductions, you may want to take all or part of these medical expenses on Schedule A (Form N-12). If you cannot use all the medical expenses on Form N-141 because of the dollar limit or earned income limit (explained later), you can take the rest of these expenses on Schedule A. But if you deduct the medical expenses first on Schedule A, you cannot use any part of these expenses on Form N-141. Special Rules. (1) Married Couples Must File Joint Returns ---- If you are married at the end of the taxable year, the credit for employment-related expenses is allowable only if you and your spouse file a joint return for the taxable year. (2) Marital Status If you are legally separated from your spouse under a decree of divorce or separate maintenance, you are not considered married. (3) Certain Married Individuals Living Apart and Filing Separate Returns If during the last 6 months of the taxable year your spouse was not a member of your household and you (I) maintained a household which was for more than one-half of the taxable year the principal place of abode of a qualifying individual, and (II) furnished over half of the cost of maintaining such household during the taxable year, then you are not considered married for purposes of the credit or the exclusion. (4) Children of Divorced or Separated Parents If you were divorced, legally separated, or lived apart from your spouse during the last 6 months of 1994, you may be able to claim the credit even if your child is not your dependent. If your child is not your dependent, he or she is a qualifying person if all five of the following apply: 1. You had custody of the child for the longer period during the year; and 2. The child received over half of his or her support from one or both of the parents; and 3. The child was in the custody of one or both of the parents over half of the year; and 4. The child was under age 13, or was physically or mentally unable to care for himself or herself; and 5. The child is not your dependent because: a. As the custodial parent, you have signed federal Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, or a similar statement, agreeing not to claim the child s exemption for 1994; or b. You were divorced or separated before 1985 and your divorce decree or written agreement states that the other parent can claim the child s exemption, and the other parent provides at least $600 in child support during the year. Note: This rule does not apply if your decree or agreement was changed after 1984 to specify that the other parent cannot claim the child s exemption. (5) Payments to a Related Individual You can count work-related expenses you pay to relatives who are not your dependents, even if they live in your home. However, do not count any amounts you pay to: 1. A dependent for whom you (or your spouse if you are married) can claim an exemption, or 2. Your child who is under age 19 at the end of the year, even if he or she is not your dependent. Specific Instructions We have provided specific instructions for most of the lines on the form. Those lines that do not appear in the instructions are self-explanatory. Part I. Line 1. Complete columns (a) through (e) for each person or organization that provided the care. If you do not give the information asked for in each column, or if the information you give is not correct, your credit and, if applicable, the exclusion of employer-provided dependent care benefits may be disallowed. You can use Form HW-16, Dependent Care Provider s Identification and Certification, to get the correct information from the care provider. (This form is available at your District Tax Office.) If the provider does not comply with your request to certify the information, complete the entries you can, such as the provider s name and address. Write See attached in the columns for which you do not have the provider s certification of information. Attach a statement that you requested the information from the care provider, but the provider did not comply with your request. You must keep records to show that you exercised due diligence in attempting to provide the required information. For more details, including what is considered due diligence, see federal Publication 503. Columns (a) and (b) Enter the care provider s name and address. If you were covered by your employer s dependent care plan and your employer furnished the care (either at your workplace or by hiring a care provider), enter your employer s name in column (a), write See HW-2" in column (b), and leave columns (c) through (e) blank. But if your employer paid a third party (not hired by your employer) on your behalf to provide the care, you must give information on the third party in columns (a) through (e). Column (c) If the care provider is an individual, enter his or her social security number (SSN). For other than an individual, enter provider s employer identification number (EIN). If the provider is a tax-exempt organization, enter Tax-Exempt. If the care provider is located outside Hawaii and does not have a taxpayer identification number, provide a statement that the care provider is located outside Hawaii and that the taxpayer identification number is not required. Column (d) Enter the care provider s general excise tax license number. If the provider is a taxexempt organization of the type described in IRC section 501(c)(3) (one organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals.), enter Tax-Exempt. If the care provider is located outside Hawaii, provide a statement that the care provider is located outside Hawaii and that the general excise tax license number is not required. Column (e) Enter the total amount you actually paid in 1994 to the care provider. Also include amounts your employer paid on your behalf to a third party. It does not matter when the expenses were incurred. Do not reduce this amount by any reimbursement you received.

110 Part II. Line 4. Qualified Expenses On line 4 enter the amount of qualified child and dependent care expenses you incurred and actually paid in Note: Do not include on line 4 qualified expenses that you incurred in 1994 but did not pay until Instead, you may be entitled to increase the amount of your 1995 credit when you pay the 1994 expense in Line 5 and 6. Earned Income Limit The amount of your qualified expenses cannot be more than your earned income or, if married filing a joint return, the smaller of your earned income or your spouse s earned income.in general, earned income is wages, salaries, tips, and other employee compensation. It also includes net earnings from selfemployment. Unmarried taxpayers If you are unmarried at the end of 1994 or are treated as being unmarried at the end of the year, enter your earned income on line 5. Married Taxpayers If you are married, filing a joint return, figure each spouse s earned income separately and disregard community property laws. Enter your earned income on line 5 and your spouse s earned income on line 6. Spouse Who Is a Full-time Student or Is Disabled If your spouse was a full-time student or was mentally or physically unable to care for himself or herself, figure your spouse s earned income on a monthly basis to determine your spouse s earned income for the year. For each month that your spouse was disabled or a full-time student, your spouse is considered to have earned income of not less than $200 a month ($400 a month if more than one qualifying person was cared for in 1994). But if your spouse also worked during any month and earned more than that amount, use his or her actual earned income. For any month that your spouse was not disabled or a full-time student, use your spouse s actual earned income if your spouse worked during the month. If, in the same month, both you and your spouse were full-time students and did not work, you cannot use any amount paid that month to figure the credit. The same applies to a couple who did not work because neither was capable of self-care. A full-time student is one who was enrolled in a school for the number of hours or classes that is considered full time. The student must have been enrolled at least 5 months during Self-employment Income You must reduce your earned income by any loss from self-employment. If you only have a loss from self-employment, or your loss is more than your other earned income you cannot take the credit. Line If you had qualified expenses for 1993 that you did not pay until 1994, you may be able to increase the amount of credit you can take in To do this, multiply the 1993 expenses you paid in 1994 by the applicable percentage from your 1993 Form N-141 table on line 13 that applies to the adjusted gross income shown on your 1993 Form N-12, line 32, or Form N-13, line 11. Your 1993 expenses must be within the 1993 limits. Attach a computation showing how you figured the increase. If you can take a credit for your 1993 expenses, write "PYE" and the amount of the credit on the dotted line next to line 10. Enter the total amount of the credit on line 10. Part III. Line Enter the total amount of employerpaid dependent care benefits for 1994, under IRC section 129, Dependent Care Assistance Program. Line If you participated in an employee plan in which the amount you contributed to an employerpaid dependent care benefit plan was deducted from your income, and you did not receive the full benefit from this plan, you may be entitled to deduct the amount forfeited on this line. (See your employer for the forfeited amount you are allowed to deduct.) Line Enter the amount of qualified child and dependent care expenses you incurred in This includes qualified expenses that you incurred in 1994, but did not pay until Lines 16 and For purposes of Part III, earned income shall not include any amounts paid or incurred by an employer for dependent care assistance to an employee. Note: The earned income amounts for Parts II and III may be different. Line If your filing status is married filing separately, see Certain Married Individuals Living Apart and Filing Separate Returns earlier. If you are considered unmarried under that rule, enter your earned income (from line 16) on line 17. On line 19, enter the smaller of the amount from line 18 or $5,000. If you are not considered unmarried under that rule, enter your spouse s earned income on line 17. If your spouse was a student or disabled in 1994, see the Instructions for Part II, lines 5 and 6. On line 19, enter the smaller of the amount from line 18 or $2, TAX TABLE AND TAX RATE SCHEDULES FOR INDIVIDUALS TAX TABLE MUST BE USED BY PERSONS WITH TAXABLE INCOME OF LESS THAN $100,000. Page 31

111 1994 Hawaii Tax Table , ,000 1,000 1, ,050 1, ,100 1, ,150 1, ,200 1, ,250 1, ,300 1, ,350 1, ,400 1, ,450 1, ,500 1, ,550 1, ,600 1, ,650 1, ,700 1, ,750 1, ,800 1, ,850 1, ,900 1, ,950 2, ,000 2,000 2, ,050 2, ,100 2, ,150 2, ,200 2, ,250 2, ,300 2, ,350 2, ,400 2, ,450 2, Based on Taxable Income For persons with taxable incomes of less than $100,000 Example: Mr. & Mrs. Brown are filing a joint return. Their taxable income on line 37 is $23,270. First, they find the $23,250-23,300 income line. Next, they find the column for married filing jointly and read down the column. The amount shown where the income line and filing status column meet is $1,549. This is the tax amount they must write on line 38 of their return. If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 2,500 2, ,550 2, ,600 2, ,650 2, ,700 2, ,750 2, ,800 2, ,850 2, ,900 2, ,950 3, ,000 3,000 3, ,050 3, ,100 3, ,150 3, ,200 3, ,250 3, ,300 3, ,350 3, ,400 3, ,450 3, ,500 3, ,550 3, ,600 3, ,650 3, ,700 3, ,750 3, ,800 3, ,850 3, ,900 3, ,950 4, ,000 4,000 4, ,050 4, ,100 4, ,150 4, ,200 4, ,250 4, ,300 4, ,350 4, ,400 4, ,450 4, ,500 4, ,550 4, ,600 4, ,650 4, ,700 4, ,750 4, ,800 4, ,850 4, ,900 4, ,950 5, At But Single or Married Head least less Married filing of a than filing jointly housesepa- hold * rately 23,200 23,250 1,860 1,545 1,695 23,250 23,300 1,865 1,549 1, ,350 1,870 1,553 1,705 5,000 5,000 5, ,050 5, ,100 5, ,150 5, ,200 5, ,250 5, ,300 5, ,350 5, ,400 5, ,450 5, ,500 5, ,550 5, ,600 5, ,650 5, ,700 5, ,750 5, ,800 5, ,850 5, ,900 5, ,950 6, ,000 6,000 6, ,050 6, ,100 6, ,150 6, ,200 6, ,250 6, ,300 6, ,350 6, ,400 6, ,450 6, ,500 6, ,550 6, ,600 6, ,650 6, ,700 6, ,750 6, ,800 6, ,850 6, ,900 6, ,950 7, *This column must also be used by qualifying widow(er) Continued on next page Page 32

112 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 7,000 7,000 7, ,050 7, ,100 7, ,150 7, ,200 7, ,000 10,000 10, ,050 10, ,100 10, ,150 10, ,200 10, ,000 13,000 13, ,050 13, ,100 13, ,150 13, ,200 13, ,250 7, ,300 7, ,350 7, ,400 7, ,450 7, ,500 7, ,550 7, ,600 7, ,650 7, ,700 7, ,750 7, ,800 7, ,850 7, ,900 7, ,950 8, ,000 8,000 8, ,050 8, ,100 8, ,150 8, ,200 8, ,250 8, ,300 8, ,350 8, ,400 8, ,450 8, ,500 8, ,550 8, ,600 8, ,650 8, ,700 8, ,750 8, ,800 8, ,850 8, ,900 8, ,950 9, ,000 9,000 9, ,050 9, ,100 9, ,150 9, ,200 9, ,250 9, ,300 9, ,350 9, ,400 9, ,450 9, ,500 9, ,550 9, ,600 9, ,650 9, ,700 9, ,750 9, ,800 9, ,850 9, ,900 9, ,950 10, ,250 10, ,300 10, ,350 10, ,400 10, ,450 10, ,500 10, ,550 10, ,600 10, ,650 10, ,700 10, ,750 10, ,800 10, ,850 10, ,900 10, ,950 11, ,000 11,000 11, ,050 11, ,100 11, ,150 11, ,200 11, ,250 11, ,300 11, ,350 11, ,400 11, ,450 11, ,500 11, ,550 11, ,600 11, ,650 11, ,700 11, ,750 11, ,800 11, ,850 11, ,900 11, ,950 12, ,000 12,000 12, ,050 12, ,100 12, ,150 12, ,200 12, ,250 12, ,300 12, ,350 12, ,400 12, ,450 12, ,500 12, ,550 12, ,600 12, ,650 12, ,700 12, ,750 12, ,800 12, ,850 12, ,900 12, ,950 13, ,250 13, ,300 13, ,350 13, ,400 13, ,450 13, ,500 13, ,550 13, ,600 13, ,650 13, ,700 13, ,750 13, ,800 13, ,850 13, ,900 13, ,950 14, ,000 14,000 14, ,050 14, ,100 14, ,150 14, ,200 14,250 1, ,250 14,300 1, ,300 14,350 1, ,350 14,400 1, ,400 14,450 1, ,450 14,500 1, ,500 14,550 1, ,550 14,600 1, ,600 14,650 1, ,650 14,700 1, ,700 14,750 1, ,750 14,800 1, ,800 14,850 1, ,850 14,900 1, ,900 14,950 1, ,950 15,000 1, ,000 15,000 15,050 1, ,050 15,100 1, ,100 15,150 1, ,150 15,200 1, ,200 15,250 1, ,250 15,300 1, ,300 15,350 1, ,350 15,400 1, ,400 15,450 1, ,002 15,450 15,500 1, ,007 15,500 15,550 1, ,011 15,550 15,600 1, ,015 15,600 15,650 1, ,020 15,650 15,700 1, ,024 15,700 15,750 1, ,028 15,750 15,800 1, ,032 15,800 15,850 1, ,037 15,850 15,900 1, ,041 15,900 15,950 1, ,045 15,950 16,000 1, ,050 *This column must also be used by qualifying widow(er) Continued on next page Page 33

113 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 16,000 16,000 16,050 1, ,054 16,050 16,100 1, ,058 16,100 16,150 1, ,063 16,150 16,200 1, ,067 16,200 16,250 1, ,071 19,000 19,000 19,050 1,447 1,192 1,312 19,050 19,100 1,452 1,196 1,316 19,100 19,150 1,457 1,200 1,321 19,150 19,200 1,462 1,204 1,325 19,200 19,250 1,466 1,208 1,329 22,000 22,000 22,050 1,740 1,440 1,580 22,050 22,100 1,745 1,444 1,585 22,100 22,150 1,750 1,448 1,590 22,150 22,200 1,755 1,453 1,595 22,200 22,250 1,760 1,457 1,599 16,250 16,300 1, ,075 16,300 16,350 1, ,080 16,350 16,400 1, ,084 16,400 16,450 1, ,088 16,450 16,500 1, ,093 16,500 16,550 1, ,097 16,550 16,600 1, ,101 16,600 16,650 1,219 1,000 1,106 16,650 16,700 1,224 1,004 1,110 16,700 16,750 1,229 1,008 1,114 16,750 16,800 1,234 1,012 1,118 16,800 16,850 1,238 1,016 1,123 16,850 16,900 1,243 1,020 1,127 16,900 16,950 1,248 1,024 1,131 16,950 17,000 1,253 1,028 1,136 17,000 17,000 17,050 1,257 1,032 1,140 17,050 17,100 1,262 1,036 1,144 17,100 17,150 1,267 1,040 1,149 17,150 17,200 1,272 1,044 1,153 17,200 17,250 1,276 1,048 1,157 17,250 17,300 1,281 1,052 1,161 17,300 17,350 1,286 1,056 1,166 17,350 17,400 1,291 1,060 1,170 17,400 17,450 1,295 1,064 1,174 17,450 17,500 1,300 1,068 1,179 17,500 17,550 1,305 1,072 1,183 17,550 17,600 1,310 1,076 1,187 17,600 17,650 1,314 1,080 1,192 17,650 17,700 1,319 1,084 1,196 17,700 17,750 1,324 1,088 1,200 17,750 17,800 1,329 1,092 1,204 17,800 17,850 1,333 1,096 1,209 17,850 17,900 1,338 1,100 1,213 17,900 17,950 1,343 1,104 1,217 17,950 18,000 1,348 1,108 1,222 18,000 18,000 18,050 1,352 1,112 1,226 18,050 18,100 1,357 1,116 1,230 18,100 18,150 1,362 1,120 1,235 18,150 18,200 1,367 1,124 1,239 18,200 18,250 1,371 1,128 1,243 18,250 18,300 1,376 1,132 1,247 18,300 18,350 1,381 1,136 1,252 18,350 18,400 1,386 1,140 1,256 18,400 18,450 1,390 1,144 1,260 18,450 18,500 1,395 1,148 1,265 18,500 18,550 1,400 1,152 1,269 18,550 18,600 1,405 1,156 1,273 18,600 18,650 1,409 1,160 1,278 18,650 18,700 1,414 1,164 1,282 18,700 18,750 1,419 1,168 1,286 18,750 18,800 1,424 1,172 1,290 18,800 18,850 1,428 1,176 1,295 18,850 18,900 1,433 1,180 1,299 18,900 18,950 1,438 1,184 1,303 18,950 19,000 1,443 1,188 1,308 19,250 19,300 1,471 1,212 1,333 19,300 19,350 1,476 1,216 1,338 19,350 19,400 1,481 1,220 1,342 19,400 19,450 1,485 1,224 1,346 19,450 19,500 1,490 1,228 1,351 19,500 19,550 1,495 1,232 1,355 19,550 19,600 1,500 1,236 1,359 19,600 19,650 1,504 1,240 1,364 19,650 19,700 1,509 1,244 1,368 19,700 19,750 1,514 1,248 1,372 19,750 19,800 1,519 1,252 1,376 19,800 19,850 1,523 1,256 1,381 19,850 19,900 1,528 1,260 1,385 19,900 19,950 1,533 1,264 1,389 19,950 20,000 1,538 1,268 1,394 20,000 20,000 20,050 1,542 1,272 1,398 20,050 20,100 1,547 1,276 1,402 20,100 20,150 1,552 1,280 1,407 20,150 20,200 1,557 1,284 1,411 20,200 20,250 1,561 1,288 1,415 20,250 20,300 1,566 1,292 1,419 20,300 20,350 1,571 1,296 1,424 20,350 20,400 1,576 1,300 1,428 20,400 20,450 1,580 1,304 1,432 20,450 20,500 1,585 1,308 1,437 20,500 20,550 1,590 1,312 1,441 20,550 20,600 1,595 1,316 1,445 20,600 20,650 1,600 1,320 1,450 20,650 20,700 1,605 1,324 1,454 20,700 20,750 1,610 1,328 1,458 20,750 20,800 1,615 1,332 1,462 20,800 20,850 1,620 1,336 1,467 20,850 20,900 1,625 1,340 1,471 20,900 20,950 1,630 1,344 1,475 20,950 21,000 1,635 1,348 1,480 21,000 21,000 21,050 1,640 1,352 1,484 21,050 21,100 1,645 1,357 1,489 21,100 21,150 1,650 1,361 1,494 21,150 21,200 1,655 1,365 1,499 21,200 21,250 1,660 1,370 1,503 21,250 21,300 1,665 1,374 1,508 21,300 21,350 1,670 1,378 1,513 21,350 21,400 1,675 1,383 1,518 21,400 21,450 1,680 1,387 1,523 21,450 21,500 1,685 1,392 1,527 21,500 21,550 1,690 1,396 1,532 21,550 21,600 1,695 1,400 1,537 21,600 21,650 1,700 1,405 1,542 21,650 21,700 1,705 1,409 1,547 21,700 21,750 1,710 1,413 1,551 21,750 21,800 1,715 1,418 1,556 21,800 21,850 1,720 1,422 1,561 21,850 21,900 1,725 1,427 1,566 21,900 21,950 1,730 1,431 1,571 21,950 22,000 1,735 1,435 1,575 22,250 22,300 1,765 1,462 1,604 22,300 22,350 1,770 1,466 1,609 22,350 22,400 1,775 1,470 1,614 22,400 22,450 1,780 1,475 1,619 22,450 22,500 1,785 1,479 1,623 22,500 22,550 1,790 1,483 1,628 22,550 22,600 1,795 1,488 1,633 22,600 22,650 1,800 1,492 1,638 22,650 22,700 1,805 1,497 1,643 22,700 22,750 1,810 1,501 1,647 22,750 22,800 1,815 1,505 1,652 22,800 22,850 1,820 1,510 1,657 22,850 22,900 1,825 1,514 1,662 22,900 22,950 1,830 1,518 1,667 22,950 23,000 1,835 1,523 1,671 23,000 23,000 23,050 1,840 1,527 1,676 23,050 23,100 1,845 1,532 1,681 23,100 23,150 1,850 1,536 1,686 23,150 23,200 1,855 1,540 1,691 23,200 23,250 1,860 1,545 1,695 23,250 23,300 1,865 1,549 1,700 23,300 23,350 1,870 1,553 1,705 23,350 23,400 1,875 1,558 1,710 23,400 23,450 1,880 1,562 1,715 23,450 23,500 1,885 1,567 1,719 23,500 23,550 1,890 1,571 1,724 23,550 23,600 1,895 1,575 1,729 23,600 23,650 1,900 1,580 1,734 23,650 23,700 1,905 1,584 1,739 23,700 23,750 1,910 1,588 1,743 23,750 23,800 1,915 1,593 1,748 23,800 23,850 1,920 1,597 1,753 23,850 23,900 1,925 1,602 1,758 23,900 23,950 1,930 1,606 1,763 23,950 24,000 1,935 1,610 1,767 24,000 24,000 24,050 1,940 1,615 1,772 24,050 24,100 1,945 1,619 1,777 24,100 24,150 1,950 1,623 1,782 24,150 24,200 1,955 1,628 1,787 24,200 24,250 1,960 1,632 1,791 24,250 24,300 1,965 1,637 1,796 24,300 24,350 1,970 1,641 1,801 24,350 24,400 1,975 1,645 1,806 24,400 24,450 1,980 1,650 1,811 24,450 24,500 1,985 1,654 1,815 24,500 24,550 1,990 1,658 1,820 24,550 24,600 1,995 1,663 1,825 24,600 24,650 2,000 1,667 1,830 24,650 24,700 2,005 1,672 1,835 24,700 24,750 2,010 1,676 1,839 24,750 24,800 2,015 1,680 1,844 24,800 24,850 2,020 1,685 1,849 24,850 24,900 2,025 1,689 1,854 24,900 24,950 2,030 1,693 1,859 24,950 25,000 2,035 1,698 1,863 *This column must also be used by qualifying widow(er) Continued on next page Page 34

