Haw. Code R. § 18-235-1.14
Example 1: Taxpayer retires from employment on disability that is total and permanent. After retirement, Taxpayer accepts another job and Taxpayer's earned income is greater than $30,000 for the taxable year. Taxpayer is engaged in a substantial gainful business or occupation because Taxpayer's earned income is greater than $30,000 for the taxable year.
Example 2: Taxpayer retires as a teacher on disability that is total and permanent. Taxpayer begins babysitting children and selling items. Taxpayer's earned income from these two businesses is greater than $30,000 for the taxable year. Taxpayer is engaged in a substantial gainful business or occupation because Taxpayer's earned income is greater than $30,000 for the taxable year.
Example 1: A and B file a joint income tax return. Only A is disabled. A's earned income is less than $25,000 for the taxable year. B's earned income is greater than $30,000 for the taxable year. For purposes of determining whether an individual is engaged in a "substantial gainful business or occupation," only the disabled spouse's earned income is measured when a joint tax return is filed. A is not engaged in a substantial gainful business or occupation because A's earned income is less than $30,000 for the taxable year.
Example 1: Taxpayer retires on disability that is total and permanent and receives an insurance settlement. Taxpayer does not engage in any other employment. The insurance settlement is invested and Taxpayer receives $35,000 in interest, dividends, and capital gains during the taxable year. Taxpayer is not engaged in a substantial gainful business or occupation because earned income does not include interest, dividends, and capital gains.
Example 2. Taxpayer works for wages and receives $20,000 in wages for the taxable year. Taxpayer also has net earnings from self-employment of $8,000 and gross earnings from self-employment of $75,000 for the taxable year. Taxpayer has earned income of $95,000 for the taxable year and is engaged in a substantial gainful business or occupation because earned income includes the $20,000 in wages and $75,000 of gross earnings from self-employment.
Example 3. Taxpayer has gross earnings from selfemployment of $60,000 for the taxable year. Taxpayer is engaged in a substantial gainful business or occupation because earned income includes the $60,000 of gross earnings from self-employment.
Example 4. Taxpayer has gross earnings from self-employment of $59,999 and net earnings from self-employment of $30,000 for the taxable year. Taxpayer has earned income of $30,000 for the taxable year and is not engaged in a substantial gainful business or occupation. Taxpayer's earned income includes net earnings from self-employment because gross earnings from self-employment are less than $60,000 for the taxable year.
Example 5. Taxpayer works for wages and receives $10,000 in wages for the taxable year. Taxpayer also has gross earnings from self-employment of $59,999 and net earnings from self-employment of $25,000 for the taxable year. Taxpayer has earned income of $35,000 for the taxable year and is engaged in a substantial gainful business or occupation because earned income includes the $10,000 of wages and the $25,000 of net earnings from self-employment.
Example 6. Taxpayer has structured her business as a C corporation for which she is sole shareholder. The corporation has gross earnings of $75,000 for the taxable year. Taxpayer earns no wages, but the corporation pays taxpayer a dividend of $25,000 for the taxable year. Taxpayer has earned income of $75,000 for the taxable year and is engaged in a substantial gainful business or occupation because earned income includes the $75,000 of gross income earned by her corporation. Entities such as corporations are disregarded for purposes of determining Taxpayer's earned income.
Example 1: Taxpayer retires on disability that is total and permanent because Taxpayer loses both feet at the ankles in an accident. After retirement, Taxpayer accepts another job and Taxpayer's earned income from that job is greater than $30,000 for the taxable year. Taxpayer is engaged in a substantial gainful business or occupation because Taxpayer's earned income is greater than $30,000 for the taxable year.
Haw. Code R. § 18-235-1.14