Report Title:

Earned Income Tax Credit

Description:

Provides an earned income tax credit beginning in 2002.

HOUSE OF REPRESENTATIVES

H.B. NO.

1780

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO EARNED INCOME TAX CREDIT.

 

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- Earned income tax credit. (a) Each resident individual taxpayer who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for income tax purposes, may claim a refundable earned income tax credit. The tax credit, for the appropriate taxable year, shall be equal to:

(1) For taxable years beginning after December 31, 2001, and ending before January 1, 2003, ten per cent of the federal earned income tax credit; and

(2) For taxable years beginning after December 31, 2002, fifteen per cent of the federal earned income tax credit,

determined under section 32 of the Internal Revenue Code and reported as such on the resident individual’s federal income tax return.

(b) In the case of a part—year resident, the tax credit shall equal the amount of the tax credit calculated in subsection (a)(1) or (2) multiplied by the ratio of adjusted gross income attributed to this State to the entire adjusted gross income computed without regard to source in the State pursuant to section 235-5.

(c) For purposes of claiming the tax credit allowed by this section, a resident individual taxpayer shall use the same filing status (i.e., "married filing jointly", "head of household", "qualifying widow(er)", or "single") on their Hawaii tax return as used on the taxpayer’s federal return for the taxable year.

(d) If the tax credit under this section exceeds the taxpayer’s income tax liability, the excess of tax credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. All claims including any amended claims for tax credits 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 comply with the preceding sentence shall constitute a waiver of the right to claim the tax credit.

(e) The director of taxation:

(1) Shall prepare such forms as may be necessary to claim a tax credit under this section;

(2) May require proof of the claim for the tax credit; and

(3) May adopt rules pursuant to chapter 91 to effectuate this section."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2001.

INTRODUCED BY:

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