114 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 25,000 25,000 25,050 2,040 1,702 1,868 25,050 25,100 2,045 1,707 1,873 25,100 25,150 2,050 1,711 1,878 25,150 25,200 2,055 1,715 1,883 25,200 25,250 2,060 1,720 1,887 28,000 28,000 28,050 2,340 1,965 2,156 28,050 28,100 2,345 1,969 2,161 28,100 28,150 2,350 1,973 2,166 28,150 28,200 2,355 1,978 2,171 28,200 28,250 2,360 1,982 2,175 31,000 31,000 31,050 2,640 2,227 2,444 31,050 31,100 2,645 2,232 2,449 31,100 31,150 2,650 2,237 2,454 31,150 31,200 2,655 2,242 2,459 31,200 31,250 2,660 2,246 2,463 25,250 25,300 2,065 1,724 1,892 25,300 25,350 2,070 1,728 1,897 25,350 25,400 2,075 1,733 1,902 25,400 25,450 2,080 1,737 1,907 25,450 25,500 2,085 1,742 1,911 25,500 25,550 2,090 1,746 1,916 25,550 25,600 2,095 1,750 1,921 25,600 25,650 2,100 1,755 1,926 25,650 25,700 2,105 1,759 1,931 25,700 25,750 2,110 1,763 1,935 25,750 25,800 2,115 1,768 1,940 25,800 25,850 2,120 1,772 1,945 25,850 25,900 2,125 1,777 1,950 25,900 25,950 2,130 1,781 1,955 25,950 26,000 2,135 1,785 1,959 26,000 26,000 26,050 2,140 1,790 1,964 26,050 26,100 2,145 1,794 1,969 26,100 26,150 2,150 1,798 1,974 26,150 26,200 2,155 1,803 1,979 26,200 26,250 2,160 1,807 1,983 26,250 26,300 2,165 1,812 1,988 26,300 26,350 2,170 1,816 1,993 26,350 26,400 2,175 1,820 1,998 26,400 26,450 2,180 1,825 2,003 26,450 26,500 2,185 1,829 2,007 26,500 26,550 2,190 1,833 2,012 26,550 26,600 2,195 1,838 2,017 26,600 26,650 2,200 1,842 2,022 26,650 26,700 2,205 1,847 2,027 26,700 26,750 2,210 1,851 2,031 26,750 26,800 2,215 1,855 2,036 26,800 26,850 2,220 1,860 2,041 26,850 26,900 2,225 1,864 2,046 26,900 26,950 2,230 1,868 2,051 26,950 27,000 2,235 1,873 2,055 27,000 27,000 27,050 2,240 1,877 2,060 27,050 27,100 2,245 1,882 2,065 27,100 27,150 2,250 1,886 2,070 27,150 27,200 2,255 1,890 2,075 27,200 27,250 2,260 1,895 2,079 27,250 27,300 2,265 1,899 2,084 27,300 27,350 2,270 1,903 2,089 27,350 27,400 2,275 1,908 2,094 27,400 27,450 2,280 1,912 2,099 27,450 27,500 2,285 1,917 2,103 27,500 27,550 2,290 1,921 2,108 27,550 27,600 2,295 1,925 2,113 27,600 27,650 2,300 1,930 2,118 27,650 27,700 2,305 1,934 2,123 27,700 27,750 2,310 1,938 2,127 27,750 27,800 2,315 1,943 2,132 27,800 27,850 2,320 1,947 2,137 27,850 27,900 2,325 1,952 2,142 27,900 27,950 2,330 1,956 2,147 27,950 28,000 2,335 1,960 2,151 28,250 28,300 2,365 1,987 2,180 28,300 28,350 2,370 1,991 2,185 28,350 28,400 2,375 1,995 2,190 28,400 28,450 2,380 2,000 2,195 28,450 28,500 2,385 2,004 2,199 28,500 28,550 2,390 2,008 2,204 28,550 28,600 2,395 2,013 2,209 28,600 28,650 2,400 2,017 2,214 28,650 28,700 2,405 2,022 2,219 28,700 28,750 2,410 2,026 2,223 28,750 28,800 2,415 2,030 2,228 28,800 28,850 2,420 2,035 2,233 28,850 28,900 2,425 2,039 2,238 28,900 28,950 2,430 2,043 2,243 28,950 29,000 2,435 2,048 2,247 29,000 29,000 29,050 2,440 2,052 2,252 29,050 29,100 2,445 2,057 2,257 29,100 29,150 2,450 2,061 2,262 29,150 29,200 2,455 2,065 2,267 29,200 29,250 2,460 2,070 2,271 29,250 29,300 2,465 2,074 2,276 29,300 29,350 2,470 2,078 2,281 29,350 29,400 2,475 2,083 2,286 29,400 29,450 2,480 2,087 2,291 29,450 29,500 2,485 2,092 2,295 29,500 29,550 2,490 2,096 2,300 29,550 29,600 2,495 2,100 2,305 29,600 29,650 2,500 2,105 2,310 29,650 29,700 2,505 2,109 2,315 29,700 29,750 2,510 2,113 2,319 29,750 29,800 2,515 2,118 2,324 29,800 29,850 2,520 2,122 2,329 29,850 29,900 2,525 2,127 2,334 29,900 29,950 2,530 2,131 2,339 29,950 30,000 2,535 2,135 2,343 30,000 30,000 30,050 2,540 2,140 2,348 30,050 30,100 2,545 2,144 2,353 30,100 30,150 2,550 2,148 2,358 30,150 30,200 2,555 2,153 2,363 30,200 30,250 2,560 2,157 2,367 30,250 30,300 2,565 2,162 2,372 30,300 30,350 2,570 2,166 2,377 30,350 30,400 2,575 2,170 2,382 30,400 30,450 2,580 2,175 2,387 30,450 30,500 2,585 2,179 2,391 30,500 30,550 2,590 2,183 2,396 30,550 30,600 2,595 2,188 2,401 30,600 30,650 2,600 2,192 2,406 30,650 30,700 2,605 2,197 2,411 30,700 30,750 2,610 2,201 2,415 30,750 30,800 2,615 2,205 2,420 30,800 30,850 2,620 2,210 2,425 30,850 30,900 2,625 2,214 2,430 30,900 30,950 2,630 2,218 2,435 30,950 31,000 2,635 2,223 2,439 31,250 31,300 2,665 2,251 2,468 31,300 31,350 2,670 2,256 2,473 31,350 31,400 2,675 2,261 2,478 31,400 31,450 2,680 2,265 2,483 31,450 31,500 2,685 2,270 2,487 31,500 31,550 2,690 2,275 2,492 31,550 31,600 2,695 2,280 2,497 31,600 31,650 2,700 2,284 2,502 31,650 31,700 2,705 2,289 2,507 31,700 31,750 2,710 2,294 2,511 31,750 31,800 2,715 2,299 2,516 31,800 31,850 2,720 2,303 2,521 31,850 31,900 2,725 2,308 2,526 31,900 31,950 2,730 2,313 2,531 31,950 32,000 2,735 2,318 2,535 32,000 32,000 32,050 2,740 2,322 2,540 32,050 32,100 2,745 2,327 2,545 32,100 32,150 2,750 2,332 2,550 32,150 32,200 2,755 2,337 2,555 32,200 32,250 2,760 2,341 2,559 32,250 32,300 2,765 2,346 2,564 32,300 32,350 2,770 2,351 2,569 32,350 32,400 2,775 2,356 2,574 32,400 32,450 2,780 2,360 2,579 32,450 32,500 2,785 2,365 2,583 32,500 32,550 2,790 2,370 2,588 32,550 32,600 2,795 2,375 2,593 32,600 32,650 2,800 2,379 2,598 32,650 32,700 2,805 2,384 2,603 32,700 32,750 2,810 2,389 2,607 32,750 32,800 2,815 2,394 2,612 32,800 32,850 2,820 2,398 2,617 32,850 32,900 2,825 2,403 2,622 32,900 32,950 2,830 2,408 2,627 32,950 33,000 2,835 2,413 2,631 33,000 33,000 33,050 2,840 2,417 2,636 33,050 33,100 2,845 2,422 2,641 33,100 33,150 2,850 2,427 2,646 33,150 33,200 2,855 2,432 2,651 33,200 33,250 2,860 2,436 2,655 33,250 33,300 2,865 2,441 2,660 33,300 33,350 2,870 2,446 2,665 33,350 33,400 2,875 2,451 2,670 33,400 33,450 2,880 2,455 2,675 33,450 33,500 2,885 2,460 2,679 33,500 33,550 2,890 2,465 2,684 33,550 33,600 2,895 2,470 2,689 33,600 33,650 2,900 2,474 2,694 33,650 33,700 2,905 2,479 2,699 33,700 33,750 2,910 2,484 2,703 33,750 33,800 2,915 2,489 2,708 33,800 33,850 2,920 2,493 2,713 33,850 33,900 2,925 2,498 2,718 33,900 33,950 2,930 2,503 2,723 33,950 34,000 2,935 2,508 2,727 *This column must also be used by qualifying widow(er) Continued on next page Page 35

115 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 34,000 34,000 34,050 2,940 2,512 2,732 34,050 34,100 2,945 2,517 2,737 34,100 34,150 2,950 2,522 2,742 34,150 34,200 2,955 2,527 2,747 34,200 34,250 2,960 2,531 2,751 37,000 37,000 37,050 3,240 2,797 3,020 37,050 37,100 3,245 2,802 3,025 37,100 37,150 3,250 2,807 3,030 37,150 37,200 3,255 2,812 3,035 37,200 37,250 3,260 2,816 3,039 40,000 40,000 40,050 3,540 3,082 3,308 40,050 40,100 3,545 3,087 3,313 40,100 40,150 3,550 3,092 3,318 40,150 40,200 3,555 3,097 3,323 40,200 40,250 3,560 3,101 3,327 34,250 34,300 2,965 2,536 2,756 34,300 34,350 2,970 2,541 2,761 34,350 34,400 2,975 2,546 2,766 34,400 34,450 2,980 2,550 2,771 34,450 34,500 2,985 2,555 2,775 34,500 34,550 2,990 2,560 2,780 34,550 34,600 2,995 2,565 2,785 34,600 34,650 3,000 2,569 2,790 34,650 34,700 3,005 2,574 2,795 34,700 34,750 3,010 2,579 2,799 34,750 34,800 3,015 2,584 2,804 34,800 34,850 3,020 2,588 2,809 34,850 34,900 3,025 2,593 2,814 34,900 34,950 3,030 2,598 2,819 34,950 35,000 3,035 2,603 2,823 35,000 35,000 35,050 3,040 2,607 2,828 35,050 35,100 3,045 2,612 2,833 35,100 35,150 3,050 2,617 2,838 35,150 35,200 3,055 2,622 2,843 35,200 35,250 3,060 2,626 2,847 35,250 35,300 3,065 2,631 2,852 35,300 35,350 3,070 2,636 2,857 35,350 35,400 3,075 2,641 2,862 35,400 35,450 3,080 2,645 2,867 35,450 35,500 3,085 2,650 2,871 35,500 35,550 3,090 2,655 2,876 35,550 35,600 3,095 2,660 2,881 35,600 35,650 3,100 2,664 2,886 35,650 35,700 3,105 2,669 2,891 35,700 35,750 3,110 2,674 2,895 35,750 35,800 3,115 2,679 2,900 35,800 35,850 3,120 2,683 2,905 35,850 35,900 3,125 2,688 2,910 35,900 35,950 3,130 2,693 2,915 35,950 36,000 3,135 2,698 2,919 36,000 36,000 36,050 3,140 2,702 2,924 36,050 36,100 3,145 2,707 2,929 36,100 36,150 3,150 2,712 2,934 36,150 36,200 3,155 2,717 2,939 36,200 36,250 3,160 2,721 2,943 36,250 36,300 3,165 2,726 2,948 36,300 36,350 3,170 2,731 2,953 36,350 36,400 3,175 2,736 2,958 36,400 36,450 3,180 2,740 2,963 36,450 36,500 3,185 2,745 2,967 36,500 36,550 3,190 2,750 2,972 36,550 36,600 3,195 2,755 2,977 36,600 36,650 3,200 2,759 2,982 36,650 36,700 3,205 2,764 2,987 36,700 36,750 3,210 2,769 2,991 36,750 36,800 3,215 2,774 2,996 36,800 36,850 3,220 2,778 3,001 36,850 36,900 3,225 2,783 3,006 36,900 36,950 3,230 2,788 3,011 36,950 37,000 3,235 2,793 3,015 37,250 37,300 3,265 2,821 3,044 37,300 37,350 3,270 2,826 3,049 37,350 37,400 3,275 2,831 3,054 37,400 37,450 3,280 2,835 3,059 37,450 37,500 3,285 2,840 3,063 37,500 37,550 3,290 2,845 3,068 37,550 37,600 3,295 2,850 3,073 37,600 37,650 3,300 2,854 3,078 37,650 37,700 3,305 2,859 3,083 37,700 37,750 3,310 2,864 3,087 37,750 37,800 3,315 2,869 3,092 37,800 37,850 3,320 2,873 3,097 37,850 37,900 3,325 2,878 3,102 37,900 37,950 3,330 2,883 3,107 37,950 38,000 3,335 2,888 3,111 38,000 38,000 38,050 3,340 2,892 3,116 38,050 38,100 3,345 2,897 3,121 38,100 38,150 3,350 2,902 3,126 38,150 38,200 3,355 2,907 3,131 38,200 38,250 3,360 2,911 3,135 38,250 38,300 3,365 2,916 3,140 38,300 38,350 3,370 2,921 3,145 38,350 38,400 3,375 2,926 3,150 38,400 38,450 3,380 2,930 3,155 38,450 38,500 3,385 2,935 3,159 38,500 38,550 3,390 2,940 3,164 38,550 38,600 3,395 2,945 3,169 38,600 38,650 3,400 2,949 3,174 38,650 38,700 3,405 2,954 3,179 38,700 38,750 3,410 2,959 3,183 38,750 38,800 3,415 2,964 3,188 38,800 38,850 3,420 2,968 3,193 38,850 38,900 3,425 2,973 3,198 38,900 38,950 3,430 2,978 3,203 38,950 39,000 3,435 2,983 3,207 39,000 39,000 39,050 3,440 2,987 3,212 39,050 39,100 3,445 2,992 3,217 39,100 39,150 3,450 2,997 3,222 39,150 39,200 3,455 3,002 3,227 39,200 39,250 3,460 3,006 3,231 39,250 39,300 3,465 3,011 3,236 39,300 39,350 3,470 3,016 3,241 39,350 39,400 3,475 3,021 3,246 39,400 39,450 3,480 3,025 3,251 39,450 39,500 3,485 3,030 3,255 39,500 39,550 3,490 3,035 3,260 39,550 39,600 3,495 3,040 3,265 39,600 39,650 3,500 3,044 3,270 39,650 39,700 3,505 3,049 3,275 39,700 39,750 3,510 3,054 3,279 39,750 39,800 3,515 3,059 3,284 39,800 39,850 3,520 3,063 3,289 39,850 39,900 3,525 3,068 3,294 39,900 39,950 3,530 3,073 3,299 39,950 40,000 3,535 3,078 3,303 40,250 40,300 3,565 3,106 3,332 40,300 40,350 3,570 3,111 3,337 40,350 40,400 3,575 3,116 3,342 40,400 40,450 3,580 3,120 3,347 40,450 40,500 3,585 3,125 3,351 40,500 40,550 3,590 3,130 3,356 40,550 40,600 3,595 3,135 3,361 40,600 40,650 3,600 3,139 3,366 40,650 40,700 3,605 3,144 3,371 40,700 40,750 3,610 3,149 3,375 40,750 40,800 3,615 3,154 3,380 40,800 40,850 3,620 3,158 3,385 40,850 40,900 3,625 3,163 3,390 40,900 40,950 3,630 3,168 3,395 40,950 41,000 3,635 3,173 3,399 41,000 41,000 41,050 3,640 3,178 3,404 41,050 41,100 3,645 3,183 3,409 41,100 41,150 3,650 3,188 3,414 41,150 41,200 3,655 3,193 3,419 41,200 41,250 3,660 3,198 3,424 41,250 41,300 3,665 3,203 3,429 41,300 41,350 3,670 3,208 3,434 41,350 41,400 3,675 3,213 3,439 41,400 41,450 3,680 3,218 3,444 41,450 41,500 3,685 3,223 3,449 41,500 41,550 3,690 3,228 3,454 41,550 41,600 3,695 3,233 3,459 41,600 41,650 3,700 3,238 3,464 41,650 41,700 3,705 3,243 3,469 41,700 41,750 3,710 3,248 3,474 41,750 41,800 3,715 3,253 3,479 41,800 41,850 3,720 3,258 3,484 41,850 41,900 3,725 3,263 3,489 41,900 41,950 3,730 3,268 3,494 41,950 42,000 3,735 3,273 3,499 42,000 42,000 42,050 3,740 3,278 3,504 42,050 42,100 3,745 3,283 3,509 42,100 42,150 3,750 3,288 3,514 42,150 42,200 3,755 3,293 3,519 42,200 42,250 3,760 3,298 3,524 42,250 42,300 3,765 3,303 3,529 42,300 42,350 3,770 3,308 3,534 42,350 42,400 3,775 3,313 3,539 42,400 42,450 3,780 3,318 3,544 42,450 42,500 3,785 3,323 3,549 42,500 42,550 3,790 3,328 3,554 42,550 42,600 3,795 3,333 3,559 42,600 42,650 3,800 3,338 3,564 42,650 42,700 3,805 3,343 3,569 42,700 42,750 3,810 3,348 3,574 42,750 42,800 3,815 3,353 3,579 42,800 42,850 3,820 3,358 3,584 42,850 42,900 3,825 3,363 3,589 42,900 42,950 3,830 3,368 3,594 42,950 43,000 3,835 3,373 3,599 *This column must also be used by qualifying widow(er) Continued on next page Page 36

116 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 43,000 43,000 43,050 3,840 3,378 3,604 43,050 43,100 3,845 3,383 3,609 43,100 43,150 3,850 3,388 3,614 43,150 43,200 3,855 3,393 3,619 43,200 43,250 3,860 3,398 3,624 46,000 46,000 46,050 4,140 3,678 3,904 46,050 46,100 4,145 3,683 3,909 46,100 46,150 4,150 3,688 3,914 46,150 46,200 4,155 3,693 3,919 46,200 46,250 4,160 3,698 3,924 49,000 49,000 49,050 4,440 3,978 4,204 49,050 49,100 4,445 3,983 4,209 49,100 49,150 4,450 3,988 4,214 49,150 49,200 4,455 3,993 4,219 49,200 49,250 4,460 3,998 4,224 43,250 43,300 3,865 3,403 3,629 43,300 43,350 3,870 3,408 3,634 43,350 43,400 3,875 3,413 3,639 43,400 43,450 3,880 3,418 3,644 43,450 43,500 3,885 3,423 3,649 43,500 43,550 3,890 3,428 3,654 43,550 43,600 3,895 3,433 3,659 43,600 43,650 3,900 3,438 3,664 43,650 43,700 3,905 3,443 3,669 43,700 43,750 3,910 3,448 3,674 43,750 43,800 3,915 3,453 3,679 43,800 43,850 3,920 3,458 3,684 43,850 43,900 3,925 3,463 3,689 43,900 43,950 3,930 3,468 3,694 43,950 44,000 3,935 3,473 3,699 44,000 44,000 44,050 3,940 3,478 3,704 44,050 44,100 3,945 3,483 3,709 44,100 44,150 3,950 3,488 3,714 44,150 44,200 3,955 3,493 3,719 44,200 44,250 3,960 3,498 3,724 44,250 44,300 3,965 3,503 3,729 44,300 44,350 3,970 3,508 3,734 44,350 44,400 3,975 3,513 3,739 44,400 44,450 3,980 3,518 3,744 44,450 44,500 3,985 3,523 3,749 44,500 44,550 3,990 3,528 3,754 44,550 44,600 3,995 3,533 3,759 44,600 44,650 4,000 3,538 3,764 44,650 44,700 4,005 3,543 3,769 44,700 44,750 4,010 3,548 3,774 44,750 44,800 4,015 3,553 3,779 44,800 44,850 4,020 3,558 3,784 44,850 44,900 4,025 3,563 3,789 44,900 44,950 4,030 3,568 3,794 44,950 45,000 4,035 3,573 3,799 45,000 45,000 45,050 4,040 3,578 3,804 45,050 45,100 4,045 3,583 3,809 45,100 45,150 4,050 3,588 3,814 45,150 45,200 4,055 3,593 3,819 45,200 45,250 4,060 3,598 3,824 45,250 45,300 4,065 3,603 3,829 45,300 45,350 4,070 3,608 3,834 45,350 45,400 4,075 3,613 3,839 45,400 45,450 4,080 3,618 3,844 45,450 45,500 4,085 3,623 3,849 45,500 45,550 4,090 3,628 3,854 45,550 45,600 4,095 3,633 3,859 45,600 45,650 4,100 3,638 3,864 45,650 45,700 4,105 3,643 3,869 45,700 45,750 4,110 3,648 3,874 45,750 45,800 4,115 3,653 3,879 45,800 45,850 4,120 3,658 3,884 45,850 45,900 4,125 3,663 3,889 45,900 45,950 4,130 3,668 3,894 45,950 46,000 4,135 3,673 3,899 46,250 46,300 4,165 3,703 3,929 46,300 46,350 4,170 3,708 3,934 46,350 46,400 4,175 3,713 3,939 46,400 46,450 4,180 3,718 3,944 46,450 46,500 4,185 3,723 3,949 46,500 46,550 4,190 3,728 3,954 46,550 46,600 4,195 3,733 3,959 46,600 46,650 4,200 3,738 3,964 46,650 46,700 4,205 3,743 3,969 46,700 46,750 4,210 3,748 3,974 46,750 46,800 4,215 3,753 3,979 46,800 46,850 4,220 3,758 3,984 46,850 46,900 4,225 3,763 3,989 46,900 46,950 4,230 3,768 3,994 46,950 47,000 4,235 3,773 3,999 47,000 47,000 47,050 4,240 3,778 4,004 47,050 47,100 4,245 3,783 4,009 47,100 47,150 4,250 3,788 4,014 47,150 47,200 4,255 3,793 4,019 47,200 47,250 4,260 3,798 4,024 47,250 47,300 4,265 3,803 4,029 47,300 47,350 4,270 3,808 4,034 47,350 47,400 4,275 3,813 4,039 47,400 47,450 4,280 3,818 4,044 47,450 47,500 4,285 3,823 4,049 47,500 47,550 4,290 3,828 4,054 47,550 47,600 4,295 3,833 4,059 47,600 47,650 4,300 3,838 4,064 47,650 47,700 4,305 3,843 4,069 47,700 47,750 4,310 3,848 4,074 47,750 47,800 4,315 3,853 4,079 47,800 47,850 4,320 3,858 4,084 47,850 47,900 4,325 3,863 4,089 47,900 47,950 4,330 3,868 4,094 47,950 48,000 4,335 3,873 4,099 48,000 48,000 48,050 4,340 3,878 4,104 48,050 48,100 4,345 3,883 4,109 48,100 48,150 4,350 3,888 4,114 48,150 48,200 4,355 3,893 4,119 48,200 48,250 4,360 3,898 4,124 48,250 48,300 4,365 3,903 4,129 48,300 48,350 4,370 3,908 4,134 48,350 48,400 4,375 3,913 4,139 48,400 48,450 4,380 3,918 4,144 48,450 48,500 4,385 3,923 4,149 48,500 48,550 4,390 3,928 4,154 48,550 48,600 4,395 3,933 4,159 48,600 48,650 4,400 3,938 4,164 48,650 48,700 4,405 3,943 4,169 48,700 48,750 4,410 3,948 4,174 48,750 48,800 4,415 3,953 4,179 48,800 48,850 4,420 3,958 4,184 48,850 48,900 4,425 3,963 4,189 48,900 48,950 4,430 3,968 4,194 48,950 49,000 4,435 3,973 4,199 49,250 49,300 4,465 4,003 4,229 49,300 49,350 4,470 4,008 4,234 49,350 49,400 4,475 4,013 4,239 49,400 49,450 4,480 4,018 4,244 49,450 49,500 4,485 4,023 4,249 49,500 49,550 4,490 4,028 4,254 49,550 49,600 4,495 4,033 4,259 49,600 49,650 4,500 4,038 4,264 49,650 49,700 4,505 4,043 4,269 49,700 49,750 4,510 4,048 4,274 49,750 49,800 4,515 4,053 4,279 49,800 49,850 4,520 4,058 4,284 49,850 49,900 4,525 4,063 4,289 49,900 49,950 4,530 4,068 4,294 49,950 50,000 4,535 4,073 4,299 50,000 50,000 50,050 4,540 4,078 4,304 50,050 50,100 4,545 4,083 4,309 50,100 50,150 4,550 4,088 4,314 50,150 50,200 4,555 4,093 4,319 50,200 50,250 4,560 4,098 4,324 50,250 50,300 4,565 4,103 4,329 50,300 50,350 4,570 4,108 4,334 50,350 50,400 4,575 4,113 4,339 50,400 50,450 4,580 4,118 4,344 50,450 50,500 4,585 4,123 4,349 50,500 50,550 4,590 4,128 4,354 50,550 50,600 4,595 4,133 4,359 50,600 50,650 4,600 4,138 4,364 50,650 50,700 4,605 4,143 4,369 50,700 50,750 4,610 4,148 4,374 50,750 50,800 4,615 4,153 4,379 50,800 50,850 4,620 4,158 4,384 50,850 50,900 4,625 4,163 4,389 50,900 50,950 4,630 4,168 4,394 50,950 51,000 4,635 4,173 4,399 51,000 51,000 51,050 4,640 4,178 4,404 51,050 51,100 4,645 4,183 4,409 51,100 51,150 4,650 4,188 4,414 51,150 51,200 4,655 4,193 4,419 51,200 51,250 4,660 4,198 4,424 51,250 51,300 4,665 4,203 4,429 51,300 51,350 4,670 4,208 4,434 51,350 51,400 4,675 4,213 4,439 51,400 51,450 4,680 4,218 4,444 51,450 51,500 4,685 4,223 4,449 51,500 51,550 4,690 4,228 4,454 51,550 51,600 4,695 4,233 4,459 51,600 51,650 4,700 4,238 4,464 51,650 51,700 4,705 4,243 4,469 51,700 51,750 4,710 4,248 4,474 51,750 51,800 4,715 4,253 4,479 51,800 51,850 4,720 4,258 4,484 51,850 51,900 4,725 4,263 4,489 51,900 51,950 4,730 4,268 4,494 51,950 52,000 4,735 4,273 4,499 *This column must also be used by qualifying widow(er) Continued on next page Page 37

