Another tax season is beginning!

Form and instruction packets will be mailed to Hawaii taxpayers in January. Taxpayers will receive the same form they filed for the 2001 tax year. However, Hawaii residents who checked the box on their 2001 income tax return requesting only a mailing label will instead receive a postcard-sized mailing containing their mailing label. Nonresidents will receive a nonresident form and instruction packet only if one was requested on their 2001 income tax return.

Here is some important information to help Hawaii taxpayers through the filing season.

Changes for Individual Taxpayers: The following are some of the changes listed on the inside cover of the instruction booklets:

• The 2002 income tax rates for individuals are 1.4% to 8.25% (reduced from the 2001 rates of 1.5% to 8.5%).
• A $1 per qualified Hawaii resident general income tax credit may be claimed for 2002.
• The deadline for incurring costs eligible for the 4% Residential Construction and Remodeling Income Tax Credit was extended to June 30, 2003.
• Several federal income tax provisions included in the federal Economic Growth and Tax Relief Reconciliation Act of 2002 were adopted and are applicable to Hawaii taxpayers. These include provisions relating to:

• Individual retirement account limitations;
• Education individual retirement account limitations;
• Qualified retirement plan (pension) limitations;
• Qualified tuition programs; and
• Exclusion for employer provided education assistance.

• Department of Education coaches may waive all or part of their coaching stipend; amounts waived are not reported as income on Hawaii tax returns.
• Form N-101A is no longer required to obtain an automatic 4-month extension of time to file a Hawaii individual income tax return. Use Form N-101A only if you need to make a payment. A payment should be made if additional taxes are due because the extension of time to file an income tax return is not an extension of time to pay the tax owed.

Filing Returns: The filing deadline is April 20, 2003. Because April 20th falls on a Sunday, returns filed on Monday, April 21, 2003, will be considered timely filed.

Hawaii resident Form N-11, may be electronically filed (e-filed) through the Federal/State Joint E-filing (JELF) Program. Interested persons should talk to their tax preparer about e-filing their return, or view the list of approved software vendors on our website at www.state.hi.us/tax.

The Hawaii resident short form, Form N-13, may be e-filed through the State’s Internet Portal. Go to www.ehawaiigov.org/efile for more information.

Of course, paper returns are still accepted, but e-filing speeds processing and reduces the chance of errors. This allows refunds on e-filed returns to be issued in as little as 2 weeks, as opposed to the 4 to 10 weeks (depending on how early or late in the filing season the return is filed) it takes for refunds on paper returns.

Free Tax Preparation Services. Free tax preparation services are available at the Oahu, Hawaii (Hilo Office only), and Kauai District Tax Offices from January 2, 2003, through April 21, 2003, for taxpayers filing the 2002 resident short form, Form N-13. This service will be available on a first-come, first-served basis, Mondays through Fridays (except State holidays), from 8:00 A.M. to 12:00 PM. See below for office locations.

Expect Delays (This Year): It may take just a little longer than usual to process paper returns filed in 2003. The Department successfully implemented its new income tax processing system in November, and will need to manually re-enter name and address information this first year even if a mailing label is used. More tax return information than in previous years also will be manually entered adding to the processing time.
   
No delays are expected for e-filed returns, which bypass all manual processing.

Expect Better Customer Service: More information will be available to staff about income tax returns processed through the new system. Combined with increased automation, staff can immediately answer more questions about tax returns and quickly resolve problems that may occur.

Obtaining Forms and Information: Taxpayers who require additional forms or information have a number of convenient ways to do so.

• Department Website – State tax forms, including forms with writable fields that allow users to type in their entries before printing, and a number of publications and other informational resources are available on the Department’s website at www.state.hi.us/tax.
• Forms by Fax/Mail Service – Call the Forms By Fax/Mail Service (available 24 hours a day, 7 days a week) at 808-587-7572, or toll-free from the neighbor islands and continental U.S. at 1-800-222-7572.
• 2002 Tax Information CD – The 2002 Tax Information CD will be available in late January at a cost of $10. The CD will contain the 2002 tax forms with writable fields, Tax Information Releases, Announcements, Tax Facts, brochures, and more. Call the Forms by Fax/Mail number to request an order form.
• Tax forms, information and assistance are available at any district tax office, Mondays through Fridays (except State holidays), from 7:45 A.M. to 4:30 PM. Locations, telephone numbers, and e-mail addresses are listed below.