Report Title:

Tax Credits; National Guard and Reserves; Military Dependents

Description:

Provides a tax credit to members of the Hawaii National Guard and U.S. Army, Navy, Air Force, Marine Corps, and Coast Guard Reserves, with qualifying dependents. (SD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

329

TWENTY-THIRD LEGISLATURE, 2005

H.D. 1

STATE OF HAWAII

S.D. 1


 

A BILL FOR AN ACT

 

RELATING TO TAX CREDITS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Military dependent tax credit. (a) There shall be allowed to each eligible taxpayer who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who files a net income tax return for a taxable year, a military dependent tax credit that shall be deductible from the taxpayer's net income tax liability imposed by this chapter for the taxable year in which the tax credit is properly claimed.

(b) The amount of the tax credit shall be $100 per eligible taxpayer; provided that a husband and wife filing separate returns for a taxable year for which a joint return could have been filed shall claim only the tax credits to which they would have been entitled had a joint return been filed; provided further that no refund or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

(c) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal and state statutes, rules, and regulations.

(d) If the tax credit under this section exceeds the taxpayer's net income tax liability under this chapter, any excess of the tax credit may be used as a credit against the taxpayer's income tax liability in subsequent taxable years until exhausted; provided that a taxpayer who has no income or no income taxable under this chapter may also claim the tax credit under this section.

(e) Every claim, including amended claims, for the tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the tax credit may be claimed. Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

(f) The director of taxation shall prepare forms as may be necessary to claim a tax credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

(g) The department of taxation shall report to the legislature annually, no later than twenty days prior to the convening of every regular session, on the number of taxpayers claiming the tax credit and the total cost of the tax credit to the State during the past year.

(h) For the purposes of this section:

"Adopted child" means a child who is placed with the taxpayer by an authorized placement agency (as determined by the department of taxation) for legal adoption and is an adopted child even if the adoption is not final.

"Eligible foster child" means any child who is cared for by the taxpayer as the taxpayer's own and is placed with the taxpayer by an authorized placement agency (as determined by the department of taxation).

"Eligible taxpayer" means a person who qualifies for the tax deduction under paragraph 235-7(a)(7) and claims a qualifying dependent.

"Qualifying dependent" means a child who:

(1) Is under age eighteen at the end of the year that the tax credit is claimed;

(2) Has resided with the taxpayer for the entire year the tax credit is claimed;

(3) Is a citizen or resident alien of the United States;

(4) Is claimed as a dependent by the taxpayer and is related to the taxpayer as a:

(A) Son, daughter, stepson, stepdaughter, or adopted child, or a descendant of a son, daughter, stepson, stepdaughter, or adopted child, who is cared for by the taxpayer as if the child was the taxpayer's own child;

(B) Brother, sister, stepbrother, or stepsister, or the child or grandchild of a brother, sister, stepbrother, or stepsister who is cared for by the taxpayer as if the child was the taxpayer's own child; or

(C) Eligible foster child;

provided that any qualifying dependent who was born or died in the year the tax credit is claimed is considered to have lived with the taxpayer for all of the claimed year if the taxpayer's home was the qualifying dependent's home for the entire time the qualifying dependent was alive during the claimed year."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2004.