117 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 52,000 52,000 52,050 4,740 4,278 4,504 52,050 52,100 4,745 4,283 4,509 52,100 52,150 4,750 4,288 4,514 52,150 52,200 4,755 4,293 4,519 52,200 52,250 4,760 4,298 4,524 55,000 55,000 55,050 5,040 4,578 4,804 55,050 55,100 5,045 4,583 4,809 55,100 55,150 5,050 4,588 4,814 55,150 55,200 5,055 4,593 4,819 55,200 55,250 5,060 4,598 4,824 58,000 58,000 58,050 5,340 4,878 5,104 58,050 58,100 5,345 4,883 5,109 58,100 58,150 5,350 4,888 5,114 58,150 58,200 5,355 4,893 5,119 58,200 58,250 5,360 4,898 5,124 52,250 52,300 4,765 4,303 4,529 52,300 52,350 4,770 4,308 4,534 52,350 52,400 4,775 4,313 4,539 52,400 52,450 4,780 4,318 4,544 52,450 52,500 4,785 4,323 4,549 52,500 52,550 4,790 4,328 4,554 52,550 52,600 4,795 4,333 4,559 52,600 52,650 4,800 4,338 4,564 52,650 52,700 4,805 4,343 4,569 52,700 52,750 4,810 4,348 4,574 52,750 52,800 4,815 4,353 4,579 52,800 52,850 4,820 4,358 4,584 52,850 52,900 4,825 4,363 4,589 52,900 52,950 4,830 4,368 4,594 52,950 53,000 4,835 4,373 4,599 53,000 53,000 53,050 4,840 4,378 4,604 53,050 53,100 4,845 4,383 4,609 53,100 53,150 4,850 4,388 4,614 53,150 53,200 4,855 4,393 4,619 53,200 53,250 4,860 4,398 4,624 53,250 53,300 4,865 4,403 4,629 53,300 53,350 4,870 4,408 4,634 53,350 53,400 4,875 4,413 4,639 53,400 53,450 4,880 4,418 4,644 53,450 53,500 4,885 4,423 4,649 53,500 53,550 4,890 4,428 4,654 53,550 53,600 4,895 4,433 4,659 53,600 53,650 4,900 4,438 4,664 53,650 53,700 4,905 4,443 4,669 53,700 53,750 4,910 4,448 4,674 53,750 53,800 4,915 4,453 4,679 53,800 53,850 4,920 4,458 4,684 53,850 53,900 4,925 4,463 4,689 53,900 53,950 4,930 4,468 4,694 53,950 54,000 4,935 4,473 4,699 54,000 54,000 54,050 4,940 4,478 4,704 54,050 54,100 4,945 4,483 4,709 54,100 54,150 4,950 4,488 4,714 54,150 54,200 4,955 4,493 4,719 54,200 54,250 4,960 4,498 4,724 54,250 54,300 4,965 4,503 4,729 54,300 54,350 4,970 4,508 4,734 54,350 54,400 4,975 4,513 4,739 54,400 54,450 4,980 4,518 4,744 54,450 54,500 4,985 4,523 4,749 54,500 54,550 4,990 4,528 4,754 54,550 54,600 4,995 4,533 4,759 54,600 54,650 5,000 4,538 4,764 54,650 54,700 5,005 4,543 4,769 54,700 54,750 5,010 4,548 4,774 54,750 54,800 5,015 4,553 4,779 54,800 54,850 5,020 4,558 4,784 54,850 54,900 5,025 4,563 4,789 54,900 54,950 5,030 4,568 4,794 54,950 55,000 5,035 4,573 4,799 55,250 55,300 5,065 4,603 4,829 55,300 55,350 5,070 4,608 4,834 55,350 55,400 5,075 4,613 4,839 55,400 55,450 5,080 4,618 4,844 55,450 55,500 5,085 4,623 4,849 55,500 55,550 5,090 4,628 4,854 55,550 55,600 5,095 4,633 4,859 55,600 55,650 5,100 4,638 4,864 55,650 55,700 5,105 4,643 4,869 55,700 55,750 5,110 4,648 4,874 55,750 55,800 5,115 4,653 4,879 55,800 55,850 5,120 4,658 4,884 55,850 55,900 5,125 4,663 4,889 55,900 55,950 5,130 4,668 4,894 55,950 56,000 5,135 4,673 4,899 56,000 56,000 56,050 5,140 4,678 4,904 56,050 56,100 5,145 4,683 4,909 56,100 56,150 5,150 4,688 4,914 56,150 56,200 5,155 4,693 4,919 56,200 56,250 5,160 4,698 4,924 56,250 56,300 5,165 4,703 4,929 56,300 56,350 5,170 4,708 4,934 56,350 56,400 5,175 4,713 4,939 56,400 56,450 5,180 4,718 4,944 56,450 56,500 5,185 4,723 4,949 56,500 56,550 5,190 4,728 4,954 56,550 56,600 5,195 4,733 4,959 56,600 56,650 5,200 4,738 4,964 56,650 56,700 5,205 4,743 4,969 56,700 56,750 5,210 4,748 4,974 56,750 56,800 5,215 4,753 4,979 56,800 56,850 5,220 4,758 4,984 56,850 56,900 5,225 4,763 4,989 56,900 56,950 5,230 4,768 4,994 56,950 57,000 5,235 4,773 4,999 57,000 57,000 57,050 5,240 4,778 5,004 57,050 57,100 5,245 4,783 5,009 57,100 57,150 5,250 4,788 5,014 57,150 57,200 5,255 4,793 5,019 57,200 57,250 5,260 4,798 5,024 57,250 57,300 5,265 4,803 5,029 57,300 57,350 5,270 4,808 5,034 57,350 57,400 5,275 4,813 5,039 57,400 57,450 5,280 4,818 5,044 57,450 57,500 5,285 4,823 5,049 57,500 57,550 5,290 4,828 5,054 57,550 57,600 5,295 4,833 5,059 57,600 57,650 5,300 4,838 5,064 57,650 57,700 5,305 4,843 5,069 57,700 57,750 5,310 4,848 5,074 57,750 57,800 5,315 4,853 5,079 57,800 57,850 5,320 4,858 5,084 57,850 57,900 5,325 4,863 5,089 57,900 57,950 5,330 4,868 5,094 57,950 58,000 5,335 4,873 5,099 58,250 58,300 5,365 4,903 5,129 58,300 58,350 5,370 4,908 5,134 58,350 58,400 5,375 4,913 5,139 58,400 58,450 5,380 4,918 5,144 58,450 58,500 5,385 4,923 5,149 58,500 58,550 5,390 4,928 5,154 58,550 58,600 5,395 4,933 5,159 58,600 58,650 5,400 4,938 5,164 58,650 58,700 5,405 4,943 5,169 58,700 58,750 5,410 4,948 5,174 58,750 58,800 5,415 4,953 5,179 58,800 58,850 5,420 4,958 5,184 58,850 58,900 5,425 4,963 5,189 58,900 58,950 5,430 4,968 5,194 58,950 59,000 5,435 4,973 5,199 59,000 59,000 59,050 5,440 4,978 5,204 59,050 59,100 5,445 4,983 5,209 59,100 59,150 5,450 4,988 5,214 59,150 59,200 5,455 4,993 5,219 59,200 59,250 5,460 4,998 5,224 59,250 59,300 5,465 5,003 5,229 59,300 59,350 5,470 5,008 5,234 59,350 59,400 5,475 5,013 5,239 59,400 59,450 5,480 5,018 5,244 59,450 59,500 5,485 5,023 5,249 59,500 59,550 5,490 5,028 5,254 59,550 59,600 5,495 5,033 5,259 59,600 59,650 5,500 5,038 5,264 59,650 59,700 5,505 5,043 5,269 59,700 59,750 5,510 5,048 5,274 59,750 59,800 5,515 5,053 5,279 59,800 59,850 5,520 5,058 5,284 59,850 59,900 5,525 5,063 5,289 59,900 59,950 5,530 5,068 5,294 59,950 60,000 5,535 5,073 5,299 60,000 60,000 60,050 5,540 5,078 5,304 60,050 60,100 5,545 5,083 5,309 60,100 60,150 5,550 5,088 5,314 60,150 60,200 5,555 5,093 5,319 60,200 60,250 5,560 5,098 5,324 60,250 60,300 5,565 5,103 5,329 60,300 60,350 5,570 5,108 5,334 60,350 60,400 5,575 5,113 5,339 60,400 60,450 5,580 5,118 5,344 60,450 60,500 5,585 5,123 5,349 60,500 60,550 5,590 5,128 5,354 60,550 60,600 5,595 5,133 5,359 60,600 60,650 5,600 5,138 5,364 60,650 60,700 5,605 5,143 5,369 60,700 60,750 5,610 5,148 5,374 60,750 60,800 5,615 5,153 5,379 60,800 60,850 5,620 5,158 5,384 60,850 60,900 5,625 5,163 5,389 60,900 60,950 5,630 5,168 5,394 60,950 61,000 5,635 5,173 5,399 *This column must also be used by qualifying widow(er) Continued on next page Page 38

118 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 61,000 61,000 61,050 5,640 5,178 5,404 61,050 61,100 5,645 5,183 5,409 61,100 61,150 5,650 5,188 5,414 61,150 61,200 5,655 5,193 5,419 61,200 61,250 5,660 5,198 5,424 64,000 64,000 64,050 5,940 5,478 5,704 64,050 64,100 5,945 5,483 5,709 64,100 64,150 5,950 5,488 5,714 64,150 64,200 5,955 5,493 5,719 64,200 64,250 5,960 5,498 5,724 67,000 67,000 67,050 6,240 5,778 6,004 67,050 67,100 6,245 5,783 6,009 67,100 67,150 6,250 5,788 6,014 67,150 67,200 6,255 5,793 6,019 67,200 67,250 6,260 5,798 6,024 61,250 61,300 5,665 5,203 5,429 61,300 61,350 5,670 5,208 5,434 61,350 61,400 5,675 5,213 5,439 61,400 61,450 5,680 5,218 5,444 61,450 61,500 5,685 5,223 5,449 61,500 61,550 5,690 5,228 5,454 61,550 61,600 5,695 5,233 5,459 61,600 61,650 5,700 5,238 5,464 61,650 61,700 5,705 5,243 5,469 61,700 61,750 5,710 5,248 5,474 61,750 61,800 5,715 5,253 5,479 61,800 61,850 5,720 5,258 5,484 61,850 61,900 5,725 5,263 5,489 61,900 61,950 5,730 5,268 5,494 61,950 62,000 5,735 5,273 5,499 62,000 62,000 62,050 5,740 5,278 5,504 62,050 62,100 5,745 5,283 5,509 62,100 62,150 5,750 5,288 5,514 62,150 62,200 5,755 5,293 5,519 62,200 62,250 5,760 5,298 5,524 62,250 62,300 5,765 5,303 5,529 62,300 62,350 5,770 5,308 5,534 62,350 62,400 5,775 5,313 5,539 62,400 62,450 5,780 5,318 5,544 62,450 62,500 5,785 5,323 5,549 62,500 62,550 5,790 5,328 5,554 62,550 62,600 5,795 5,333 5,559 62,600 62,650 5,800 5,338 5,564 62,650 62,700 5,805 5,343 5,569 62,700 62,750 5,810 5,348 5,574 62,750 62,800 5,815 5,353 5,579 62,800 62,850 5,820 5,358 5,584 62,850 62,900 5,825 5,363 5,589 62,900 62,950 5,830 5,368 5,594 62,950 63,000 5,835 5,373 5,599 63,000 63,000 63,050 5,840 5,378 5,604 63,050 63,100 5,845 5,383 5,609 63,100 63,150 5,850 5,388 5,614 63,150 63,200 5,855 5,393 5,619 63,200 63,250 5,860 5,398 5,624 63,250 63,300 5,865 5,403 5,629 63,300 63,350 5,870 5,408 5,634 63,350 63,400 5,875 5,413 5,639 63,400 63,450 5,880 5,418 5,644 63,450 63,500 5,885 5,423 5,649 63,500 63,550 5,890 5,428 5,654 63,550 63,600 5,895 5,433 5,659 63,600 63,650 5,900 5,438 5,664 63,650 63,700 5,905 5,443 5,669 63,700 63,750 5,910 5,448 5,674 63,750 63,800 5,915 5,453 5,679 63,800 63,850 5,920 5,458 5,684 63,850 63,900 5,925 5,463 5,689 63,900 63,950 5,930 5,468 5,694 63,950 64,000 5,935 5,473 5,699 64,250 64,300 5,965 5,503 5,729 64,300 64,350 5,970 5,508 5,734 64,350 64,400 5,975 5,513 5,739 64,400 64,450 5,980 5,518 5,744 64,450 64,500 5,985 5,523 5,749 64,500 64,550 5,990 5,528 5,754 64,550 64,600 5,995 5,533 5,759 64,600 64,650 6,000 5,538 5,764 64,650 64,700 6,005 5,543 5,769 64,700 64,750 6,010 5,548 5,774 64,750 64,800 6,015 5,553 5,779 64,800 64,850 6,020 5,558 5,784 64,850 64,900 6,025 5,563 5,789 64,900 64,950 6,030 5,568 5,794 64,950 65,000 6,035 5,573 5,799 65,000 65,000 65,050 6,040 5,578 5,804 65,050 65,100 6,045 5,583 5,809 65,100 65,150 6,050 5,588 5,814 65,150 65,200 6,055 5,593 5,819 65,200 65,250 6,060 5,598 5,824 65,250 65,300 6,065 5,603 5,829 65,300 65,350 6,070 5,608 5,834 65,350 65,400 6,075 5,613 5,839 65,400 65,450 6,080 5,618 5,844 65,450 65,500 6,085 5,623 5,849 65,500 65,550 6,090 5,628 5,854 65,550 65,600 6,095 5,633 5,859 65,600 65,650 6,100 5,638 5,864 65,650 65,700 6,105 5,643 5,869 65,700 65,750 6,110 5,648 5,874 65,750 65,800 6,115 5,653 5,879 65,800 65,850 6,120 5,658 5,884 65,850 65,900 6,125 5,663 5,889 65,900 65,950 6,130 5,668 5,894 65,950 66,000 6,135 5,673 5,899 66,000 66,000 66,050 6,140 5,678 5,904 66,050 66,100 6,145 5,683 5,909 66,100 66,150 6,150 5,688 5,914 66,150 66,200 6,155 5,693 5,919 66,200 66,250 6,160 5,698 5,924 66,250 66,300 6,165 5,703 5,929 66,300 66,350 6,170 5,708 5,934 66,350 66,400 6,175 5,713 5,939 66,400 66,450 6,180 5,718 5,944 66,450 66,500 6,185 5,723 5,949 66,500 66,550 6,190 5,728 5,954 66,550 66,600 6,195 5,733 5,959 66,600 66,650 6,200 5,738 5,964 66,650 66,700 6,205 5,743 5,969 66,700 66,750 6,210 5,748 5,974 66,750 66,800 6,215 5,753 5,979 66,800 66,850 6,220 5,758 5,984 66,850 66,900 6,225 5,763 5,989 66,900 66,950 6,230 5,768 5,994 66,950 67,000 6,235 5,773 5,999 67,250 67,300 6,265 5,803 6,029 67,300 67,350 6,270 5,808 6,034 67,350 67,400 6,275 5,813 6,039 67,400 67,450 6,280 5,818 6,044 67,450 67,500 6,285 5,823 6,049 67,500 67,550 6,290 5,828 6,054 67,550 67,600 6,295 5,833 6,059 67,600 67,650 6,300 5,838 6,064 67,650 67,700 6,305 5,843 6,069 67,700 67,750 6,310 5,848 6,074 67,750 67,800 6,315 5,853 6,079 67,800 67,850 6,320 5,858 6,084 67,850 67,900 6,325 5,863 6,089 67,900 67,950 6,330 5,868 6,094 67,950 68,000 6,335 5,873 6,099 68,000 68,000 68,050 6,340 5,878 6,104 68,050 68,100 6,345 5,883 6,109 68,100 68,150 6,350 5,888 6,114 68,150 68,200 6,355 5,893 6,119 68,200 68,250 6,360 5,898 6,124 68,250 68,300 6,365 5,903 6,129 68,300 68,350 6,370 5,908 6,134 68,350 68,400 6,375 5,913 6,139 68,400 68,450 6,380 5,918 6,144 68,450 68,500 6,385 5,923 6,149 68,500 68,550 6,390 5,928 6,154 68,550 68,600 6,395 5,933 6,159 68,600 68,650 6,400 5,938 6,164 68,650 68,700 6,405 5,943 6,169 68,700 68,750 6,410 5,948 6,174 68,750 68,800 6,415 5,953 6,179 68,800 68,850 6,420 5,958 6,184 68,850 68,900 6,425 5,963 6,189 68,900 68,950 6,430 5,968 6,194 68,950 69,000 6,435 5,973 6,199 69,000 69,000 69,050 6,440 5,978 6,204 69,050 69,100 6,445 5,983 6,209 69,100 69,150 6,450 5,988 6,214 69,150 69,200 6,455 5,993 6,219 69,200 69,250 6,460 5,998 6,224 69,250 69,300 6,465 6,003 6,229 69,300 69,350 6,470 6,008 6,234 69,350 69,400 6,475 6,013 6,239 69,400 69,450 6,480 6,018 6,244 69,450 69,500 6,485 6,023 6,249 69,500 69,550 6,490 6,028 6,254 69,550 69,600 6,495 6,033 6,259 69,600 69,650 6,500 6,038 6,264 69,650 69,700 6,505 6,043 6,269 69,700 69,750 6,510 6,048 6,274 69,750 69,800 6,515 6,053 6,279 69,800 69,850 6,520 6,058 6,284 69,850 69,900 6,525 6,063 6,289 69,900 69,950 6,530 6,068 6,294 69,950 70,000 6,535 6,073 6,299 *This column must also be used by qualifying widow(er) Continued on next page Page 39

