Report Title:

Long-Term Care Insurance Premium Tax Credit

Description:

Provides tax credit to resident taxpayers, regardless of adjusted gross income, for long-term care insurance premiums at lesser of $2,000 or 20% of the amount of the insurance premium paid. Prohibits medical expense deduction for long-term care insurance cost if tax credit is claimed.

HOUSE OF REPRESENTATIVES

H.B. NO.

1768

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to long-term care insurance premium 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-   Long-term care insurance premium 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 Hawaii state individual income tax purposes, regardless of adjusted gross income, may claim a long-term care insurance premium credit against the resident taxpayer's net individual income tax liability for the taxable year in which the credit is claimed and for which the individual's income tax return is being filed; provided that a resident individual who has no income taxable under this chapter, and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for Hawaii state individual income tax purposes, may claim this credit.

(b) The tax credit for a resident individual taxpayer, including a resident husband and wife filing a joint return, shall be an amount equal to the lesser of the following amounts:

(1) $2,000; or

(2) Twenty per cent of any long-term care insurance premium payments made by the resident individual taxpayer for the taxable year in which the payments were made;

provided that a resident husband and wife filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled under this section had a joint return been filed.

For the purposes of this section, "long-term care insurance" shall have the same meaning as in section 431:10H-104.

(c) If a deduction is taken under this chapter pursuant to section 213 (with respect to medical, dental, etc., expenses) of the Internal Revenue Code of 1986, as amended, no tax credit shall be allowed for that portion of the cost of long-term care insurance for which the deduction was taken.

(d) The credit applies to premium payments for a long-term care insurance contract that covers:

(1) The taxpayer;

(2) The taxpayer's dependent as defined in section 152 of the Internal Revenue Code of 1986, as amended;

(3) The taxpayer's spouse;

(4) A son or daughter of the taxpayer;

(5) A stepson or stepdaughter of the taxpayer;

(6) A parent of the taxpayer; or

(7) A stepparent of the taxpayer.

(e) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(f) 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 credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2003.

INTRODUCED BY:

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