H.B. NO.



H.D. 2
















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

"235-   Income tax credit for exchange program hosts. (a) There shall be allowed to each taxpayer subject to the tax imposed under this chapter, a credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for qualified expenses incurred by the entity for the taxable year. The expenses upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule.

(c) The amount of the tax credit shall be equal to the qualified expenses, as defined in this section, of the taxpayer; provided that:

(1) If a deduction is taken under section 170(g) (with respect to amounts paid to maintain certain students as members of the taxpayer's household) of the Internal Revenue Code of 1986, as amended, no tax credit under this section shall be allowed for those costs for which the deduction is taken pursuant to section 170(g); and

(2) The amount of the tax credit shall not exceed $400 per month per taxpayer; provided that the taxpayer has served as a host family for the foreign exchange individual for a minimum of thirty days.

(d) The director of taxation:

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

(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section; and

(3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

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

(f) For the purposes of this section:

"Foreign exchange individual" means a person who:

(1) Is an international student or pupil, fellow, or intern, including those who are participants in an intern exchange or student exchange program of the Bureau of Educational and Cultural Affairs of the United States Department of State; and

(2) Holds a valid F-1, J-1, or M-1 visa, issued by the United States Department of State.

"Host family" means a taxpayer who provides room and board to maintain a foreign exchange individual for a minimum of thirty days; provided that the room and board is provided on a voluntary basis with no remuneration.

"Qualified expenses" means expenses incurred by a taxpayer solely and directly as a result of the taxpayer acting as a host family to a foreign exchange individual. Qualified expenses do not include any amounts paid by a taxpayer:

(1) To maintain a relative of the taxpayer as a member of the taxpayer's household, regardless of whether or not the relative of the taxpayer otherwise fulfills the requirements of a foreign exchange individual; or

(2) For which the taxpayer receives any money or other property as compensation or reimbursement for maintaining the foreign exchange individual in the taxpayer's household.

"Relative of the taxpayer" means an individual who, with respect to the taxpayer, bears any of the relationships described in section 152(d)(2)(A) to (G) of the Internal Revenue Code."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2051, and shall apply to taxable years beginning after December 31, 2016.


Report Title:

Foreign Exchange Student, Fellow, and Intern; Income Tax Credit



Establishes an income tax credit for host families of foreign exchange students, fellows, and interns. (HB547 HD2)




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