119 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 70,000 70,000 70,050 6,540 6,078 6,304 70,050 70,100 6,545 6,083 6,309 70,100 70,150 6,550 6,088 6,314 70,150 70,200 6,555 6,093 6,319 70,200 70,250 6,560 6,098 6,324 73,000 73,000 73,050 6,840 6,378 6,604 73,050 73,100 6,845 6,383 6,609 73,100 73,150 6,850 6,388 6,614 73,150 73,200 6,855 6,393 6,619 73,200 73,250 6,860 6,398 6,624 76,000 76,000 76,050 7,140 6,678 6,904 76,050 76,100 7,145 6,683 6,909 76,100 76,150 7,150 6,688 6,914 76,150 76,200 7,155 6,693 6,919 76,200 76,250 7,160 6,698 6,924 70,250 70,300 6,565 6,103 6,329 70,300 70,350 6,570 6,108 6,334 70,350 70,400 6,575 6,113 6,339 70,400 70,450 6,580 6,118 6,344 70,450 70,500 6,585 6,123 6,349 70,500 70,550 6,590 6,128 6,354 70,550 70,600 6,595 6,133 6,359 70,600 70,650 6,600 6,138 6,364 70,650 70,700 6,605 6,143 6,369 70,700 70,750 6,610 6,148 6,374 70,750 70,800 6,615 6,153 6,379 70,800 70,850 6,620 6,158 6,384 70,850 70,900 6,625 6,163 6,389 70,900 70,950 6,630 6,168 6,394 70,950 71,000 6,635 6,173 6,399 71,000 71,000 71,050 6,640 6,178 6,404 71,050 71,100 6,645 6,183 6,409 71,100 71,150 6,650 6,188 6,414 71,150 71,200 6,655 6,193 6,419 71,200 71,250 6,660 6,198 6,424 71,250 71,300 6,665 6,203 6,429 71,300 71,350 6,670 6,208 6,434 71,350 71,400 6,675 6,213 6,439 71,400 71,450 6,680 6,218 6,444 71,450 71,500 6,685 6,223 6,449 71,500 71,550 6,690 6,228 6,454 71,550 71,600 6,695 6,233 6,459 71,600 71,650 6,700 6,238 6,464 71,650 71,700 6,705 6,243 6,469 71,700 71,750 6,710 6,248 6,474 71,750 71,800 6,715 6,253 6,479 71,800 71,850 6,720 6,258 6,484 71,850 71,900 6,725 6,263 6,489 71,900 71,950 6,730 6,268 6,494 71,950 72,000 6,735 6,273 6,499 72,000 72,000 72,050 6,740 6,278 6,504 72,050 72,100 6,745 6,283 6,509 72,100 72,150 6,750 6,288 6,514 72,150 72,200 6,755 6,293 6,519 72,200 72,250 6,760 6,298 6,524 72,250 72,300 6,765 6,303 6,529 72,300 72,350 6,770 6,308 6,534 72,350 72,400 6,775 6,313 6,539 72,400 72,450 6,780 6,318 6,544 72,450 72,500 6,785 6,323 6,549 72,500 72,550 6,790 6,328 6,554 72,550 72,600 6,795 6,333 6,559 72,600 72,650 6,800 6,338 6,564 72,650 72,700 6,805 6,343 6,569 72,700 72,750 6,810 6,348 6,574 72,750 72,800 6,815 6,353 6,579 72,800 72,850 6,820 6,358 6,584 72,850 72,900 6,825 6,363 6,589 72,900 72,950 6,830 6,368 6,594 72,950 73,000 6,835 6,373 6,599 73,250 73,300 6,865 6,403 6,629 73,300 73,350 6,870 6,408 6,634 73,350 73,400 6,875 6,413 6,639 73,400 73,450 6,880 6,418 6,644 73,450 73,500 6,885 6,423 6,649 73,500 73,550 6,890 6,428 6,654 73,550 73,600 6,895 6,433 6,659 73,600 73,650 6,900 6,438 6,664 73,650 73,700 6,905 6,443 6,669 73,700 73,750 6,910 6,448 6,674 73,750 73,800 6,915 6,453 6,679 73,800 73,850 6,920 6,458 6,684 73,850 73,900 6,925 6,463 6,689 73,900 73,950 6,930 6,468 6,694 73,950 74,000 6,935 6,473 6,699 74,000 74,000 74,050 6,940 6,478 6,704 74,050 74,100 6,945 6,483 6,709 74,100 74,150 6,950 6,488 6,714 74,150 74,200 6,955 6,493 6,719 74,200 74,250 6,960 6,498 6,724 74,250 74,300 6,965 6,503 6,729 74,300 74,350 6,970 6,508 6,734 74,350 74,400 6,975 6,513 6,739 74,400 74,450 6,980 6,518 6,744 74,450 74,500 6,985 6,523 6,749 74,500 74,550 6,990 6,528 6,754 74,550 74,600 6,995 6,533 6,759 74,600 74,650 7,000 6,538 6,764 74,650 74,700 7,005 6,543 6,769 74,700 74,750 7,010 6,548 6,774 74,750 74,800 7,015 6,553 6,779 74,800 74,850 7,020 6,558 6,784 74,850 74,900 7,025 6,563 6,789 74,900 74,950 7,030 6,568 6,794 74,950 75,000 7,035 6,573 6,799 75,000 75,000 75,050 7,040 6,578 6,804 75,050 75,100 7,045 6,583 6,809 75,100 75,150 7,050 6,588 6,814 75,150 75,200 7,055 6,593 6,819 75,200 75,250 7,060 6,598 6,824 75,250 75,300 7,065 6,603 6,829 75,300 75,350 7,070 6,608 6,834 75,350 75,400 7,075 6,613 6,839 75,400 75,450 7,080 6,618 6,844 75,450 75,500 7,085 6,623 6,849 75,500 75,550 7,090 6,628 6,854 75,550 75,600 7,095 6,633 6,859 75,600 75,650 7,100 6,638 6,864 75,650 75,700 7,105 6,643 6,869 75,700 75,750 7,110 6,648 6,874 75,750 75,800 7,115 6,653 6,879 75,800 75,850 7,120 6,658 6,884 75,850 75,900 7,125 6,663 6,889 75,900 75,950 7,130 6,668 6,894 75,950 76,000 7,135 6,673 6,899 76,250 76,300 7,165 6,703 6,929 76,300 76,350 7,170 6,708 6,934 76,350 76,400 7,175 6,713 6,939 76,400 76,450 7,180 6,718 6,944 76,450 76,500 7,185 6,723 6,949 76,500 76,550 7,190 6,728 6,954 76,550 76,600 7,195 6,733 6,959 76,600 76,650 7,200 6,738 6,964 76,650 76,700 7,205 6,743 6,969 76,700 76,750 7,210 6,748 6,974 76,750 76,800 7,215 6,753 6,979 76,800 76,850 7,220 6,758 6,984 76,850 76,900 7,225 6,763 6,989 76,900 76,950 7,230 6,768 6,994 76,950 77,000 7,235 6,773 6,999 77,000 77,000 77,050 7,240 6,778 7,004 77,050 77,100 7,245 6,783 7,009 77,100 77,150 7,250 6,788 7,014 77,150 77,200 7,255 6,793 7,019 77,200 77,250 7,260 6,798 7,024 77,250 77,300 7,265 6,803 7,029 77,300 77,350 7,270 6,808 7,034 77,350 77,400 7,275 6,813 7,039 77,400 77,450 7,280 6,818 7,044 77,450 77,500 7,285 6,823 7,049 77,500 77,550 7,290 6,828 7,054 77,550 77,600 7,295 6,833 7,059 77,600 77,650 7,300 6,838 7,064 77,650 77,700 7,305 6,843 7,069 77,700 77,750 7,310 6,848 7,074 77,750 77,800 7,315 6,853 7,079 77,800 77,850 7,320 6,858 7,084 77,850 77,900 7,325 6,863 7,089 77,900 77,950 7,330 6,868 7,094 77,950 78,000 7,335 6,873 7,099 78,000 78,000 78,050 7,340 6,878 7,104 78,050 78,100 7,345 6,883 7,109 78,100 78,150 7,350 6,888 7,114 78,150 78,200 7,355 6,893 7,119 78,200 78,250 7,360 6,898 7,124 78,250 78,300 7,365 6,903 7,129 78,300 78,350 7,370 6,908 7,134 78,350 78,400 7,375 6,913 7,139 78,400 78,450 7,380 6,918 7,144 78,450 78,500 7,385 6,923 7,149 78,500 78,550 7,390 6,928 7,154 78,550 78,600 7,395 6,933 7,159 78,600 78,650 7,400 6,938 7,164 78,650 78,700 7,405 6,943 7,169 78,700 78,750 7,410 6,948 7,174 78,750 78,800 7,415 6,953 7,179 78,800 78,850 7,420 6,958 7,184 78,850 78,900 7,425 6,963 7,189 78,900 78,950 7,430 6,968 7,194 78,950 79,000 7,435 6,973 7,199 *This column must also be used by qualifying widow(er) Continued on next page Page 40

120 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 79,000 79,000 79,050 7,440 6,978 7,204 79,050 79,100 7,445 6,983 7,209 79,100 79,150 7,450 6,988 7,214 79,150 79,200 7,455 6,993 7,219 79,200 79,250 7,460 6,998 7,224 82,000 82,000 82,050 7,740 7,278 7,504 82,050 82,100 7,745 7,283 7,509 82,100 82,150 7,750 7,288 7,514 82,150 82,200 7,755 7,293 7,519 82,200 82,250 7,760 7,298 7,524 85,000 85,000 85,050 8,040 7,578 7,804 85,050 85,100 8,045 7,583 7,809 85,100 85,150 8,050 7,588 7,814 85,150 85,200 8,055 7,593 7,819 85,200 85,250 8,060 7,598 7,824 79,250 79,300 7,465 7,003 7,229 79,300 79,350 7,470 7,008 7,234 79,350 79,400 7,475 7,013 7,239 79,400 79,450 7,480 7,018 7,244 79,450 79,500 7,485 7,023 7,249 79,500 79,550 7,490 7,028 7,254 79,550 79,600 7,495 7,033 7,259 79,600 79,650 7,500 7,038 7,264 79,650 79,700 7,505 7,043 7,269 79,700 79,750 7,510 7,048 7,274 79,750 79,800 7,515 7,053 7,279 79,800 79,850 7,520 7,058 7,284 79,850 79,900 7,525 7,063 7,289 79,900 79,950 7,530 7,068 7,294 79,950 80,000 7,535 7,073 7,299 80,000 80,000 80,050 7,540 7,078 7,304 80,050 80,100 7,545 7,083 7,309 80,100 80,150 7,550 7,088 7,314 80,150 80,200 7,555 7,093 7,319 80,200 80,250 7,560 7,098 7,324 80,250 80,300 7,565 7,103 7,329 80,300 80,350 7,570 7,108 7,334 80,350 80,400 7,575 7,113 7,339 80,400 80,450 7,580 7,118 7,344 80,450 80,500 7,585 7,123 7,349 80,500 80,550 7,590 7,128 7,354 80,550 80,600 7,595 7,133 7,359 80,600 80,650 7,600 7,138 7,364 80,650 80,700 7,605 7,143 7,369 80,700 80,750 7,610 7,148 7,374 80,750 80,800 7,615 7,153 7,379 80,800 80,850 7,620 7,158 7,384 80,850 80,900 7,625 7,163 7,389 80,900 80,950 7,630 7,168 7,394 80,950 81,000 7,635 7,173 7,399 81,000 81,000 81,050 7,640 7,178 7,404 81,050 81,100 7,645 7,183 7,409 81,100 81,150 7,650 7,188 7,414 81,150 81,200 7,655 7,193 7,419 81,200 81,250 7,660 7,198 7,424 81,250 81,300 7,665 7,203 7,429 81,300 81,350 7,670 7,208 7,434 81,350 81,400 7,675 7,213 7,439 81,400 81,450 7,680 7,218 7,444 81,450 81,500 7,685 7,223 7,449 81,500 81,550 7,690 7,228 7,454 81,550 81,600 7,695 7,233 7,459 81,600 81,650 7,700 7,238 7,464 81,650 81,700 7,705 7,243 7,469 81,700 81,750 7,710 7,248 7,474 81,750 81,800 7,715 7,253 7,479 81,800 81,850 7,720 7,258 7,484 81,850 81,900 7,725 7,263 7,489 81,900 81,950 7,730 7,268 7,494 81,950 82,000 7,735 7,273 7,499 82,250 82,300 7,765 7,303 7,529 82,300 82,350 7,770 7,308 7,534 82,350 82,400 7,775 7,313 7,539 82,400 82,450 7,780 7,318 7,544 82,450 82,500 7,785 7,323 7,549 82,500 82,550 7,790 7,328 7,554 82,550 82,600 7,795 7,333 7,559 82,600 82,650 7,800 7,338 7,564 82,650 82,700 7,805 7,343 7,569 82,700 82,750 7,810 7,348 7,574 82,750 82,800 7,815 7,353 7,579 82,800 82,850 7,820 7,358 7,584 82,850 82,900 7,825 7,363 7,589 82,900 82,950 7,830 7,368 7,594 82,950 83,000 7,835 7,373 7,599 83,000 83,000 83,050 7,840 7,378 7,604 83,050 83,100 7,845 7,383 7,609 83,100 83,150 7,850 7,388 7,614 83,150 83,200 7,855 7,393 7,619 83,200 83,250 7,860 7,398 7,624 83,250 83,300 7,865 7,403 7,629 83,300 83,350 7,870 7,408 7,634 83,350 83,400 7,875 7,413 7,639 83,400 83,450 7,880 7,418 7,644 83,450 83,500 7,885 7,423 7,649 83,500 83,550 7,890 7,428 7,654 83,550 83,600 7,895 7,433 7,659 83,600 83,650 7,900 7,438 7,664 83,650 83,700 7,905 7,443 7,669 83,700 83,750 7,910 7,448 7,674 83,750 83,800 7,915 7,453 7,679 83,800 83,850 7,920 7,458 7,684 83,850 83,900 7,925 7,463 7,689 83,900 83,950 7,930 7,468 7,694 83,950 84,000 7,935 7,473 7,699 84,000 84,000 84,050 7,940 7,478 7,704 84,050 84,100 7,945 7,483 7,709 84,100 84,150 7,950 7,488 7,714 84,150 84,200 7,955 7,493 7,719 84,200 84,250 7,960 7,498 7,724 84,250 84,300 7,965 7,503 7,729 84,300 84,350 7,970 7,508 7,734 84,350 84,400 7,975 7,513 7,739 84,400 84,450 7,980 7,518 7,744 84,450 84,500 7,985 7,523 7,749 84,500 84,550 7,990 7,528 7,754 84,550 84,600 7,995 7,533 7,759 84,600 84,650 8,000 7,538 7,764 84,650 84,700 8,005 7,543 7,769 84,700 84,750 8,010 7,548 7,774 84,750 84,800 8,015 7,553 7,779 84,800 84,850 8,020 7,558 7,784 84,850 84,900 8,025 7,563 7,789 84,900 84,950 8,030 7,568 7,794 84,950 85,000 8,035 7,573 7,799 85,250 85,300 8,065 7,603 7,829 85,300 85,350 8,070 7,608 7,834 85,350 85,400 8,075 7,613 7,839 85,400 85,450 8,080 7,618 7,844 85,450 85,500 8,085 7,623 7,849 85,500 85,550 8,090 7,628 7,854 85,550 85,600 8,095 7,633 7,859 85,600 85,650 8,100 7,638 7,864 85,650 85,700 8,105 7,643 7,869 85,700 85,750 8,110 7,648 7,874 85,750 85,800 8,115 7,653 7,879 85,800 85,850 8,120 7,658 7,884 85,850 85,900 8,125 7,663 7,889 85,900 85,950 8,130 7,668 7,894 85,950 86,000 8,135 7,673 7,899 86,000 86,000 86,050 8,140 7,678 7,904 86,050 86,100 8,145 7,683 7,909 86,100 86,150 8,150 7,688 7,914 86,150 86,200 8,155 7,693 7,919 86,200 86,250 8,160 7,698 7,924 86,250 86,300 8,165 7,703 7,929 86,300 86,350 8,170 7,708 7,934 86,350 86,400 8,175 7,713 7,939 86,400 86,450 8,180 7,718 7,944 86,450 86,500 8,185 7,723 7,949 86,500 86,550 8,190 7,728 7,954 86,550 86,600 8,195 7,733 7,959 86,600 86,650 8,200 7,738 7,964 86,650 86,700 8,205 7,743 7,969 86,700 86,750 8,210 7,748 7,974 86,750 86,800 8,215 7,753 7,979 86,800 86,850 8,220 7,758 7,984 86,850 86,900 8,225 7,763 7,989 86,900 86,950 8,230 7,768 7,994 86,950 87,000 8,235 7,773 7,999 87,000 87,000 87,050 8,240 7,778 8,004 87,050 87,100 8,245 7,783 8,009 87,100 87,150 8,250 7,788 8,014 87,150 87,200 8,255 7,793 8,019 87,200 87,250 8,260 7,798 8,024 87,250 87,300 8,265 7,803 8,029 87,300 87,350 8,270 7,808 8,034 87,350 87,400 8,275 7,813 8,039 87,400 87,450 8,280 7,818 8,044 87,450 87,500 8,285 7,823 8,049 87,500 87,550 8,290 7,828 8,054 87,550 87,600 8,295 7,833 8,059 87,600 87,650 8,300 7,838 8,064 87,650 87,700 8,305 7,843 8,069 87,700 87,750 8,310 7,848 8,074 87,750 87,800 8,315 7,853 8,079 87,800 87,850 8,320 7,858 8,084 87,850 87,900 8,325 7,863 8,089 87,900 87,950 8,330 7,868 8,094 87,950 88,000 8,335 7,873 8,099 *This column must also be used by qualifying widow(er) Continued on next page Page 41

121 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 88,000 88,000 88,050 8,340 7,878 8,104 88,050 88,100 8,345 7,883 8,109 88,100 88,150 8,350 7,888 8,114 88,150 88,200 8,355 7,893 8,119 88,200 88,250 8,360 7,898 8,124 91,000 91,000 91,050 8,640 8,178 8,404 91,050 91,100 8,645 8,183 8,409 91,100 91,150 8,650 8,188 8,414 91,150 91,200 8,655 8,193 8,419 91,200 91,250 8,660 8,198 8,424 94,000 94,000 94,050 8,940 8,478 8,704 94,050 94,100 8,945 8,483 8,709 94,100 94,150 8,950 8,488 8,714 94,150 94,200 8,955 8,493 8,719 94,200 94,250 8,960 8,498 8,724 88,250 88,300 8,365 7,903 8,129 88,300 88,350 8,370 7,908 8,134 88,350 88,400 8,375 7,913 8,139 88,400 88,450 8,380 7,918 8,144 88,450 88,500 8,385 7,923 8,149 88,500 88,550 8,390 7,928 8,154 88,550 88,600 8,395 7,933 8,159 88,600 88,650 8,400 7,938 8,164 88,650 88,700 8,405 7,943 8,169 88,700 88,750 8,410 7,948 8,174 88,750 88,800 8,415 7,953 8,179 88,800 88,850 8,420 7,958 8,184 88,850 88,900 8,425 7,963 8,189 88,900 88,950 8,430 7,968 8,194 88,950 89,000 8,435 7,973 8,199 89,000 89,000 89,050 8,440 7,978 8,204 89,050 89,100 8,445 7,983 8,209 89,100 89,150 8,450 7,988 8,214 89,150 89,200 8,455 7,993 8,219 89,200 89,250 8,460 7,998 8,224 89,250 89,300 8,465 8,003 8,229 89,300 89,350 8,470 8,008 8,234 89,350 89,400 8,475 8,013 8,239 89,400 89,450 8,480 8,018 8,244 89,450 89,500 8,485 8,023 8,249 89,500 89,550 8,490 8,028 8,254 89,550 89,600 8,495 8,033 8,259 89,600 89,650 8,500 8,038 8,264 89,650 89,700 8,505 8,043 8,269 89,700 89,750 8,510 8,048 8,274 89,750 89,800 8,515 8,053 8,279 89,800 89,850 8,520 8,058 8,284 89,850 89,900 8,525 8,063 8,289 89,900 89,950 8,530 8,068 8,294 89,950 90,000 8,535 8,073 8,299 90,000 90,000 90,050 8,540 8,078 8,304 90,050 90,100 8,545 8,083 8,309 90,100 90,150 8,550 8,088 8,314 90,150 90,200 8,555 8,093 8,319 90,200 90,250 8,560 8,098 8,324 90,250 90,300 8,565 8,103 8,329 90,300 90,350 8,570 8,108 8,334 90,350 90,400 8,575 8,113 8,339 90,400 90,450 8,580 8,118 8,344 90,450 90,500 8,585 8,123 8,349 90,500 90,550 8,590 8,128 8,354 90,550 90,600 8,595 8,133 8,359 90,600 90,650 8,600 8,138 8,364 90,650 90,700 8,605 8,143 8,369 90,700 90,750 8,610 8,148 8,374 90,750 90,800 8,615 8,153 8,379 90,800 90,850 8,620 8,158 8,384 90,850 90,900 8,625 8,163 8,389 90,900 90,950 8,630 8,168 8,394 90,950 91,000 8,635 8,173 8,399 91,250 91,300 8,665 8,203 8,429 91,300 91,350 8,670 8,208 8,434 91,350 91,400 8,675 8,213 8,439 91,400 91,450 8,680 8,218 8,444 91,450 91,500 8,685 8,223 8,449 91,500 91,550 8,690 8,228 8,454 91,550 91,600 8,695 8,233 8,459 91,600 91,650 8,700 8,238 8,464 91,650 91,700 8,705 8,243 8,469 91,700 91,750 8,710 8,248 8,474 91,750 91,800 8,715 8,253 8,479 91,800 91,850 8,720 8,258 8,484 91,850 91,900 8,725 8,263 8,489 91,900 91,950 8,730 8,268 8,494 91,950 92,000 8,735 8,273 8,499 92,000 92,000 92,050 8,740 8,278 8,504 92,050 92,100 8,745 8,283 8,509 92,100 92,150 8,750 8,288 8,514 92,150 92,200 8,755 8,293 8,519 92,200 92,250 8,760 8,298 8,524 92,250 92,300 8,765 8,303 8,529 92,300 92,350 8,770 8,308 8,534 92,350 92,400 8,775 8,313 8,539 92,400 92,450 8,780 8,318 8,544 92,450 92,500 8,785 8,323 8,549 92,500 92,550 8,790 8,328 8,554 92,550 92,600 8,795 8,333 8,559 92,600 92,650 8,800 8,338 8,564 92,650 92,700 8,805 8,343 8,569 92,700 92,750 8,810 8,348 8,574 92,750 92,800 8,815 8,353 8,579 92,800 92,850 8,820 8,358 8,584 92,850 92,900 8,825 8,363 8,589 92,900 92,950 8,830 8,368 8,594 92,950 93,000 8,835 8,373 8,599 93,000 93,000 93,050 8,840 8,378 8,604 93,050 93,100 8,845 8,383 8,609 93,100 93,150 8,850 8,388 8,614 93,150 93,200 8,855 8,393 8,619 93,200 93,250 8,860 8,398 8,624 93,250 93,300 8,865 8,403 8,629 93,300 93,350 8,870 8,408 8,634 93,350 93,400 8,875 8,413 8,639 93,400 93,450 8,880 8,418 8,644 93,450 93,500 8,885 8,423 8,649 93,500 93,550 8,890 8,428 8,654 93,550 93,600 8,895 8,433 8,659 93,600 93,650 8,900 8,438 8,664 93,650 93,700 8,905 8,443 8,669 93,700 93,750 8,910 8,448 8,674 93,750 93,800 8,915 8,453 8,679 93,800 93,850 8,920 8,458 8,684 93,850 93,900 8,925 8,463 8,689 93,900 93,950 8,930 8,468 8,694 93,950 94,000 8,935 8,473 8,699 94,250 94,300 8,965 8,503 8,729 94,300 94,350 8,970 8,508 8,734 94,350 94,400 8,975 8,513 8,739 94,400 94,450 8,980 8,518 8,744 94,450 94,500 8,985 8,523 8,749 94,500 94,550 8,990 8,528 8,754 94,550 94,600 8,995 8,533 8,759 94,600 94,650 9,000 8,538 8,764 94,650 94,700 9,005 8,543 8,769 94,700 94,750 9,010 8,548 8,774 94,750 94,800 9,015 8,553 8,779 94,800 94,850 9,020 8,558 8,784 94,850 94,900 9,025 8,563 8,789 94,900 94,950 9,030 8,568 8,794 94,950 95,000 9,035 8,573 8,799 95,000 95,000 95,050 9,040 8,578 8,804 95,050 95,100 9,045 8,583 8,809 95,100 95,150 9,050 8,588 8,814 95,150 95,200 9,055 8,593 8,819 95,200 95,250 9,060 8,598 8,824 95,250 95,300 9,065 8,603 8,829 95,300 95,350 9,070 8,608 8,834 95,350 95,400 9,075 8,613 8,839 95,400 95,450 9,080 8,618 8,844 95,450 95,500 9,085 8,623 8,849 95,500 95,550 9,090 8,628 8,854 95,550 95,600 9,095 8,633 8,859 95,600 95,650 9,100 8,638 8,864 95,650 95,700 9,105 8,643 8,869 95,700 95,750 9,110 8,648 8,874 95,750 95,800 9,115 8,653 8,879 95,800 95,850 9,120 8,658 8,884 95,850 95,900 9,125 8,663 8,889 95,900 95,950 9,130 8,668 8,894 95,950 96,000 9,135 8,673 8,899 96,000 96,000 96,050 9,140 8,678 8,904 96,050 96,100 9,145 8,683 8,909 96,100 96,150 9,150 8,688 8,914 96,150 96,200 9,155 8,693 8,919 96,200 96,250 9,160 8,698 8,924 96,250 96,300 9,165 8,703 8,929 96,300 96,350 9,170 8,708 8,934 96,350 96,400 9,175 8,713 8,939 96,400 96,450 9,180 8,718 8,944 96,450 96,500 9,185 8,723 8,949 96,500 96,550 9,190 8,728 8,954 96,550 96,600 9,195 8,733 8,959 96,600 96,650 9,200 8,738 8,964 96,650 96,700 9,205 8,743 8,969 96,700 96,750 9,210 8,748 8,974 96,750 96,800 9,215 8,753 8,979 96,800 96,850 9,220 8,758 8,984 96,850 96,900 9,225 8,763 8,989 96,900 96,950 9,230 8,768 8,994 96,950 97,000 9,235 8,773 8,999 *This column must also be used by qualifying widow(er) Continued on next page Page 42

