Haw. Code R. § 18-235-55.7

Current through September, 2024

Section 18-235-55.7 - Income tax credit for low-income household renters

(a) In general. Section 235-55.7, HRS, provides an income tax credit for low-income household renters.

As used in this section:

"Adjusted gross income" shall be defined as set forth in section 235-1, HRS.

"Dependent" shall be defined pursuant to section 152, IRC, (dependent defined).

"Principal residence" means the dwelling place that constitutes the principal place of abode of the taxpayer or the taxpayer's immediate family in this State, as opposed to a dwelling which is used for vacation, educational, or other temporary purposes.

"Qualified exemption" means an exemption which is allowed under section 235-54, HRS. Persons for whom an exemption is claimed must have physically resided in the State for more than nine months during the taxable year. There are no exceptions to this provision. Thus, a person who is out of the State for a period of three months or more, for any reason (including attending school or business), shall not qualify for an exemption.

"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. Rent shall 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 subsidy from any source. For purposes of claiming this credit, rent means the money paid for use of the dwelling only and does not include ground rent, utilities, goods, services, and the like.

"Resident taxpayer" shall be defined as an individual whose entire income is subject to tax under chapter 235, HRS, as imposed by section 235-4, HRS, without regard to source.

(b) Amount of tax credit. Each taxpayer with an adjusted gross income of less than $30,000, who has paid more than $1,000 in rent during the taxable year for which the credit is claimed, may claim a tax credit under section 235-55.7, HRS. The amount of tax credit available is calculated by multiplying $50 by the number of qualified exemptions the taxpayer is entitled; provided that a resident individual who has no income or taxable income under chapter 235, HRS, also may claim the tax credit. If a taxpayer or spouse is age sixty-five or older, the taxpayer may claim double the tax credit; however, no additional exemptions shall be granted for blindness, deafness, or total disability.

(c) Taxpayer may not be a dependent of another taxpayer. Even though a taxpayer is a resident of the State and is required to file a resident income tax return, the tax credit under section 235-55.7, HRS, may not be claimed if the taxpayer qualifies as a dependent of another taxpayer under federal or state laws and rules, even if the taxpayer entitled to claim the dependency exemption does not take it. A dependent is defined in section 152, IRC, (dependent defined), and is illustrated by the following example.

Example: Jane Doe, a full-time student, works part time and earned $1,500 during the taxable year. Jane is required to file a Hawaii resident income tax return. Her father furnished over fifty percent of her support. Although Jane's father is entitled to claim her as a dependent on both his federal and state income tax returns, he elects not to claim Jane as a dependent on his state income tax return. Jane may not claim the tax credit under section 235-55.7, HRS, since she may be claimed as a dependent by her father.

(d) Maintenance of records. Taxpayers claiming this credit shall maintain properly dated rent receipts. The receipts shall state the name of the taxpayer, the address of the dwelling for which the rent is paid, and the amount of rent paid, to substantiate the claim for the tax credit. Claims for the tax credit shall be made on forms approved by the department and are subject to section 231-34, HRS.

Haw. Code R. § 18-235-55.7

[Eff 2/16/82; am 7/23/94] (Auth: HRS §§ 231-3(9), 235-55.7, 235-118) (Imp: HRS § 235-55.7)