122 1994 Hawaii Tax Table (Continued) If line 37 If line 37 If line 37 (taxable And you are (taxable And you are (taxable And you are income) is income) is income) is At But Single or Married Head At But Single or Married Head At But Single or Married Head least less Married filing of a least less Married filing of a least less Married filing of a than filing jointly house- than filing jointly house- than filing jointly housesepa- hold sepa- hold sepa- hold * * * rately rately rately Your tax is Your tax is Your tax is 97,000 97,000 97,050 9,240 8,778 9,004 97,050 97,100 9,245 8,783 9,009 97,100 97,150 9,250 8,788 9,014 97,150 97,200 9,255 8,793 9,019 97,200 97,250 9,260 8,798 9,024 98,000 98,000 98,050 9,340 8,878 9,104 98,050 98,100 9,345 8,883 9,109 98,100 98,150 9,350 8,888 9,114 98,150 98,200 9,355 8,893 9,119 98,200 98,250 9,360 8,898 9,124 99,000 99,000 99,050 9,440 8,978 9,204 99,050 99,100 9,445 8,983 9,209 99,100 99,150 9,450 8,988 9,214 99,150 99,200 9,455 8,993 9,219 99,200 99,250 9,460 8,998 9,224 97,250 97,300 9,265 8,803 9,029 97,300 97,350 9,270 8,808 9,034 97,350 97,400 9,275 8,813 9,039 97,400 97,450 9,280 8,818 9,044 97,450 97,500 9,285 8,823 9,049 97,500 97,550 9,290 8,828 9,054 97,550 97,600 9,295 8,833 9,059 97,600 97,650 9,300 8,838 9,064 97,650 97,700 9,305 8,843 9,069 97,700 97,750 9,310 8,848 9,074 97,750 97,800 9,315 8,853 9,079 97,800 97,850 9,320 8,858 9,084 97,850 97,900 9,325 8,863 9,089 97,900 97,950 9,330 8,868 9,094 97,950 98,000 9,335 8,873 9,099 98,250 98,300 9,365 8,903 9,129 98,300 98,350 9,370 8,908 9,134 98,350 98,400 9,375 8,913 9,139 98,400 98,450 9,380 8,918 9,144 98,450 98,500 9,385 8,923 9,149 98,500 98,550 9,390 8,928 9,154 98,550 98,600 9,395 8,933 9,159 98,600 98,650 9,400 8,938 9,164 98,650 98,700 9,405 8,943 9,169 98,700 98,750 9,410 8,948 9,174 98,750 98,800 9,415 8,953 9,179 98,800 98,850 9,420 8,958 9,184 98,850 98,900 9,425 8,963 9,189 98,900 98,950 9,430 8,968 9,194 98,950 99,000 9,435 8,973 9,199 99,250 99,300 9,465 9,003 9,229 99,300 99,350 9,470 9,008 9,234 99,350 99,400 9,475 9,013 9,239 99,400 99,450 9,480 9,018 9,244 99,450 99,500 9,485 9,023 9,249 99,500 99,550 9,490 9,028 9,254 99,550 99,600 9,495 9,033 9,259 99,600 99,650 9,500 9,038 9,264 99,650 99,700 9,505 9,043 9,269 99,700 99,750 9,510 9,048 9,274 99,750 99,800 9,515 9,053 9,279 99,800 99,850 9,520 9,058 9,284 99,850 99,900 9,525 9,063 9,289 99,900 99,950 9,530 9,068 9,294 99, ,000 9,535 9,073 9, ,000 OR OVER You MUST use the tax rate schedules. *This column must also be used by qualifying widow(er) Page 43

123 1994 Tax Rate Schedules CAUTION If your taxable income is less than $100,000, you MUST use the Tax Table. Use this schedule if you checked Schedule I SINGLE TAXPAYERS AND MARRIED FILING SEPARATE RETURNS If the amount on Form N-12, Line 37 is Your tax is Not over $1, % of taxable income Filing Status Box 1 or 3 Over $1,500 but not over $2,500...$ plus 4% over $1,500 on Form N-12 Over $2,500 but not over $3,500...$ plus 6% over $2,500 Over $3,500 but not over $5,500...$ plus 7.25% over $3,500 Over $5,500 but not over $10,500...$ plus 8% over $5,500 Over $10,500 but not over $15,500...$ plus 8.75% over $10,500 Over $15,500 but not over $20,500...$ 1, plus 9.5% over $15,500 Over $20,500...$ 1, plus 10% over $20,500 Schedule II MARRIED TAXPAYERS FILING JOINT RETURNS AND CERTAIN WIDOWS AND WIDOWERS Use this schedule if you checked If the amount on Form N-12, Line 37 is Your tax is Not over $3, % of taxable income Filing Status Box 2 or 5 Over $3,000 but not over $5,000...$ plus 4% over $3,000 on Form N-12 Over $5,000 but not over $7,000...$ plus 6% over $5,000 Over $7,000 but not over $11,000...$ plus 7.25% over $7,000 Over $11,000 but not over $21,000...$ plus 8% over $11,000 Over $21,000 but not over $31,000...$ 1, plus 8.75% over $21,000 Over $31,000 but not over $41,000...$ 2, plus 9.5% over $31,000 Over $41,000...$ 3, plus 10% over $41,000 Use this schedule if you checked Schedule III UNMARRIED HEADS OF HOUSEHOLD If the amount on Form N-12, Line 37 is Your tax is Not over $1, % of taxable income Filing Status Box 4 on Form N-12 Over $1,500 but not over $2,500...$ plus 3% over $1,500 Page 44 Over $2,500 but not over $3,500...$ plus 4.5% over $2,500 Over $3,500 but not over $5,500...$ plus 5.9% over $3,500 Over $5,500 but not over $11,000...$ plus 7.25% over $5,500 Over $11,000 but not over $21,000...$ plus 8.6% over $11,000 Over $21,000 but not over $41,000...$ 1, plus 9.6% over $21,000 Over $41,000...$ 3, plus 10% over $41,000

124 Index to Instructions A Page Abandoned Spouse... 7 Address Change Addresses of Taxation District Offices... 5 Adjustments to Income Alimony Paid Received Amended Return Annuities... 10, 24 and 29 At-Risk Rules Attachments to Return B Balance Due (or Refund) Bartering... 8 Birth or Death of Dependent... 8 Blind, Deaf, or Totally Disabled Person Business Income and Expenses (Schedule C) Business Use of Your Home C Capital Gain Distributions... 9 Capital Gains and Losses (Schedule D) Casualty and Theft Losses Change in Federal Taxable Income Changes for Child and Dependent Care Expenses Credit for and Contributions to Charity Credits Against Tax D Death of Taxpayer... 5 Dependents Exemptions Disability Exemption Dividends, Other Distributions... 9 and 22 Divorced or Separated Parents... 8 Domicile Defined... 4 E Educational Expenses Employee Business Expenses Estates and Trusts Estimated Tax... 5, 14 and 17 Exemptions and 13 F Filing Requirements Extension of Time to File... 5 When to File... 5 Where to File... 5 Which Form to File Who Must File... 4 Who Should File... 4 Filing Status Food/Excise Tax Credit and 31 Forms... 3 H Page Head of Household... 7 Highlights for 1994 (Changes and Important Reminders)... 2 I Income Tax Withholding...14 Income Not To Be Reported... 8 To Be Reported... 8 Individual Housing Accounts Distributions From...10 Payments To...12 Tax Liability upon sale or transfer...10 Individual Retirement Arrangements (IRA)...11 Interest Expense Interest Income... 9 and 22 Interest Late Payment of Tax...18 Interest Penalty on Early Withdrawal of Savings...11 Itemized Deductions You Choose to Itemize Deductions...12 You MUST Itemize Deductions...12 K Keogh Plan (HR-10)...11 and 24 M Married Persons Joint or Separate Returns Married Persons Who Live Apart (and Abandoned Spouses)... 7 Special Rule for Aliens... 6 Medical and Dental Expenses...19 Medical Services Excise Tax Credit and 31 Miscellaneous Itemized Deductions Moving Expenses...11 and 21 Multistate Tax Compact Act... 5 N Net Operating Loss...11 and 12 Nonresident... 4 Nonresident Alien Exemption for Spouse... 7 Filing a Joint Return... 6 Who Must File... 4 Nontaxable Income (Examples)... 8 O Other Income P Partnerships Passive Activity Loss Rules...27 Payments (Amount You Owe)...17 Penalty Late Filing...18 Pensions and Annuities... 10, 24 and 29 Political Campaigns- Hawaii Election $2 Check-off... 6 Preparer Did You Have Someone Else Prepare Your Return?...18 R Page Records How Long to Keep...18 Refund (or Balance Due)...17 Reminders...18 Rent Income Residence, Sale of...26 Resident...4 Retirement Plan Payments...11 and 24 Rounding Off to Whole Dollars Royalties S Sale of Your Home...26 Small Business Corporation (S Corporation)...29 Social Security Number...6 Steps for Preparing Your Return and 18 Student Dependent- Exemption...8 T Tax Computation...13 Other Methods of Computing...13 Other Accumulation Distributions of Trusts...13 Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1, Distribution from an Individual Housing Account...10 Lump-Sum Distributions- 5 Year Averaging...10 Parent s Election to Report Child s Interest and Dividends...13 Recapture of Capital Goods Excise Tax Credit...13 Recapture of Low-Income Housing Tax Credit...13 Sale of Your Home Purchased with proceeds from an Individual Housing Account...10 and 13 Tax Credits Tax Rate Schedules...44 Tax Table Taxable Income (Examples)...8 Taxes You Can Deduct...19 Tip Income U Unemployment Compensation...10 V Vacation Homes...27 W When to File...5 Where to File...5 Which Form to File Who Must File...4 Who Should File...4 Widows and Widowers, Qualifying...7 Winnings Prizes, Gambling and Lotteries (Other Income)...10 Withholding Hawaii Tax...14 Page 45

125 FORM N-13 STATE OF HAWAII DEPARTMENT OF TAXATION (REV. 1994) USE STATE LABEL OTHERWISE PRINT OR TYPE Individual Income Tax Return 1994 RESIDENT (FOR USE BY TAXPAYERS WHO HAVE LESS THAN $100,000 TAXABLE INCOME AND WHO DO NOT ITEMIZE DEDUCTIONS AND DO NOT CLAIM ADJUSTMENTS TO INCOME) DO NOT WRITE OR STAPLE IN THIS SPACE Name (If joint return, give first names and initials of both) Last Name Your social security number C/O Present mailing or home address (Number and street, including apartment number or rural route) City, town or post office, State and ZIP code AMD UNP 008 PNT INT Spouse s social security number Your occupation Spouse s occupation HAWAII ELECTION Do you want $2 to go to the Hawaii Election Campaign Fund?... Yes No CAMPAIGN FUND If joint return, does your spouse want $2 to go to the fund?... Yes No FILING STATUS 1 Single (Check only ONE box) 2 Married filing joint return (even if only one had income). 3 Married filing separate return. Enter spouse s social security no. above and full name here. 4 Head of household (with qualifying person). If the qualifying person is your child but not your dependent, enter this child s name here. 5 Qualifying widow(er) with dependent child (Year spouse died 19 ). Note: Checking Yes will not increase your tax or reduce your refund. ATTACH CHECK OR MONEY ORDER HERE ATTACH COPY B OF FORM HW-2 HERE INCOME EXEMPTIONS Caution: If you can be claimed as a dependent on another person s tax return (such as your parents ), do not check box 6a, but be sure to check the box below line 11. 6a Yourself... Age 65 or over... 6b Spouse... Age 65 or over... } 6c and 6d 6e Total number of exemptions claimed... 7 Wages, salaries, tips, etc. (attach Form HW-2; if unavailable, see item 5 on page 9 of Instructions) Interest income (complete Part I on page 2 if over $400) Dividends (complete Part II on page 2 if over $400) Unemployment compensation (insurance) Add lines 7, 8, 9 and 10...Adjusted Gross Income 11 Caution: If you can be claimed as a dependent on another person s return, see page 10 of the Instructions and check here... If you are married filing separately and your spouse itemizes deductions, see page 7 of the Instructions. 12 Standard deduction. { 1, enter $1,500 If you checked filing status box: 2 or 5, enter $1,900 3, enter $950 4, enter $1, Standard Deduction Line 11 minus line 12. (This line MUST be filled in) Multiply $1,040 by the total number of exemptions claimed on line 6e. If you and/or your spouse are blind, deaf, or disabled, check applicable box(es) Yourself Spouse, and see page 10 of Instructions Line 13 minus line 14. Enter the result (but not less than zero).... Taxable Income 15 Continue on other side Dependents: If more than 6 2. Check 5. No. of months dependents, use if under 3. If age 1 or older, dependent s 4. Relationship lived in your 1. First and last name attachment. age 1. social security number home in Enter number of boxes checked on 6a and 6b Enter number of your children listed Enter number of other dependents Add numbers entered in boxes above 6c 6d 6e Continue on other side CAUTION: You may NOT file Form N-13 (you must file Form N-12 instead) if any of the following apply to you: You are a part-year resident. You are married filing a separate return and your spouse itemizes. You received any capital gains distributions. NOTE: You may also be required to file Form N-12 for other reasons. See pages 5 and 6 of Instructions. FORM N-13

126 FORM N-13 Page 2 PART I Interest Income If you received more than $400 in interest, you must complete Part I and list the names of the payers and the amounts of interest on the lines below. See page 9 of the Instructions for what interest to report. 1 Name of Payer Amount PART II Dividend Income If you received more than $400 in ordinary dividends and nontaxable distributions, list the names of the payers and the amounts of the dividends on the lines below. Be sure to include any nontaxable distributions on these lines. They will be deducted on line 3 below. See page 9 of the Instructions for a definition of ordinary dividends and nontaxable distributions. Name of Payer Amount 1 2 Total interest income. Enter here and on Form N-13, line Total. Add above amounts Nontaxable distributions. (See Instructions for adjustment to basis)... 4 Total dividend income (line 2 minus line 3). Enter here and on Form N-13, line 9... TAX PAYMENTS AND CREDITS REFUND OR AMOUNT YOU OWE 16 Tax. Check if from Tax Table; or Form N-615, Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1, Tax Energy Conservation Tax Credit (attach Form N-157) Line 16 minus line 17 (but not less than zero) a Total Hawaii income tax withheld... 19a 19b Amount paid with extension(s)... 19b 19c Food/Excise Tax Credit (attach Form N-311)... (i) Food portion exemptions from Form N-311, Part II, line 1 (ii) Excise portion exemptions from Form N-311, Part II, line 8 (iii) DHS, etc. exemptions from Form N-311, Part II, line 10 (iv) If married filing separately, enter spouse s AGI here $ Enter total credit amount from Form N-311, Part II, line c 19d Credit for Child and Dependent Care Expenses (attach Form N-141)... 19d 19e Credit for Low-Income Household Renters (attach Form N-153)... 19e 19f Credit for $1 general income tax (see page 12 of Instructions for qualifications)... 19f 19g Credit for Child Passenger Restraint System(s) (attach Form N-165)... 19g 19h Medical Services Excise Tax Credit (attach Form N-858)... 19h 20 Add lines 19a through 19h...Total If line 20 is larger than line 18, enter the amount to be REFUNDED TO YOU (line 20 minus line 18) If line 18 is larger than line 20, enter the AMOUNT YOU OWE (line 18 minus line 20). DO NOT include the penalty and interest for the late filing of your return; see page 13 of the Instructions. Attach check or money order for full amount payable to Hawaii State Tax Collector. Write your social security number and 1994 Form N-13" on it Estimated tax penalty. (see page 13 of Instructions) Also include on line 21 or 22, whichever applies If you do not need Hawaii income tax forms mailed to you next year because a tax preparer will prepare your return, check here, and you will receive a preprinted label only DECLARATION I declare, under the penalties set forth in section , HRS, that this return (including accompanying schedules or statements) has been examined by me and, to the best of my knowledge and belief, is a true, correct, and complete return, made in good faith, for the taxable year stated, pursuant to the Hawaii Income Tax Law, Chapter 235, HRS. PLEASE SIGN HERE Your signature Date Spouse s signature (if filing jointly, BOTH must sign) Date Paid Preparer s Information Preparer s Preparer s social security number Signature Check if and date self-employed Firm s name (or yours Federal E.I. No. if self-employed) and address ZIP Code REMINDERS: Check your arithmetic. Don t forget to sign your return. Use your preprinted address label if you received one. Be sure required attachments are attached. (HW-2s, N-311, N-153, N-141, etc.) File early using the preaddressed envelope if you received one.

127 FORM N-13EZ ATTACH CHECK OR MONEY ORDER HERE ATTACH COPY B OF FORM HW-2 HERE USE STATE LABEL OTHERWISE PRINT OR TYPE (1993) STATE OF HAWAII ---- DEPARTMENT OF TAXATION Individual Income Tax Return 1993 RESIDENT ---- For Single and Joint Filers With No Dependents DO NOT WRITE OR STAPLE IN THIS SPACE and Adjusted Gross Income of Less Than $30,000 AMD UNP 008 PNT INT Name (If joint return, give first names and initials of both) Last Name Your social security number C/O Present mailing or home address (Number and street, including apartment number or rural route) City, town or post office, State and ZIP code HAWAII ELECTION Do you want $2 to go to the Hawaii Election Campaign Fund?... Yes No CAMPAIGN FUND If joint return, does your spouse want $2 to go to the fund?... Yes No (Check only ONE box) FILING STATUS INCOME REFUND TAX PAYMENTS OR AMOUNT AND YOU OWE CREDITS PLEASE SIGN HERE 1 Single Spouse s social security number Your occupation Spouse s occupation 2 Married filing joint return (even if only one had income). Caution: If you (or your spouse) can be claimed as a dependent on another person s tax return, be sure to check this box. 3 Total wages, salaries, and tips. This should be shown in box 1 of your HW-2 (or W-2) form(s). Attach your HW-2 (W-2) forms. 3 4 Taxable interest income of $400 or less. If total is over $400, you cannot use Form N-13EZ Add lines 3 and 4...This is your Adjusted Gross Income 5 6 If you checked the dependent box above, do worksheet on back and enter amount from line G here. Otherwise, if single, enter $2,540, or if married, enter $3,980. For an explanation of these amounts, see back of form Line 5 minus line 6. Enter the result (but not less than zero)....this is your Taxable Income 7 8 Tax. Look at line 7 above. Use the amount on line 7 to find your tax in the tax tables. Enter here.... Tax 8 9a Total Hawaii income tax withheld... 9a 9b Food/Excise Tax Credit... 9b 9c Credit for Low-Income Household Renters... 9c 9d Credit for $1 general income tax... 9d 9e Medical Services Excise Tax Credit... 9e 10 Add lines 9a through 9e...Total If line 10 is larger than line 8, subtract line 8 from line 10...This is your Refund If line 8 is larger than line 10, subtract line 10 from line This is the Amount You Owe 12 Attach a check or money order for the full amount payable to Hawaii State Tax Collector. Write your social security number and 1993 Form N-13EZ on it. DECLARATION I declare, under the penalties set forth in section , HRS, that this return (including accompanying schedules or statements) has been examined by me and, to the best of my knowledge and belief, is a true, correct, and complete return, made in good faith, for the taxable year stated, pursuant to the Hawaii Income Tax Law, Chapter 235, HRS. Use this form if Your signature Date Spouse s signature (if filing jointly, BOTH must sign) Date Note: Checking Yes will not increase your tax or reduce your refund. Your filing status is single or married filing jointly. You do not claim any dependents. You (and your spouse if married) were a resident for the entire year of You (and your spouse if married) were under age 65 on January 1, 1994, and not deceased and/or blind, deaf, or disabled at the end of Your adjusted gross income (line 5) is less than $30,000. You had only wages, salaries, tips, and taxable scholarship or fellowship grants, and your taxable interest income was $400 or less. But if you earned tips, including allocated tips, that are not included in box 5 and box 7 of your Form HW-2 (or W-2), you cannot use Form N-13EZ. You do not claim any minor children, for tax credit purposes, who receive more than half of their support from the Department of Human Services, social security survivor benefits, and the like. FORM N-13EZ

128 FORM N-13EZ (1993) Page 2 STANDARD DEDUCTION FOR DEPENDENTS WORKSHEET Your standard deduction is limited to the greater of $500 or your earned income (up to the full standard deduction for your filing status). Enter the appropriate amount on line 6. Use this worksheet to figure the amount to enter on line 6 if someone can claim you (or your spouse if married) as a dependent, even if that person chooses not to do so. A. Enter the amount from Form N-13EZ, line 3. A. B. Minimum standard deduction... B C. Enter the LARGER of line A or line B here... C. D. Maximum standard deduction. If single, enter 1,500.00; If married, enter 1, D. E. Enter the SMALLER of line C or line D here. This is your standard deduction... E. F. Exemption amount. If single, enter 0. If married and both you and your spouse can be claimed as dependents, enter 0. If married and only one of you can be claimed as dependent, enter 1, F. G. Add lines E and F. Enter the total here and on line 6 on the front.... G. If you did not check the dependent box because no one can claim you (or your spouse if married) as a dependent, enter on line 6, the amount shown below that applies to you. Single, enter 2, This is the total of your standard deduction Married, enter 3, This is the total of your standard deduction (1,500.00) and your personal exemption (1,040.00). (1,900.00), exemption for yourself (1,040.00), and exemption for your spouse (1,040.00). THE FOOD/EXCISE TAX CREDIT WORKSHEET Note: If you (or your spouse) have not physically resided in Hawaii for more than 9 months during 1993, are being claimed or eligible to be claimed as a dependent by another taxpayer, and/or have been confined to a prison, youth correctional facility, or jail for the entire taxable year, you are NOT eligible to claim that portion of the tax credit for that person. 1 If single, or married (and only one of you are eligible to claim this credit), enter $55 here. If you are married (and both of you are eligible to claim this credit), enter $110 here. This is the food portion of the tax credit $ 2 Read down the Adjusted Gross Income column in the table below until you find the amount on page 1, line 5. Adjusted Gross Income Tax Credits Adjusted Gross Income Tax Credits Under $ 6, $55 $12,000 Under $15, $ 6,000 Under $ 8, $15,000 Under $20, $ 8,000 Under $10, $20,000 Under $30, $10,000 Under $12, $30,000 and over Multiply the corresponding allowable tax credit on line 2 above by 1 if single or married (and only one of you are eligible to claim this credit) or by 2 if married (and both of you are eligible to claim this credit). This is the excise portion of the tax credit. Enter the result here $ 4 Add lines 1 and 3. Enter here and on line 9b on the front. This is your total food/excise tax credit... 4 $ CREDIT FOR LOW-INCOME HOUSEHOLD RENTERS WORKSHEET Note: This credit is available ONLY if you are NOT eligible to be claimed as a dependent by another taxpayer, you paid MORE than $1,000 in rent during the taxable year, and you (and your spouse) have physically resided for more than nine months in Hawaii. This credit may be claimed by qualifying residents with no income or no taxable income provided the rental unit is not partially or wholly exempted from real property tax. Information is required of each rental unit occupied during the taxable year. Begin with your last rental address during the taxable year and work backward. The total rent paid is the combined rent paid by you and any others with whom you may have shared the rent. If more than one rental unit was occupied during the taxable year, submit the required information for each additional unit on a separate sheet and attach it to this form. 1 Address (give Apt. No., if any) Occupied From, 1993, To, 1993, Total rent paid for this period. $ month month Owned by (or agent for owner) # name address (General Excise Tax License) 2 Enter here the total amount of rent paid during the taxable year for all units shown above.... $ 3 Enter total of excluded amounts of rent paid here.... $ 4 Line 2 minus line 3. Total rent paid... $ 5 Did other qualified individuals share the cost of any of the rental units? If Yes, complete the following information. Begin with your name and list others below it. Be prepared to furnish proof of your share of rent paid. If more than two persons shared the rental cost during the taxable year, submit the required information for each on a separate sheet and attach it to this form. (a) Name and Address (b) Share of Rent Paid $ $ 6 If you are single, or married (and only one of you are eligible to claim this credit), enter $50 here. If you are married (and both of you are eligible to claim this credit), enter $100 here. This is your Credit for Low-Income Household Renters. Enter here and on line 9c on the front.... $ CREDIT FOR GENERAL INCOME TAX Note: Do not claim this credit if you are being claimed or eligible to be claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes or confined to a prison, youth correctional facility, or in jail for the entire taxable year. This is a one-time $1.00 general income tax credit for resident taxpayers for the year 1993 whether or not they physically reside in this State for nine months. The credit is multiplied by the number of qualified exemptions to which the taxpayer is entitled. The credit is refundable regardless of income tax liability for MEDICAL SERVICES EXCISE TAX CREDIT WORKSHEET 1 Enter the total amount of your qualified medical expenses paid in Percent of qualified medical expenses allowed x.04 3 Multiply line 1 by line 2. Enter the result here, BUT NO MORE THAN $ Enter the total amount of your nursing facilities expenses paid by or for you beginning July 1, 1993, and throughout the remainder of the tax year. If none or not applicable, enter -0- here and on line Percent of nursing facilities expenses allowed... 5 x.06 6 Multiply line 4 by line 5. Enter the result here Add lines 3 and 6. Enter the result here and on line 9e on the front. This is your medical services excise tax credit... 7

129 1994 Instructions for preparing STATE OF HAWAII DEPARTMENT OF TAXATION Forms N-13 EZ N-13 THIS PACKAGE CONTAINS: Form N-13EZ Hawaii Individual Income Tax Return Resident (For Single and Joint Filers With No Dependents and Adjusted Gross Income of Less Than $30,000) Form N-13 Hawaii Individual Income Tax Return Resident Form N-153 Credit for Low-Income Household Renter Form N-311 Food/Excise Tax Credit Form N-858 Medical Services Excise Tax Credit DUE DATE: APRIL 20, 1995 Peel off the label and place it in the address area of the Form N-13EZ or N-13 you file. If someone else prepares your return, please give the preparer the preaddressed label and the envelope and ask the preparer to use them. Make necessary corrections on the label. Make it EZ on yourself See page 3. MESSAGE FROM THE DIRECTOR We realize that the tax law does change from year to year and is complex. To make tax filing easier for you, Hawaii has adopted many of the federal income tax provisions. This year s instruction booklet contains instructions for preparing both Forms N-13 and N-13EZ. If your filing status is either Single or Married Filing Jointly, you do not claim any dependents, and your adjusted gross income is less than $30,000, you may be able to use Form N-13EZ. Filing Form N-13EZ will save you time and make filing your income taxes easier. The Department of Taxation appreciates the efforts you made last year in filing an accurate tax return. This resulted in the faster processing of your returns and a prompt refund. We congratulate you. For another successful tax season, the following are suggested to assist you in filing your return and receiving an early refund: Please check your mathematical calculations before sending in your return. Mistakes may bring requests for clarification and may slow up refunds. Mail your return as soon as possible to avoid those delays that are inevitable due to the volume of business at the end of the State income tax season on April 20th. Use the preprinted name and address label and preaddressed envelope, if you receive them. Both help to prevent mistakes and to assist in processing refunds faster. To reduce State printing and postage costs, the Department of Taxation has added a line for you to indicate if you do not need a Hawaii income tax package next year because a tax preparer will prepare your return. If you do not need a package, check the box at line 24 on Form N-13, or at line 13 on Form N-13EZ, and you will receive a preprinted name and address label only. The Department of Taxation continues to be committed to improve and to provide quality service to you, our customers. We thank you for the suggestions you have given us in the past, many of which have been helpful and have been used. If you have more suggestions, please send them to me in writing at the Department of Taxation, P. O. Box 259, Honolulu, Hawaii RICHARD F. KAHLE, JR. Director of Taxation State of Hawaii Department of Taxation P.O. Box 3559 Honolulu, Hawaii (See inside for correct filing address) Bulk Rate U.S. Postage PAID State of Hawaii Department of Taxation

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131 Make it EZ on yourself... Why spend unnecessary time preparing your Hawaii taxes? If you are single or married filing jointly, chances are good that you could be using Form N-13EZ. It s quick, it s easy, and you can do it yourself. Check the chart below to see which form you should use. Form N-13EZ Form N-13 Filing Status Single or joint filer only, under 65 and not blind, deaf or disabled All Dependents Amount of Income Sources of Income None Allowed Adjusted gross income less than $30,000 Only income from: Wages, salaries, tips Taxable interest of $400 or less Taxable scholarship or fellowship grants Allowed Taxable income less than $100,000 Only income from: Wages, salaries, tips Interest and ordinary dividends Unemployment compensation Adjustments to Income None None Standard Deduction Allowed Allowed Itemized Deductions None None Payments Tax Credits Other Taxes Filing Date Withholding on Form(s) HW-2 (or W-2) Only for: Food/Excise Tax Credit Credit for Low-Income Household Renters Credit for $1 General Income Tax Medical Services Excise Tax Credit Only tax computed using the tax table By April 20, 1995 (Extension to file Form N-13EZ not allowed) Withholding on Form(s) HW-2 (or W-2) Only for: Energy Conservation Tax Credit Food/Excise Tax Credit Credit for Child and Dependent Care Expenses Credit for Low-Income Household Renters Credit for $1 General Income Tax Credit for Child Passenger Restraint System(s) Medical Services Excise Tax Credit Only tax computed using the tax table By April 20, 1995 (May request an extension to file Form N-13) Page 3

132 Instructions for Hawaii Resident Income Tax Return Form N-13EZ Before You Begin Step 1 WHO MUST FILE See page 5 You should complete your federal income tax return (Form 1040, Form 1040A or Form 1040EZ) before you begin your Form N-13EZ. You will use most of the information you entered on your federal income tax return to complete your Form N-13EZ. Name and Address If there is a label on the front of your package, follow the instructions below. If there is no label, print or type the information requested in the space provided at the top of Form N-13EZ. 1. Complete your Form N-13EZ before you remove the address label from the front of your package. 2. After you complete your Form N-13EZ, check to make sure that it is correct. Then remove your address label from the front of your package and attach it on the front of your Form N-13EZ in the space provided at the top. 3. Make sure the information on the address label is correct. If you need to make any changes, draw a line in ink through the incorrect information and clearly print the new information. Hawaii Election Campaign Fund See page 7. After Line 2 Dependent Check Box Check the box if someone (such as your parent) can claim you as a dependent on his or her tax return. You must use the Standard Deduction for Dependents Worksheet on Form N-13EZ, page 2 when you get to line 6. Do not check the box if you cannot be claimed as a dependent on someone else s tax return. Step 2 Step 3 Tax and Credits Step 4 Refund or Amount You Owe Taxable Income Be sure to enter the correct types of income on this line. See the chart on page 3 for more information and the statements near the bottom of Form N-13EZ. Line 5 Adjusted Gross Income Add both lines 3 and 4. Be sure not to include nontaxable income such as retirement or pension income which may otherwise be subject to the federal income tax. First figure your tax, then make sure you qualify to claim your credits. Line 8 Tax To figure your tax on the amount shown on line 7, you must use the tax table on pages 20 through 23. Be sure to use the single or married filing joint status and correct taxable income amount when you figure your tax. To avoid a delay in the processing of your return, be sure you enter the correct amounts on lines 9 through 12. Line 9a Hawaii Income Tax Withheld Add the amounts shown as Hawaii income tax withheld on your Form(s) HW-2 (or W-2). Enter the total on line 9a. The amount of Hawaii income tax withheld will be shown on the Form HW-2 (or W-2). Lines 9a - 9e Tax Payments and Credits Complete applicable worksheet(s) on Form N-13EZ, page 2. The worksheets replace the requirement for submitting Forms N-311, N-153, and N-858. Page 4 Sign Your Return Line 11 Refund If the amount on line 10 is more than the amount on line 8, then your payments and credits are more than your tax. Subtract line 8 from line 10. Enter the result on line 11. This is the amount of your refund. If line 10 is less than the amount of line 8, go to line 12. Line 12 Amount You Owe If the amount on line 10 is less than the amount on line 8, then your tax is more than your payments and credits. Subtract line 10 from line 8. Enter the result on line 12. This is the amount you owe. Attach a check or money order for the full amount you owe to the front of your Form N-13EZ in the area designated. Make your check or money order payable to the Hawaii State Tax Collector. Do not send cash. Be sure to write your social security number and 1994 Form N-13EZ on your check or money order. When you mail your Form N-13EZ and payment, make sure your payment is not covered up by your Form(s) HW-2 (or W-2) or any other items. Penalties There is a penalty for not paying enough tax during the year. There are also penalties for late filing and late payment. If you owe a penalty, the Hawaii State Tax Collector will send you a bill. See pages 13 through 14 for more information. A penalty may be imposed if your check is returned by your bank for insufficient funds. Line Forms If your Form N-13EZ is prepared by someone else, or if you do not need Hawaii income tax forms mailed to you next year, check the box at line 13, and you will receive a pre-printed label only. You must sign your return in the space provided. Paid Preparer s Information If you pay a person to prepare your Form N-13EZ, that person must sign and provide all other information below the area for your signature. A paid preparer must give you a copy of your return in addition to the copy to be filed with the Hawaii Department of Taxation. Attach Your Form(s) HW-2 (or W-2) To Your Return. You must attach Copy 2 of all Form(s) HW-2 (or W-2) to the front of your return in the area designated. If you do not receive your Form HW-2 (or W-2) by January 31, contact your employer. Only your employer can give you or correct a Form HW-2 (or W-2). If you cannot get a copy of your Form HW-2 (or W-2), you must complete Form L-15, Employer Substitute Wage and Tax Statement. Mailing Addresses Please use the addressed envelope that came with your return. If you do not have an addressed envelope, or if you moved during the year, mail your return to the taxation district office in which you reside or have your principal place of business, or if you have no residence in Hawaii, then with the Oahu District Office, P.O. Box 3559, Honolulu, Hawaii The State of Hawaii is divided into four taxation districts. Consequently, you must file your return, pay your tax, get your refund, get your forms, or conduct other Hawaii tax affairs with the taxation district office located in the county where you reside or have your principal business. For locations, mailing addresses, and phone numbers of the district offices, see page 6.

133 STATE OF HAWAII DEPARTMENT OF TAXATION RELATED FEDERAL/HAWAII TAX FORMS Copy of Fed. Form Federal Comparable May Be Form Number Title or Description of Federal Form Hawaii Form Submitted+ W-2...Wage and Tax Statement... HW-2...Yes W-4...Employee s Withholding Allowance Certificate... HW-4...No W-10...Dependent Care Provider s Identification and Certification... HW-16...No U.S. Individual Income Tax Return... N-12...No 1040 Sch A...Itemized Deductions... Sch A&B...No Sch B...Interest and Dividend Income... Sch A&B...No Sch C...Profit or Loss from Business... Sch C...Yes* Sch C-EZ...Net Profit From Business... None...Yes* Sch D...Capital Gains and Losses... Sch D...No Sch E...Supplemental Income and Loss... Sch E...Yes* Sch F...Farm Income and Expenses... Sch F...Yes* Sch R...Credit for the Elderly or the Disabled... None...No 1040A...U.S. Individual Income Tax Return (short form)... N-13...No 1040ES...Estimated Tax for Individuals... N-1...No 1040EZ...Income Tax Return for Single and Joint Filers With No Dependents... N-13EZ...No 1040NR...U.S. Nonresident Alien Income Tax Return... None...No 1040X...Amended U.S. Individual Income Tax Return... N-188X...No Application for Tentative Refund... N No Application for Change in Accounting Period... N Yes Statement of Person Claiming Refund Due a Deceased Taxpayer... N No Questionnaire Exemption Claimed for Dependent... None...No Employee Business Expenses... N Yes 2106-EZ...Unreimbursed Employee Business Expenses... None...Yes Sale of Your Home... N No Multiple Support Declaration... N Yes Underpayment of Estimated Income Tax by Individuals and Fiduciaries... N No Child and Dependent Care Expenses... N No Application for Additional Extension of Time to File U.S. Individual Income Tax Return... N-101B...No Power of Attorney and Declaration of Representative... N Yes Moving Expenses... N No Depreciation and Amortization... N Yes Casualties and Thefts... N Yes Sales of Business Property... Sch D-1...No Farm Rental Income and Expenses... None...Yes Employee s Substitute Wage & Tax Statement... L-15...No Application for Automatic Extension of Time to File U.S. Individual Income Tax Return... N-101A...No Investment Interest Expense Deduction... N No Tax on Accumulated Distribution of Trusts... N No Tax on Lump-Sum Distributions... N No Election to Postpone Determination (Hobby Losses)... N Yes Return for Additional Taxes Attributable to Qualified Retirement Plans (Includings IRA s), Annuities and Modified Endowment Contracts... None...No Jobs Credit... N No At-Risk Limitations... None...Yes Installment Sale Income... N Yes Gains and Losses From Section 1256 Contracts and Straddles... Sch D-3...Yes Passive Activity Loss Limitations... None...Yes Low-Income Housing Credit... N No Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1, N No Parent s Election to Report Child s Interest and Dividends... N No Like-Kind Exchanges... None...Yes Expenses for Business Use of Your Home... None...Yes +If Yes is indicated and there is no Hawaii equivalent form, the federal form must be used. *A copy of the federal schedule may be substituted if your Hawaii General Excise ID Number is written on the schedule. Page 3

134 Instructions for Hawaii Resident Income Tax Return Form N-13 Form N-13 General Instructions Who Must File 1. Every individual doing business in Hawaii during the taxable year, whether or not he or she derives any taxable income therefrom. Doing business includes all activities engaged in or caused to be engaged in with the object of gain or economic benefit, direct or indirect, except personal services performed as an employee under the direction and control of an employer. For this purpose every person receiving rents from property owned in Hawaii is classed as doing business and must file a return whether or not he or she derives taxable income therefrom. 2. Every individual receiving: (1) $2,540 (the combined amount of the personal exemption and the standard deduction for an individual) or more in gross income subject to taxation under chapter 235, HRS; or (2) $3,580 (the combined amount of the personal exemption and the standard deduction for an individual) or more if an individual attains the age of 65 before the close of the taxable year. 3. Every individual claiming the benefit of the provision as to persons taking up residence in Hawaii after attaining the age of 65 years and before July 1, The return should be accompanied by a signed statement setting forth the date that the individual established residence in Hawaii and the individual s date of birth. 4. Children receiving income during the taxable year who have not attained the age of 14 years before the end of the taxable year. The income of a minor child is not included in the gross income of the parent for income tax purposes, unless the parent files Form N-814, Parent s Election to Report Child s Interest and Dividends. The minor child s income shall be reflected in the return filed by or for such child. Resident A resident is taxed on income from all sources. A resident must file an Individual Income Tax Return Resident (Form N-12, N-13, or N-13EZ), if required to do so. A Hawaii resident is an individual who is: 1. Domiciled for the entire year in Hawaii even though temporarily outside of Hawaii; or 2. Even though domiciled outside of Hawaii, an individual may be presumed to be a resident while maintaining a permanent place of abode within the State and spending a total of more than 200 days in the aggregate, during the taxable year within Hawaii. This presumption may be overcome by evidence satisfactory to the Department of Taxation that the individual maintained a permanent place of abode outside the State and is in the State for a temporary or transitory purpose. No person shall be deemed to have gained or lost a residence simply because of his or her presence or absence in compliance with military or naval orders of the United States, while engaged in aviation or navigation, while temporarily relocated by an employer, or while a student at any institution of learning. See Tax Information Release No. 90-3, Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or from Nonresident to Resident. Nonresident A Hawaii nonresident is an individual who is in Hawaii for a temporary or transient purpose, and whose permanent domicile is not Hawaii. This includes, but is not limited to, citizens of countries other than the U.S. who do not have permanent resident alien visas (i.e. those who do not have their green cards ). A nonresident must file an Individual Income Tax Return Nonresident (Form N-15), if required to do so, and will be taxed on income from Hawaii sources only. A nonresident married to a Hawaii resident may choose to file a joint return with the resident spouse on Form N-12; however, the nonresident will then be taxed on all income from all sources as a Hawaii resident. For more information, see the special rules under Married Filing a Joint Return on page 7. Part-Year Resident A part-year resident is an individual who was a Hawaii resident for part of the year, and a nonresident of Hawaii during the other part of the year. This includes those who became Hawaii residents during the year and those who gave up being a Hawaii resident during the year. A part-year resident must file an Individual Income Tax Return Resident long form (Form N-12), if required to do so, and will be taxed on ALL income from all sources during the period of residency, and on income from Hawaii sources only during the period of nonresidency. Domicile Defined The term domicile means the place where an individual has a true, fixed, permanent home and principal establishment, and to which place the individual has, whenever absent, the intention of returning. It is the place in which an individual has voluntarily fixed the habitation of himself or herself and family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. Three things are necessary to create a new domicile: first, an abandonment of the old domicile; second, the intention and establishing of a new domicile; and third, an actual physical presence in the new domicile. The mere intention to abandon a domicile once established is not of itself sufficient to create a new domicile, but before a person can be said to have changed his or her domicile, even though he or she manifests an intention to abandon the old domicile, a new domicile must be shown. Reminder: If you are in Hawaii because of military orders and do not intend to make Hawaii your permanent home, you are not considered a Hawaii resident for income tax purposes, even though you have been in the State for more than 200 days in Resident vs. Nonresident Examples Note: For more information, see Tax Information Release No. 90-3, Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or from Nonresident to Resident and Tax Information Release No , Clarification of Taxation and the Eligibility for Personal Exemptions and Credits of Residents and Nonresidents in the Military and Spouses and Dependents of Persons in the Military. Example 1 - A person, who is a Hawaii resident and enlists in the military, will remain a Hawaii resident regardless of the length of absence from Hawaii while stationed at bases outside of Hawaii. Example 2 - A Hawaii resident working in a foreign country will remain a Hawaii resident unless permanent resident status is granted by the foreign country. Example 3 - Foreign students, researchers, and faculty members who are granted entry into the United States on F, H, or J visas are nonresidents for Hawaii tax purposes. Example 4 - Spouses of those in the military service do not become Hawaii residents if their principal reason for moving to Hawaii was the transfer of the servicemember spouse to Hawaii, and if it is their intention to leave Hawaii when the servicemember spouse either is transferred to another military station or leaves the service. Example 5 - A Hawaii resident who marries a nonresident will remain a Hawaii resident unless the three requirements for changing his or her domicile are also met. (Refer to the definition Domicile above.) This situation applies in reverse to a nonresident who marries a resident. A person s status will not change merely due to the person s marriage. Who Should File Even if you do not have to file, you should file to get a refund if income tax was withheld from your pay. Also, a return may be required to support a claim for a credit or refund. Which Form to File You May Be Able to Use Form N-13EZ if: Your filing status is either Single or Married Filing Joint Return and you do not claim any dependents, You had only wages, salaries, tips, interest of $400 or less, and scholarship or fellowship grants, AND Your adjusted gross income is less than $30,000. Note: For more information, see page 3. You May Be Able to Use Form N-13 if: You had only wages, salaries, tips, interest, ordinary dividends, and unemployment compensation. Note: If you had more than $400 in interest income or more than $400 in dividends, you may still file Form N-13, provided you are not required to file Form N-12 for any of the reasons listed on page 6 under You Must Use Form N-12 if... Your taxable income (adjusted gross income less standard deduction and personal exemptions) is less than $100,000. You do not itemize your deductions. You do not claim adjustments to income. You may WANT TO use Form N-12 and you may pay less tax if you can: Itemize your deductions. Claim adjustments to income. Claim credits you can t claim on Form N-13. Page 5

135 You may HAVE TO use Form N-12 because of: The amount or kind of income you receive.. Forms or schedules you file, or other taxes that can be reported only on Form N-12. Your residency status. You Must Use Form N-12 if: Amount of Income Your taxable income is $100,000 or more. Kinds of Income You had income other than wages, salaries, tips, interest, ordinary dividends, and unemployment compensation, such as: Bartering income (fair market value of goods or services you received in return for your goods or services). Income from self-employment. Gain from the sale of your home or other property, or capital gain distributions. Gain from the sale or exchange (including barter) of coins, gold, silver, gems, etc. Annuities, including lump-sum distributions. Alimony. Scholarships and Fellowships. Itemized Deductions Either husband or wife itemizes deductions. Examples are: Payments for medical insurance and medical and dental care that are more than 7.5% of your adjusted gross income. Interest on mortgages. State and local income and real estate taxes. Gifts to churches, charities (such as the Cancer Society, Red Cross, United Way), and similar organizations. Union dues and safety helmets, tools, professional journals, or other materials used in your job. Net personal casualty or theft loss that is more than $100 and 10% of adjusted gross income. Your spouse files a separate return and itemizes deductions. Exception: You can still use Form N-13 if you have a dependent child and can meet the tests on page 8 under Married Persons Who Live Apart (and Abandoned Spouses). Here is a Test to Help You Decide Whether to Itemize You should itemize if your deductions are more than: $1,900 and you are Married filing a joint return or a Qualifying widow(er) with a dependent child. $1,650 and you are a Head of Household. $1,500 and you are Single. $950 and you are Married filing a separate return. Other Forms You file any of these forms: Form N-1, Declaration of Estimated Tax for Individuals, for Form N-103, Sale of Your Home. Other Conditions You meet any one of these conditions: You applied any part of your 1993 overpayment to estimated tax for 1994, or if you want to apply any part of your 1994 overpayment to estimated tax for You received interest or dividends as a nominee (that is, in your name) for someone else. You received or paid accrued interest on securities transferred between interest payment dates. You are taking up residence in Hawaii during the tax year. (Part-year resident) You are giving up residence in Hawaii during the tax year. (Part-year resident) You are claiming the benefit of persons taking up residence in Hawaii after attaining the age of 65 years and before July 1, You are a resident husband or wife making a joint return if the other spouse is a nonresident, or the other spouse is: taking up Hawaii residence during the tax year, (Part-year resident) giving up Hawaii residence during the tax year, (Part-year resident) or claiming the benefit of persons residing in Hawaii after attaining age 65 and before July 1, You make your return on the fiscal year basis which began in You make your return using an accounting method other than the cash receipts and disbursements method. At the end of 1994 you were married to a nonresident alien or dual status alien who had U.S. source income, and you do not file a joint return. Exception: You can still use Form N-13 if you meet the tests on page 8 under Married Persons Who Live Apart (and Abandoned Spouses). Adjustments to Income You claim adjustments to income. Examples are: Payments to an individual retirement arrangement (IRA) or Keogh plan. Moving expenses (See Form N-139) Interest penalty on early withdrawal of savings. Alimony paid. Payments to an individual housing account. Exclusion of first $1,750 of military reserve or Hawaii national guard duty pay. Tax Credits You claim any of these tax credits: Credit for income tax paid to another state or to a foreign country. Credit from a regulated investment company (no form; see Form N-12 instructions). Fuel tax credit for commercial fishers (Form N-163). Low-Income Housing Credit (Form N-586) Enterprise Zone Tax Credit (Form N-756) Credit for Employment of Vocational Rehabilitation Referrals (Form N-884). Capital Goods Excise Tax Credit (Form N-312). When to File You should file as soon as you can after January 1, but not later than April 20, If you file late, you may have to pay penalties and interest. Please see the instructions for Penalties and Interest on page 13. If you know that you cannot meet the April 20 deadline, you should ask for an extension on Form N-101A, Application for Automatic Extension of Time to File Hawaii Individual Income Tax Return. This is an extension of time to file, not an extension of time for payment of tax. The official U.S. Post Office cancellation mark will be considered primary evidence of the date of filing of tax documents and payments. Timely filing of mail which does not bear a U.S. Post Office cancellation mark will be determined by reference to other competent evidence. Where to File Please use the addressed envelope that came with your return. If you do not have an addressed envelope, or if you moved during the year, mail your return to the taxation district office in which you reside or have your principal place of business, or if you have no residence in Hawaii, then with the Oahu District Office, P. O. Box 3559, Honolulu, Hawaii The State of Hawaii is divided into four taxation districts. Consequently, you must file your return, pay your tax, get your refund, get your forms, or conduct other Hawaii tax affairs with the taxation district office located in the county where you reside or have your principal business. MAILING ADDRESSES OAHU DISTRICT OFFICE P.O. Box 3559 Honolulu, Hawaii MAUI DISTRICT OFFICE P.O. Box 913 Wailuku, Hawaii HAWAII DISTRICT OFFICE P.O. Box 1377 Hilo, Hawaii KAUAI DISTRICT OFFICE P.O. Box 1688 Lihue, Hawaii DISTRICT OFFICE LOCATIONS OAHU DISTRICT OFFICE 830 Punchbowl Street Honolulu, Hawaii Telephone: For tax information: (808) (Jan. - April 20) (808) Toll-Free To request tax forms: (808) Toll-Free MAUI DISTRICT OFFICE State Office Building 54 High Street Wailuku, Hawaii Telephone: (808) HAWAII DISTRICT OFFICE State Office Building 75 Aupuni Street Hilo, Hawaii Telephone: (808) KAUAI DISTRICT OFFICE State Office Building 3060 Eiwa Street Lihue, Hawaii Telephone: (808) Page 6

136 Other Information Death of Taxpayer Did the taxpayer die before filing a return for 1994? If so, the taxpayer s spouse or personal representative may have to file a return and sign it for the person who died (decedent) if the decedent was required to file a return. A personal representative can be an executor, administrator, or anyone who is in charge of the taxpayer s property. If the decedent did not have to file a return but either had State income tax withheld, made estimated tax payments, or is eligible for various tax credits, a return must be filed to get a refund. If your spouse died in 1994 and you did not remarry in 1994, or if your spouse died in 1995 before filing a return for 1994, you may still file a joint return for the 1994 tax year. A return filed for a deceased taxpayer, including a joint return with a surviving spouse, must have the word DECEASED written in the upper left hand corner of the return. The word DECEASED and the date of death also must be written after the deceased taxpayer s first name and middle initial in the name and address area of the tax return. Generally, the personal representative must sign the return on behalf of the decedent. However, if a joint return is being filed by the decedent s spouse, the spouse should write Filing as surviving spouse on the line provided for the taxpayer s signature. If a refund is due, you must complete Form N-110, Statement of Person Claiming Refund Due a Deceased Taxpayer, and attach it to the return to ensure that the refund check will be issued in the name of the surviving spouse, personal representative, or other responsible individual instead of the decedent s name. Declaration of Estimated Tax You do not have to file a declaration if you expect that your 1995 tax return will show a tax refund, OR a tax balance due of less than $500. However, if you file a declaration for 1995, you MUST use Form N-12 to claim the payments you made. Please see Form N-1 for more details. Here s How to Fill in Form N-13 (The circled numbers in the following instructions, correspond to the circled numbers on the sample form on pages 15 and 16.) 1 Name, Address, Social Security Number, and Occupation Use the mailing label from the forms booklet we sent to you and make sure it is correct. Draw a line through any incorrect information and write the correct information directly onto the label. If the label is for a joint return and the social security numbers are not listed in the same order as the first names, show the numbers in the correct order. Do not attach your label to the return until you have completed and checked all entries. Use of the label helps us identify your account, saves processing time, and speeds refunds. If you did not receive a booklet with a label, print or type the entries in this section. Do not use the IRS mailing label. Name You must use your legal name. Nicknames are not permitted. If you have changed your name because of marriage, divorce, etc., make sure you immediately notify the Social Security Administration (SSA) so that the name on your tax return is the same as the name the SSA has on its records. This may prevent delays in issuing your refund. If you file joint returns, write the names in the same order every year. Write any descriptions (e.g. Jr., III, etc.) after your last name. If filing a joint return and if you and your spouse have different last names, list your last names in the same order as your first names and separate them with an and. For example, John Keawe and Mary Aloha should write their last names as Keawe and Aloha. Address Write your current mailing address in the space provided. If you receive your mail in care of someone else (i.e., your mail is sent to an address belonging to someone other than yourself), fill in that person s name on the line under your name. Important: If your address should change after you file your return, you must notify the Department in writing of your new address. Any refund checks due to you will not be forwarded to your new address by the postal service, and you may not receive your income tax forms and instructions next year. Social Security Number Write your social security number in the space provided. If you are married, you must also write your spouse s social security number in the space provided whether joint or separate returns are filed. Your social security numbers must be written in the same order as your names are written. If your spouse is a nonresident alien and does not have a social security number, please write NRA in the block for your spouse s social security number. Occupation Write your occupation in the space provided. If married and filing a joint return, also write your spouse s occupation in the space provided. 2 Hawaii Election Campaign Fund This fund was established by the Hawaii State Legislature to support public financing of gubernatorial election campaigns. You may have $2 go to the fund by checking the Yes box. On a joint return, both of you may choose to have $2 go to this fund, or both may choose not to. One may choose to have $2 go to this fund and the other may choose not to. If you check Yes, it will not change the tax or refund shown on your return. Boxes 1 through 5 3 Filing Status Check either box 1, 2, 3, 4, or 5 as appropriate. Do not put a check in more than 1 box. Filing Status Box 1 Single Select box 1, Single, if on December 31, 1994, you were unmarried, divorced, or separated from your spouse under a separate maintenance decree. State law governs whether you are married, divorced, or legally separated. If you are married on December 31, 1994, consider yourself married for the whole year. If your spouse died during 1994, consider yourself married to that spouse for the whole year, unless you remarried before the end of If you are unmarried and provide a home for certain other persons, you may be able to file as Head of Household. If you were married in 1994, had a child living with you, and lived apart from your spouse during the last 6 months of 1994, you may be able to file as Head of Household. See Married Persons Who Live Apart (and Abandoned Spouses) on page 8. Filing Status Box 2 Married Filing a Joint Return (even if only one of you had income) In most cases, married couples will pay less tax if they file a joint return. You must report all income, exemptions, and credits for you and your spouse. Both of you must sign the return, even if only one of you had income. You and your spouse can file a joint return even if you did not live together for the whole year. Both of you are responsible for any tax due on a joint return, so if one of you does not pay, the other may have to. Note: If you filed a joint return, and you and your spouse decide to file separate returns for the year, both of you must file amended returns on or before the due date of the original return. If your spouse died in 1994 or in 1995 before filing a return for 1994, see Death of Taxpayer, on this page. Tax Savings. If you decide not to file a joint return and plan to file a separate return, see if you can lower your tax by meeting the tests described under Married Persons Who Live Apart (and Abandoned Spouses) on page 8. If you qualify, check Box 4 for Head of Household. Special Rule for Nonresidents of Hawaii Who File a Joint Return With a Hawaii Resident. If at the end of the taxable year you were a nonresident of Hawaii (i.e. a U.S. resident who is not a resident of Hawaii) who is married to a resident of Hawaii, you may choose to file a joint return with the resident spouse on Form N-12. However, if a joint return is filed, you and your spouse must agree to be taxed on your combined worldwide income. Special Rule for Nonresident and Dual-Status Aliens. Generally, you cannot file a joint return if either spouse was a nonresident alien at any time during the tax year. However, nonresident aliens married to U.S. citizens or residents can elect to be taxed as a U.S. resident and file joint returns. If a joint return is filed, you and your spouse must agree to be taxed on your combined worldwide income. Note: For purposes of filing a joint return, common law marriages are not recognized under Hawaii law unless they began in a state which permits common law marriages. Filing Status Box 3 Married Filing a Separate Return You may file separate returns whether both you and your spouse had income, only one of you had income, or neither of you had income. If you choose to file separate returns, both you and your spouse must figure your tax the same way. This means that if one of you itemizes your deductions, the other must also itemize their deductions. (If you itemize your deductions, both of you must file Form N-12 or N-15). You each report only your own income, exemptions, deductions, and credits, and you are responsible only for the tax due on your own return. Page 7

137 If you file a separate return, write your spouse s full name in the space after Box 3 and your spouse s social security number in the block provided for that number. If your spouse does not file a Hawaii tax return, you may be able to claim the exemptions for your spouse. See instructions for lines 6a and 6b on this page. Married Persons Who Live Apart (and Abandoned Spouses) You will be considered unmarried if you meet ALL of the following tests: 1) You file a separate return, and 2) You paid more than half the cost of keeping up your home for the tax year, and 3) Your spouse did not live in your home during the last 6 months of the tax year, and 4) Your home was, for more than 6 months of the year, the principal home of your child, stepchild, adopted child, or foster child whom you can claim as a dependent or whom you could claim as your dependent except that the noncustodial parent will claim the child as a dependent under the rules discussed later, for Children of Divorced or Separated Parents on page 9. If you are considered unmarried under these rules, you will qualify to file as Head of Household. Filing Status Box 4 Head of Household There are special tax rates for a person who can meet the tests for Head of Household. These rates are lower than the rates for Single and Married Filing a Separate Return. You may be eligible to file as Head of Household if you were unmarried, or considered unmarried, on the last day of the year. You must have paid more than half the cost of keeping up a home that was the principal home for more than half the year for you and: 1) Your unmarried child, grandchild, stepchild or adopted child. This child does not have to be your dependent. 2) Your married child, grandchild, stepchild or adopted child whom you can claim as your dependent without a Multiple Support Declaration or whom you could claim as your dependent except that the noncustodial parent will claim the child as a dependent under the rules for Children of Divorced or Separated Parents on page 9. 3) Any other relative, including your mother or father, whom you can claim as a dependent without a Multiple Support Declaration. For persons who qualify as a relative, see Children and Other Dependents on this page. Also, you may be eligible to file as Head of Household if you were unmarried, or considered unmarried, on the last day of the year, and pay more than half the cost of keeping up a home that was the principal home for the whole year for your mother or father whom you can claim as a dependent without a Multiple Support Declaration, but who does not live with you. Note: If you received payments under the Aid to Families with Dependent Children (AFDC) program and used them to pay part of the cost of keeping up this home, you may not count these amounts as furnished by you. Filing Status Box 5 Qualifying Widow(er) with Dependent Child If your spouse died during 1992 or 1993 and you did not remarry before the end of 1994, file a return for 1994 showing only your own income, exemptions, deductions, and credits. However, you can Page 8 figure your tax at joint return rates if you meet ALL 3 of the following tests: You could have filed a joint return with your spouse for the year your spouse died. (It does not matter whether or not you actually filed a joint return.) Your dependent child, stepchild, or foster child lived with you (except for temporary absences for vacation or school). You paid over half the cost of keeping up the home for this child for the whole year. Check box 5, Qualifying Widow(er) with Dependent Child, and show the year your spouse died in the space provided. Do not claim an exemption for your spouse. (You can claim the exemption only for the year your spouse died.) If your spouse died in 1994 and you did not remarry, consider yourself married for the whole year. If your spouse died before 1992 and you did not remarry, you may check Box 4 if you meet the tests under Head of Household on this page. Otherwise you must file as Single. Note: See Death of Taxpayer on page 7 for more information. Lines 6a through 6e 4 Exemptions Lines 6a and 6b Boxes REGULAR FOR YOURSELF AND SPOUSE Take one exemption for yourself unless you can be claimed as a dependent on another person s tax return. (See Children and Other Dependents on this page). If you are married, you can take an exemption for your spouse if you file a joint return. If you file a separate return, you can take your spouse s exemption(s) only if your spouse is not filing a return, had no income, and was not the dependent of someone else. If, at the end of 1994 you were divorced or legally separated, you cannot take an exemption for your former spouse. If you were separated by a divorce that is not final (interlocutory decree), you may still take an exemption for your spouse if you file a joint return. If your spouse died during 1994, and you did not remarry before the end of 1994, check the boxes for the exemptions you could have taken for your spouse on the date of death. Please see the instructions for Death of Taxpayer on page 7. AGE 65 OR OVER FOR YOURSELF AND SPOUSE Take another exemption if you or your spouse were age 65 or over. You MAY NOT take this additional exemption for dependents. If you or your spouse s 65th birthday is on January 1, 1995, you can take the extra exemption for age for If you file married filing separately, you may NOT claim the extra exemption for age 65 or over for your spouse. Lines 6c and 6d Boxes Children and Other Dependents Enter on lines 6c and 6d the full names, social security numbers, if any, and other information for your dependent children and other dependents. Enter the number of dependent children listed in box 6c. Enter the number of other dependents listed in box 6d. Each person you claim as a dependent has to meet the following tests a through e : a. Income The dependent received less than $2,450 gross income. (The test does not have to be met for your child who was under 19 at the end of the year, or a full-time student at least 5 months of the year and under 24 years of age at the end of the year.) Please see the instructions for Student Dependent on page 9. Note: Gross income does not include nontaxable benefits such as social security or welfare benefits. b. Support The dependent received over half of his or her support from you, or is treated as receiving over half of his or her support from you under the rules for Children of Divorced or Separated Parents on page 9, or Dependent Supported by Two or More Taxpayers on page 9. If you file a joint return, the support can be from either spouse. In figuring total support, you must include money the dependent used for his or her own support, even if this money was not taxable (for example, social security benefits, gifts, savings, welfare benefits, etc.). If your child was a student, do not include amounts he or she received as scholarships. Support includes items such as food, a place to live, clothes, medical and dental care, and education. In figuring support, use the actual cost of these items. However, the cost of a place to live is figured at its fair rental value. Do not include in support items like income and social security taxes, premiums for life insurance, or funeral expenses for a deceased dependent. You must include capital items such as a car or furniture in figuring total support, but only if these items are actually given to, or purchased by, the dependent for the dependent s use or benefit. Do not include the cost of a capital item such as furniture for the household or for use by persons other than the dependent. c. Married Dependent The dependent did not file a joint return with his or her spouse. Note: However, if neither the dependent nor the dependent s spouse is required to file, but they file a joint return to get a refund of tax withheld, you may claim him or her if the other four tests are met. d. Citizenship or Residence The dependent was a citizen or resident of the United States, a resident of Canada or Mexico, or an alien child adopted by and living with a U.S. citizen in a foreign country. e. Relationship The dependent met test 1 or 2 below: 1. Was related to you (or your spouse if you file a joint return) in one of the following ways: Child Sister Mother-in-law or, if related Stepchild Grandchild Father-in-law by blood: Mother Stepbrother Brother-in-law Uncle Father Stepsister Sister-in-law Nephew Grandparent Stepmother Daughter-in-law Aunt Brother Stepfather Son-in-law Niece 2. Was any other person who lived in your home as a member of your household for the whole year. A person is not a member of your household if at any time during your tax year the relationship between you and that person is against local law. For this purpose child includes: Your son, daughter, stepson, stepdaughter; A child who lived in your home as a member of your family if placed with you by an authorized placement agency for legal adoption; and A foster child (any child who lived in your home as a member of your family for the whole year).

138 Student Dependent Even if your child had gross income of $2,450 or more, you can claim the child as a dependent if he or she can meet tests b, c, and d: AND was under 24 years of age at the end of the year, and was enrolled as a full-time student at a school during any 5 months of 1994; OR took a full-time, on-farm training course during any 5 months of (The course had to be given by a school or a State, county, or local government agency.) The school must have a regular teaching staff, course of study, and a regularly enrolled body of students in attendance. For this purpose school includes: elementary, junior and senior high schools; colleges and universities; and technical, trade, and mechanical schools. However, school does not include on-the-job training courses or correspondence schools. Children of Divorced or Separated Parents The parent having custody of a child for the greater portion of the year (the custodial parent) will generally be entitled to the dependency exemption. This rule applies to parents not living together during the last six months of the calendar year and those divorced or separated under a separation agreement. This general rule does not apply in the case of the following three exceptions: a. There is a multiple support agreement in effect, OR b.the custodial parent has agreed to release his or her claim to the dependency exemption to the noncustodial parent in a decree or agreement in effect before January, 1985, and the noncustodial parent furnishes at least $600 support for the child within the taxable year, OR c. The custodial parent relinquishes the exemption and provides the noncustodial parent with a written statement that the custodial parent will not claim the dependency exemption for the taxable year. This statement shall be attached to the return of the noncustodial parent who claims the exemption. Federal Form 8332 may be used for this purpose. Support by the spouse of a remarried parent will be treated as support by that parent. Dependent Supported by Two or More Taxpayers Sometimes two or more taxpayers together pay more than half of another person s support, but no one alone pays over half of that person s support. One of the taxpayers may claim the person as a dependent if all of the following are met: 1. The tests for income, married dependent, citizenship or residence, and relationship as discussed under Lines 6c and 6d. 2. The taxpayer paid more than 10% of the dependent s support, and 3. The taxpayer attaches to his or her return a signed Form N-120, Multiple Support Declaration, from every other qualifying person who paid more than 10% of the support. This form states that the person who signs it will not claim an exemption in 1994 for the person he or she helped to support. Birth or Death of Dependent You can take an exemption for a dependent who was born or who died during 1994 if he or she met the tests for a dependent while alive. This means that a baby who lived only a few minutes can be claimed as a dependent. Income A Hawaii resident is subject to income tax on his or her entire income earned worldwide. Examples of Income You Must Report Wages, including salaries, bonuses, commissions, fees, and tips. U.S. Cost of Living Allowance. Living Quarter Allowance. Dividends (Part II) Interest (Part I) on: tax refunds; bank deposits, bonds, notes; bonds issued by other states and local governments; and accounts with savings and loan associations, mutual savings banks, credit unions, etc. Unemployment compensation benefits. Temporary Disability Insurance Benefits to the extent that such amounts: are attributable to contributions by your employer which were not includible in your gross income, or are paid by your employer. Examples of Income You Do Not Report Pensions where no employee contributions are involved. All Government payments and benefits made to veterans and their families. Dividends on Veteran s Government Insurance Benefits paid by the Hawaii Retirement System or similar public (federal, city and county, or other state) retirement system. Workmen s compensation, insurance, damages, etc., for bodily injury or sickness. Interest on Federal, Hawaii State and County municipal bonds. Also, U.S. Savings Bonds. Interest on bonds issued by the Governments of Puerto Rico, Virgin Islands, and Guam. Life insurance proceeds upon death. Social Security benefits. Railroad Retirement Act benefits. Gifts, inheritances, bequests. Compensation by Hawaii or the U.S. to a patient affected with leprosy. Child support. Welfare benefits. Amounts you received from an insurance company because you lost the use of your home due to fire or other casualty to the extent the amounts were more than the cost of your normal expenses while living in your home. (You must report reimbursements for normal living expenses as income.) Contributions to an annuity purchased by qualified nonprofit organization or public school or deferred compensation plans with respect to service for State or local government. Amounts you received as combat duty pay while deployed to an area designated as a combat zone by the President of the United States. Rounding Off to Whole Dollars You may round off cents to the nearest whole dollar on your return. But, if you do round off, do so for all amounts. You can drop amounts under 50 cents. Increase amounts from 50 to 99 cents to the next dollar. Example: $1.39 becomes $1 and $2.69 becomes $3. 5 Line 7 Wages, Salaries, Tips, etc. Enter the total of all the wages shown on your HW-2 forms. If you received federal Form W-2, report the amount in box 17, State wages, tips, etc. For a joint return, add the totals for you and your spouse. Report all wages you received even if you don t have an HW-2 form. If all your tips are not shown on your HW-2 forms, add these amounts in, too. Include amounts received under an employerpaid dependent care benefit plan from Form N-141, Part III. If you have received any benefits from such a plan for the taxable year, you must complete Form N-141 and file it with your Form N-13. Also, include on this line amounts received as cost of living allowance, living quarter allowance, and temporary disability insurance benefits. If you lose an HW-2 form, ask your employer for a new one. If your employer does not give you an HW-2 form by January 31, or if the one you have is not correct, contact your employer as soon as possible. Only your employer can issue or correct your HW-2 form. If you can t get an HW-2 form from your employer by February 15, contact your taxation district office. Lines 8 and 9 6 Interest and Dividend Income Line 8 Interest Income Enter your total interest income from banks, savings and loan associations, credit unions, notes and loans, and others on line 8. Include any interest you received or that was credited to your account so you could withdraw it even if it wasn t entered in your passbook. Be sure to include interest on tax refunds. If your total interest income is more than $400 you must list the name of the payer and the amount of interest on page 2 of Form N-13. Note: If you received interest as a nominee for someone else, or you received or paid accrued interest on securities transferred between interest payment dates, you may NOT file Form N-13. You MUST file Form N-12 instead. Line 9 Dividends Enter your total ordinary dividends on line 9. Ordinary dividends are dividends paid out of earnings and profits. Assume that any dividend you receive is an ordinary dividend unless the paying corporation tells you otherwise. Dividends that are reinvested in stock purchase plans are taxable and should also be entered on line 9. Do not include nontaxable distributions on line 9. In general, distributions that are NOT made out of earnings and profits are a return of your investment and will not be taxed until you get back your cost. You must reduce your cost (or other basis) by the amount of nontaxable distributions received. After you get back all of your costs (or other basis), you must report these distributions as capital gains on Form N-12. If the total of your ordinary dividends and nontaxable distributions is more than $400 you must list the name of the payer and the amount of dividends on page 2 of Form N-13. Page 9

139 Note: If you received any capital gain distributions, or you received dividends as a nominee for someone else, you may NOT file Form N-13. You MUST file Form N-12 instead. 7 Line 10 Unemployment Compensation Unemployment compensation (insurance) you received is taxable. You should get a statement, on federal Form 1099-G, showing the total unemployment compensation paid to you during the year. For payments in 1994, you should receive this statement by January 31, Enter on line 10 the amount from federal Form 1099-G. Do not include on line 10 any supplemental unemployment benefits you received from a companyfinanced supplemental unemployment benefit fund. Instead, report these benefits as wages on Form N-13, line 7. 8 Line 11 Adjusted Gross Income Add the amounts on lines 7, 8, 9 and 10. Note: If you can be claimed as a dependent on another person s return, check the box under line Line 12 Standard Deduction Taxpayers who do not itemize their deductions may reduce their adjusted gross income by the amount of the standard deduction appropriate to their filing status. The amount of the standard deduction for each filing status is listed below: Filing Standard Status Deduction Single $1,500 Married filing jointly $1,900 Married filing separately $ 950 Head of Household $1,650 Qualifying Widow(er) $1,900 Standard deduction for dependents. Your standard deduction is limited to the greater of $500 or your earned income (up to the full standard deduction for your filing status). Enter the appropriate amount on line 12. The standard deduction for an individual who can be claimed as a dependent on the tax return of another taxpayer is computed as follows: A. Enter the amount from Form N-13, line 7... A. B. Minimum amount... B C. Compare the amounts on lines A and B above. Enter the LARGER of the two amounts here.... C. D. Maximum amount. Enter the full standard deduction for your filing status, shown in the chart above, here... D. E. Compare the amounts on lines C and D above. Enter the SMALLER of the two amounts here and on Form N-13, line E. Line 13 Subtract line 12 from line 11 and show the difference on line 13. REMINDER: This line MUST be filled in. 10 Line 14 Exemptions Regular Exemptions You are allowed $1,040 for each exemption you can claim. Multiply $1,040 by the number of exemptions shown on line 6e. Enter the amount on line 14. Remember, if you can be claimed as a dependent on another person s tax return, you may not claim an exemption for yourself. Blind, Deaf, or Totally Disabled Definition, Certification and Exemptions. Check the appropriate box(es) on line 14 if you are blind, deaf or disabled and your impairment has been certified. The disability exemption will be disallowed and your return processed without the exemption(s) claimed if you have not qualified for this special exemption by completing Forms N-172 and N-857 prior to filing your return and you will be required to file an amended return AFTER submitting the Forms N-172 and N-857, in order to claim this exemption. Blind means a person whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or whose visual acuity is greater than 20/200 but is accompanied by a limitation in the field of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees. Deaf means a person whose average loss in the speech frequencies ( Hertz) in the better ear is 82 decibels, A.S.A., or worse. Person totally disabled means a person who is totally and permanently disabled either physically or mentally, which results in the person s inability to engage in any substantial gainful business or occupation. It is presumed that a person whose gross income, before deductions and exemptions, exceeds $30,000 per year is engaged in a substantial, gainful business or occupation. The impairment of sight, deafness or disability shall be certified to on the basis of a written report on an examination performed by a qualified ophthalmologist or qualified optometrist or a qualified otolaryngologist, or a qualified physician, as the case may be. A blind, deaf, or totally disabled person who qualifies and elects the special exemption shall be allowed the following exemptions: Single $ 7,000 Husband and wife $14,000 Husband or wife (joint return) $ 8,040 Husband or wife (both over 65) $ 9,080 For more information, see Tax Information Release No. 89-3, State Tax Benefits Available to Persons with Impaired Sight, Impaired Hearing, or Who are Totally Disabled and Tax Information Release No. 94-2, State Tax Benefits Available to Persons Totally Disabled. Note: If you claim this special exemption, you will not be able to claim the additional exemptions for your children or other dependents. Enter the appropriate amount on line Line 15 Taxable Income Subtract line 14 from line 13. This is your taxable income. Your tax is figured on this amount. If line 15 is less than $100,000, please continue. If line 15 is $100,000 or more, you CANNOT use Form N-13. You MUST file Form N-12. If You Qualify, the Hawaii Department of Taxation Will Figure Your Tax If you want us to, we will figure your tax for you. If you paid too much we will send you a refund. If you did not pay enough, we will bill you for the balance. We will not charge you interest or penalties if the bill for tax due is paid within 30 days of the notice date, or by the due date for your return, whichever is later. We can do this ONLY if: a. You fill in the parts of your return through lines 15,17, and 19a through 19h, if you wish to claim the applicable tax credits. The Department of Taxation will NOT fill in these lines for you. b. You attach a copy of all your HW-2 forms to your Form N-13. c. You complete Parts I and II on page 2 of Form N-13 if required. d. You (and your spouse if filing a joint return) sign and date your return. CAUTION: The Department of Taxation will complete lines 16, 18, 20, 21, 22, or 23 if left blank. You MUST, however, complete lines 15, 17, and 19a through 19h if you qualify and wish to CLAIM any of these credits. You will not receive ANY credit for what you did not claim. 12 Line 16 Figuring Your Income Tax If line 15 is less than $100,000, find your tax in the Hawaii Tax Table on pages unless you must file Form N-615, Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1,000. See Form N-615 and instructions for more information. If line 15 is $100,000 or more you CANNOT file Form N-13. Instead, you must file Form N-12 and use the Tax Rate Schedules to figure your tax. Be sure you use the correct column in the Hawaii Tax Table. After you have found the correct tax, enter that amount on line Line 17 Energy Conservation Tax Credit Each resident taxpayer who files an individual income tax return for 1994 may claim a tax credit against his or her individual income tax liability for a solar or wind energy system, heat pump, or ice storage system installed and placed in service in Additions to existing systems (e.g., additional solar energy panels) and systems for a second home qualify for this credit. The cost of repairs to existing systems (e.g., replacing solar energy panels), however, do not qualify for this credit. The tax credit shall apply only to the actual cost of the solar or wind energy system, heat pump, or ice storage system, including accessories and installation, and shall not include the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system or heat pump (such as free gifts, offers to pay electricity bills, or rebates). Page 10

140 The tax credit may be claimed for the following energy conservation systems installed and placed in service after 12/31/89 (12/31/90 for ice storage systems), but before 1/1/99: Type of Energy Conservation System Tax Credit Rate 1. Wind energy systems 20% of the actual cost of the system. 2. Solar energy systems a. New and existing single family residential buildings b. New and existing Multi-unit buildings used primarily for residential purposes. c. New and existing hotel, commercial and industrial facilities. 3. Heat pumps a. New and existing single family residential buildings b. New and existing Multi-unit buildings used primarily for residential purposes. c. New and existing hotel, commercial and industrial facilities. The lesser of 35% of the actual cost of the system or $1,750. Per building unit: The lesser of 35% of each unit s actual cost of the system or $ % of the actual cost of the system. The lesser of 20% of the actual cost of the system or $400. Per building unit: The lesser of 20% of each unit s actual cost of the system or $ % of the actual cost of the system. 4. Ice storage systems 50% of the actual cost of the system. In the event that tax credits claimed exceed the amount of the income tax payments due, the excess of credits may be carried over to subsequent years until used up. To determine this tax credit, use Form N-157 and attach the form to individual income tax return Form N-13, and enter on page 2, line 17, the amount of the credit claimed. For more information see Form N Line 19a Total Hawaii Income Tax Withheld Enter the amount of Hawaii income tax withheld as shown on your HW-2 form. If you have more than one HW-2 form, add the amounts of Hawaii income tax withheld. If you are filing a joint return, add the amounts of Hawaii income tax withheld for you and your spouse. 15 Line 19b Amount Paid With Extension(s) If you filed Form N-101A and/or N-101B to get an extension of time to file Form N-13, enter the amount you paid on this line. Other Credits IMPORTANT!! The amount of any credit claimed on lines 19c through 19h which total more than your tax liability will be refunded to you provided the amount is not less than $1.00. It is very important that you carefully read the following instructions for each of these credits to ensure that you properly claim all the credits for which you are entitled. 16 Line 19c Food/Excise Tax Credit Note: Do not claim this credit if you are eligible to be or are being claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes. Each qualifying resident individual taxpayer who files an individual income tax return Form N-13 for 1994 and who is not claimed or is not otherwise eligible to be claimed as a dependent by any taxpayer for federal or Hawaii individual income tax purposes may claim the food/excise tax credit of a calculated amount per qualified exemption for What is a Qualified Exemption? A qualified exemption meets the following requirements: Those personal exemptions permitted under the Hawaii Income Tax Law EXCEPT the additional exemptions for deficiencies in vision, hearing, or other disabilities; Each person for whom this credit is being claimed MUST have been a resident of Hawaii and physically present in Hawaii for more than nine months during the taxable year; Birth or death of a dependent: Should a person who is a qualified exemption die during 1994, a credit may be claimed for the deceased person so long as the person was alive until after September 30, If a child is born during 1994, a credit may be claimed for the child provided the mother was physically present in the State while pregnant with the child and the total aggregate days of gestation and life after birth total at least nine months during the taxable year. In addition, for the purposes of claiming the food/excise tax credit and the general income tax credit, a minor child receiving support from the Department of Human Services of the State, social security survivor benefits, and the like, may be considered a dependent and an exemption of the parent or guardian for purposes of claiming the credit only. This credit is not available to: any person convicted of a felony who is confined in prison for the full taxable year; any person, who would otherwise qualify as a dependent, who is confined in a youth correctional facility for the full taxable year; OR any misdemeanant who is confined in jail for the full taxable year. Food portion of the tax credit. This refundable $55 credit is multiplied by the number of qualified exemptions to which the taxpayer is entitled regardless of adjusted gross income. For this portion of the tax credit, a qualified exemption does not include the additional exemptions for taxpayers age 65 or over. Excise portion of the tax credit. The excise portion of the tax credit, which is based upon adjusted gross income, is multiplied by the number of qualified exemptions to which the taxpayer is entitled. For this portion of the tax credit, a qualified exemption also includes the additional exemption for taxpayers age 65 or over. A husband and wife filing separate returns for 1994, where a joint return could have been made by them, shall claim only the tax credit to which they would have been entitled had a joint return been filed. In a case where a married person files a separate return because his or her spouse is a nonresident, their combined adjusted gross income must be used to determine the amount of the tax credit. Amount of Excise Tax Credit Read down the column in the table below until you find the amount of your Adjusted Gross Income. Then read across the line to the column headed Tax Credits. Multiply the amount indicated there by the number of qualified exemptions to which you are entitled. The resultant amount constitutes the tax credit. Adjusted Gross Income Tax (Form N-13, Line 11) Credit Under $ 6,000 $55 $ 6,000 under 8, ,000 under 10, ,000 under 12, ,000 under 15, ,000 under 20, ,000 under 30, ,000 and over 0 To Claim This Credit. Complete Form N-311 and attach that form to your return. Enter on line 19c (i) the number of qualified food portion exemptions from Form N-311, Part II, line 1. On line 19c (ii) enter the number of qualified excise portion exemptions from Form N-311, Part II, line 8. On line 19c (iii) enter the number of qualified exemptions claimed for minor children receiving support from the Department of Human Services, social security survivor s benefits, etc. from Form N-311, Part II, line 10. If you file married filing separately, enter your spouse s adjusted gross income on line 19c (iv). Enter the total amount of the credit claimed on line 19c from Form N-311, Part II, line 14. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 19d Credit for Child and Dependent Care Expenses Certain payments made for child and dependent care may be claimed as a credit against your tax due. If you maintain a household that included a child under age 13 or a dependent or spouse incapable of self-care, you may be allowed a credit of up to 25% of employment related expenses. These expenses must have been paid during the taxable year in order to enable you to work either full or part time. For detailed information and to determine this tax credit, use Form N-141 and attach this form to your return. 18 Line 19e Credit for Low-Income Household Renters Each resident taxpayer who occupies and pays rent for real property within the State as his or her residence and who files an individual income tax return for the taxable year, including those who have no income or no income taxable under chapter 235, HRS, may claim a tax credit of $50 per qualified exemption, including the additional exemption for taxpayers age 65 or over, to which he or she is entitled (See What is a Qualifed Exemption on this page) provided the following three conditions are met: The taxpayer is not eligible to be claimed as a dependent for federal or State income tax purposes by another taxpayer; Page 11

141 The taxpayer has adjusted gross income of less than $30,000; and The taxpayer has paid more than $1,000 in rent during the taxable year. Note: A minor child receiving support from the Department of Human Services of the State, social security survivor benefits, and the like, is NOT considered a qualified exemption for the purpose of claiming the credit for low-income household renters. A residence is defined as the dwelling place that constitutes the principal residence of the taxpayer or his or her immediate family in this State, and does not include a temporary dwelling which is used for vacation, educational, or other temporary purposes. For purposes of claiming this credit, RENT means: the amount paid in cash for the taxable year for the occupancy of a dwelling place which is NOT partially or wholly exempted from real property tax; and the money paid for use of the dwelling only and does not include ground rent, utilities, goods, services, and the like. Rent DOES NOT include: any amounts claimed as a deduction from gross or adjusted gross income for income tax purposes, or any amount received as a rental allowance or rental subsidy from any source. Resident taxpayer shall be determined under the provisions of section 235-1, HRS, and any rules relating to that section. In the case where a rental unit is occupied by two or more individuals and more than one individual is able to qualify as a claimant, the claim for credit shall be based upon a pro rata share of the individual s rent paid in the taxable year. A husband and wife filing separate returns for a taxable year for which a joint return could have been made by them shall claim only the tax credit to which they would have been entitled had a joint return been filed. In a case where a married person files a separate return because his or her spouse is a nonresident, combined income must be used as a basis in determining the amount of low-income household renter credit. To Claim This Credit. Use Form N-153 and attach the form to your return. For detailed information to determine this tax credit, see the instructions on Form N-153. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 19f Credit for General Income Tax Note: Do not claim this credit if you are being claimed or eligible to be claimed as a dependent by any taxpayer for federal or Hawaii income tax purposes. This is a one-time $1.00 general income tax credit for qualifying resident taxpayers for the year The credit is multiplied by the number of qualified exemptions to which the taxpayer is entitled, with the exception of the exemptions for age, regardless of adjusted gross income (See What is a Qualifed Exemption on page11). The credit is refundable regardless of income tax liability for Note: Taxpayers who have been residents of the State for nine months of the taxable year Page 12 qualify for this credit even though not physically residing in the State for the nine-month period. The credit is not based on adjusted gross income. The credit is figured on a fixed amount of $1.00 per qualified exemption. This credit is not available to: 1) any person convicted of a felony who is confined in prison for the full taxable year; 2) any person, who would otherwise qualify as a dependent, who is confined in a youth correctional facility for the full taxable year; or 3) any misdemeanant who is confined in jail for the full taxable year. To Claim This Credit. There is no special form to be filed. All you need to do is multiply $1.00 by the number of your qualified exemptions. Enter the amount on line 19f. Deadline for claiming this credit. Claims for this credit, including any amended claims thereof, must be filed on or before December 31, Line 19g Credit for Child Passenger Restraint System Each resident taxpayer who files an individual income tax return for the taxable year may claim a tax credit for 1994 for the purchase of one or more new child passenger restraint systems which can be shown to be in substantial conformity with specifications for such restraint systems set forth by the federal motor vehicle safety standards which were in effect at the time of such purchase Note: This credit is $25 per return regardless of the cost or the number of restraint systems purchased. To Claim this Credit. Use Form N-165 and attach the form with a copy of the sales invoice, which states the type of child restraint system purchased, to your return. Deadline for claiming this credit. Claims for the tax credit, including any amended claims thereof, must be filed on or before December 31, Line 19h Medical Services Excise Tax Credit Each resident individual taxpayer who files an individual income tax return for 1994, whether or not he or she has no income or no income taxable under Chapter 235, HRS, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii individual net income tax purposes, may claim the medical services excise tax credit for The tax credit is four percent of qualified medical expenses paid by the resident individual during 1994, plus six percent of the nursing facilities expenses paid by the resident individual during The portion of the tax credit attributable to medical expenses claimed on each individual income tax return shall not exceed: $200; $400 for a resident individual sixty-five years of age or over; or $600 for a resident individual and spouse both sixty-five years of age or over. The preceding limitations shall not apply to the portion of the credit attributable to nursing facilities expenses; provided that a husband and wife filing separate returns for a taxable year for which a joint return could have been filed by them can claim only the credit to which they would have been entitled had a joint return been filed. The term qualified medical expenses is defined to include those medical expenses paid for the taxpayer or the taxpayer s dependent allowable as deductions for income tax purposes under IRC section 213, provided that the medical expense was subject to the imposition and payment of the general excise tax under Chapter 237, HRS. Nursing facility expenses are amounts actually paid by the taxpayer for services provided to the taxpayer or to any individual who bears a relationship to the taxpayer as described in IRC section 152(a) by a nursing facility licensed under section 321-9, HRS, and , HRS, and any intermediate care facility for mentally retarded persons under sections 321-9, HRS, and , HRS, provided that the nursing facility expense was subject to the imposition and payment of the nursing facility tax. Do not reduce the amount of medical expenses and nursing facility expenses paid during 1994 by any insurance reimbursements (including medicare) made either to you or directly to a medical services provider. Examples of qualified medical expenses include amounts you paid for: Doctors Fees Paid to: Chiropodists Pediatricians Neurologists Ophthalmologists Dermatologists Chiropractors Osteopaths Anesthesiologists Dentists Podiatrists Gynecologists Optometrists Psychiatrists Obstetricians Psychologists Surgeons For-profit Institutions: Hospital Sanitarium* Rest Home* Convalescent Home* Nursing Home* *If availability of medical care is the principal reason for the individual s being there, the entire cost (including meals and lodging) is a medical expense. If a person is there for basically non-medical reasons, only that part of his costs which constitutes medical care is a medical expense. Others: Legal vasectomy or abortion Acupuncture Alcoholism: Payments to a treatment center for alcoholics or drug addicts (includes meals and lodging provided by the center during medical treatment) Ambulance services Braille books and magazines: The part of the cost of braille books and magazines for use by a blind or visually handicapped person that is more than the price for regular books and magazines. Car: The cost of special hand controls and other special equipment installed in a car for the use of a handicapped person. Also, the amount by which the cost of a car specially designed to hold a wheelchair is more than the cost of a regular car. Cosmetic surgery necessary to correct a deformity arising from or directly related to: a congenital abnormality; a personal injury resulting from an accident or trauma; or a disfiguring disease.

142 Dental treatment: Includes x-rays, fillings, braces, extractions, dentures. Psychiatric care: Includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Electrolysis or hair removal: Must be performed by a licensed technician. Eyeglasses and contact lenses Eye examinations Hair transplant Hearing aids, including batteries Laboratory fees Legal fees: Paid to authorize treatment for mental illness. Medical information plan: Amounts paid to a plan that keeps your medical information that can be retrieved from computer data bank for your medical care. Mentally retarded, home for: The cost of keeping a mentally retarded person in a special home on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. Nursing services Operations Oxygen or oxygen equipment: When used to relieve breathing problems caused by a medical condition. Wigs Purchased upon the advice of a physician for a chemotherapy patient. Cassette books for a visually handicapped person: The difference in cost between the cassette and the book. Psychoanalysis Sterilization Therapy Transplants: Payments for surgical, hospital, laboratory, and transportation expenses for a donor or possible donor of a kidney or other organ. Transportation: Includes actual car expenses (e.g. gas, oil). X-ray fees Diagnostic fees Orthopedic shoes Artificial teeth Special diet: When prescribed as an addition to the regular diet, exclusively for the treatment of an illness. Special mattress: When prescribed for the relief of a specific condition (e.g. arthritis). Air conditioner: When used for relief of a specific illness or condition (e.g. allergy). The above is not an exclusive list of medical expenses allowed under Internal Revenue Code section 213. Qualified medical expenses DO NOT include the following: Capital improvements; Prescription drugs defined under section (23), HRS; Prosthetic devices defined under section (23), HRS; Amounts paid as premiums for medical insurance coverage; and Amounts paid to non-profit institutions. Amounts paid for any cosmetic surgery which is directed at improving the appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. To Claim This Credit. Complete Form N-858 and attach that form to your return. Deadline for claiming this credit. Claims for the tax credit, including any amended claims thereof, must be filed on or before December 31, For more information on the medical services excise tax credit, see Tax Information Release No. 90-2, Medical Services Excise Tax Credit - Qualified Medical Expenses and Tax Information Release No. 90-5, Medical Services Excise Tax Credit - Health Maintenance Organizations (HMO). 22 Line 21 Amount Refunded to You If line 20 is larger than line 18, subtract line 18 from line 20 and show the difference on line 21. This is the amount that will be refunded to you. If line 21 is less than $1.00, we will not send you a refund unless you ask for it in writing when you file your return. If the refund is large, you should see your payroll office about reducing the amount of tax that is withheld from your wages. 23 Line 22 Amount You Owe If line 18 is larger than line 20, subtract line 20 from line 18 and show the difference on line 22. This is the balance you still owe. If line 22 is less than $1.00, you do not have to pay. You may pay by check or money order made payable to Hawaii State Tax Collector. Write your social security number and 1994 Form N-13" on your check or money order and attach it to your return. Please pay in U.S. dollars. Note: If you include penalty and/or interest for the late filing of your return with your payment, identify and enter these amounts on a separate sheet of paper and attach to Form N-13. Do not include the penalty and/or interest amounts for the late filing of your return in the Amount You Owe on line 22 of Form N Line 23 Estimated Tax Penalty See the instructions for Penalties and Interest on this page and Form N-210 to see if you owe a penalty for the underpayment of estimated taxes. If you owe a penalty, enter the penalty amount on Form N-13, line 23. Add the penalty amount to any tax due and enter the total on line 22. If you have an overpayment, subtract the penalty amount from the overpayment you show on line 21. However, if your overpayment is less than the penalty amount, enter the difference as a balance due on line Line Forms If your Form N-13 is prepared by someone else, or if you do not need Hawaii income tax forms mailed to you next year, check the box at line 24, and you will receive a pre-printed label only. 26 Completing Your Return Sign and Date Your Return Form N-13 is not considered a valid return unless you sign it. Your spouse must also sign if it is a joint return. Attach a copy of your HW-2 or federal W-2 forms to your return. Did You Have Someone Else Prepare Your Return? If you fill in your own return, the Paid Preparer s Information space under your signature should remain blank. If someone prepares your return and does not charge you, that person should not sign your return. Generally, anyone who is paid to prepare your tax return must sign it and fill in the other blanks in the Paid Preparer s Information area of your return. If you have questions about whether a preparer is required to sign your return, please contact your taxation district office. The preparer required to sign your return MUST complete the required preparer information and: Sign it, by hand, in the space provided for the preparer s signature. (Signature stamps or labels are not acceptable.) Give you a copy of your return in addition to the copy to be filed with your taxation district office. Reminders Refund Processing In general, refunds due to you are issued within 8 weeks from the date your return is filed with the Department of Taxation. However, it may take additional time if you filed your return close to the April 20 filing deadline, if errors were made in completing your return, or you moved and did not change your address in writing with the district tax office with which you filed your return. Please do not contact the Department regarding the status of your refund until at least 8 weeks have passed from the date your return was filed with the Department. Penalties and Interest a. Late Filing of Return. The law provides a penalty of 5% of the tax due for each month, or part of a month, the return is late (maximum 25%) unless you can show reasonable cause for the delay. If you file a return late, attach a full explanation to your return. b. Interest. Interest will be charged on taxes not paid by their due date, even if an extension of time to file is granted. The interest rate for not paying tax when due is 2/3 of 1% of the unpaid amount for each month or part of a month it remains unpaid. c. Failure to pay tax after filing timely returns. If a return is timely filed and the tax due is not completely paid within 60 days of the due date of the return, an amount up to 20% of the unpaid tax will be added to the tax due. d. Underpayment of estimated taxes. Starting with taxable years beginning after December 31, 1992, the Department will be imposing the penalty for the underpayment of estimated tax Page 13

143 as provided in section (f), HRS. If applicable, this penalty shall be added to the tax for the taxable year in an amount determined at the rate of eight percent (8%) a year upon the amount of the underpayment for the period of the underpayment. The amount of the underpayment is the excess of the required installment, over the amount, if any, of the installment paid on or before the due date for the installment. The period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier (1) the 20th day of the 4th month following the close of the taxable year (the due date of the income tax return withhout extension), or (2) with respect to any portion of the underpayment, the date on which the portion is paid. A payment of estimated tax on any installment date shall be credited against unpaid required installments in the order in which the installments are required to be paid. Generally, if at least: (1) 90% (66 2/3% for farmers and fishermen) of the 1994 tax liability; (2) 100% of the tax shown on the 1993 return (110% of that amount if the individual s adjusted gross income on that return is more than $150,000, and less than 2/3 of gross income for 1993 or 1994 is from farming or fishing); or (3) 90% of the tax figured by annualizing the taxable income, whichever is smallest, is not prepaid, a penalty for not paying enough estimated tax may be charged. For more information, see Form N-210. Change of Address If your mailing address changes after you file your return, you must notify the Department in writing of the change in addition to notifying the post office serving your former address. Failure to do so may prevent any refund due to you from being delivered (the postal service is not permitted to forward your State refund check), and delay important notices or correspondence to you regarding your return. Be sure to include your name(s) and social security number(s) as printed on your return in any correspondence with the Department. How Long Should Records Be Kept? Keep records of income and credits appearing on your tax return until the statute of limitations runs out for that return. Usually this is 3 years from the date the return was due or filed, or 3 years from the date the tax was paid, whichever is later. Also keep copies of your filed tax returns as part of your records. You should keep some records longer. For example, keep property records (including those on your own home) as long as they are needed to figure the basis of the original or replacement property. Amended Return If you file your income tax return and later become aware of any changes you must make to income, deductions, or credits, file Form N-188X, Amended Individual Income Tax Return, to change the Form N-12, Form N-13, Form N-13EZ, or Form N-15 you already filed. Change In Federal Taxable Income In general, a change to your federal return, whether it is made by you or by the Internal Revenue Service, must be reported to the State of Hawaii. 1) Section (b), HRS, requires a report to the Director of Taxation if the amount of IRC taxable income is changed, corrected, adjusted or recomputed as stated in (3). 2) This report must be made: a) Within 90 days after a change, correction, adjustment or recomputation is finally determined. b) Within 90 days after an amended return is filed. 3) A report within the time set out in (2) is required if: a) The amount of taxable income as returned to the United States is changed, corrected or adjusted by an officer of the United States or other competent authority. b) A change in taxable income results from a renegotiation of a contract with the United States or a subcontract thereunder. c) A recomputation of the income tax imposed by the United States under the Internal Revenue Code results from any cause. d) An amended income tax return is made to the United States. 4) The statutory period for the assessment of any deficiency or the determination of any refund attributable to the report shall not expire before the expiration of one year from the date the Department is notified by the taxpayer or the Internal Revenue Service, whichever is earlier, of such a report in writing. Before the expiration of this one-year period, the Department and the taxpayer may agree in writing to the extension of this period. The period so agreed upon may be further extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. Page 14

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