Frequently Asked Questions Re: COLA Back Pay

September 26, 2001


Question 1: Am I required to submit a completed Form HW-4, Employee’s Withholding Allowance and Status Certificate, to the Administrator ?

Answer 1: If you receive back pay for services performed in Hawaii, you are required to submit a completed Form HW-4 to the Administrator.  Otherwise, the Administrator will withhold Hawaii income tax from your back pay based on no withholding allowance, single status.

If you receive back pay for services performed outside Hawaii and were a Hawaii resident at the time the services were performed, you are required to submit a completed Form HW-4 to the Administrator.

If you receive back pay for services performed outside Hawaii and were not a Hawaii resident at the time the services were performed, you are not required to submit a completed Form HW-4 to the Administrator.  However, you must submit to the Administrator a statement signed under the penalties of perjury explaining that the back pay relates to services performed outside Hawaii and that you were not a Hawaii resident at the time the services were performed.  Otherwise, the Administrator will withhold Hawaii income tax from your back pay based on no withholding allowance, single status.

If you are the surviving spouse or representative of a deceased employee, you do not have to submit a completed Form HW-4 to the Administrator.

Form HW-4 is available at (a) our website: Tax Forms or (b) our forms request line: 587-4242 or 1-800-222-3229 (toll free).

Question 2: If I am required to submit a completed Form HW-4 and would like additional amounts withheld, how would I request for this?

Answer 2: Include on Line 5 of Form HW-4 the additional amount to be withheld from your back pay.  If you need assistance in completing the Form HW-4, please consult your tax advisor.

Question 3: I am required to complete and submit the federal Form W-9 to the Administrator.  Does Hawaii have a form similar to the Form W-9?

Answer 3: No, Hawaii does not have a form similar to the federal Form W-9.  In addition, Hawaii does not require back-up withholding on any interest payment you may receive.

Question 4: Am I required to report the back pay and interest income for Hawaii income tax purposes?

Answer 4: If you receive back pay for services performed in Hawaii, you are required to report your back pay and interest income on your Hawaii income tax return.  The Hawaii income tax withheld (as reported on your Form W-2) can be claimed on your Hawaii income tax return.  Should any of your back pay be subject to tax in any other state or territory or possession of the United States, you may be eligible to claim a Hawaii income tax credit for the income tax paid to that state or territory or possession of the United States.

If you receive back pay for services performed outside Hawaii and were a Hawaii resident at the time the services were performed, you must report the back pay and interest income on your Hawaii income tax return.  The Hawaii income tax withheld (as reported on your Form W-2) can be claimed on your Hawaii income tax return.  Should any of your back pay be subject to tax in any other state or territory or possession of the United States, you may be eligible to claim a Hawaii income tax credit for the income tax paid to that state or territory or possession of the United States.

If you receive back pay for services performed outside Hawaii and were not a Hawaii resident at the time the services were performed, you are not required to report the back pay and interest income on your Hawaii income tax return.  Please refer to Tax Information Release No. 90-3, RE: Income Taxation and Eligibility for Credits of an Individual Taxpayer Whose Status Changes from Resident to Nonresident or from Nonresident to Resident.

If you receive back pay for a deceased employee’s services performed in Hawaii as the surviving spouse or the representative for the deceased employee, you must report the back pay and interest income on your Hawaii income tax return (N-11, N-12, N-13, N-15, or N-40).  If the deceased employee’s services were performed outside Hawaii but the deceased employee was a Hawaii resident at the time the services were performed, you must report the back pay and interest income on your Hawaii income tax return.  Should any of your back pay be subject to tax in any other state or territory or possession of the United States, you may be eligible to claim a Hawaii income tax credit for the income tax paid to that state or territory or possession of the United States.  You do not need to attach a copy of the Form 1099-MISC to your Hawaii income tax return.  However, if you receive back pay for a deceased employee’s services performed outside Hawaii and the deceased employee was not a Hawaii resident at the time the services were performed, you are not required to report the back pay and interest income on your Hawaii income tax return (see Tax Information Release No. 90-3).

The reporting tax year depends on the year the back pay and interest income were distributed (year 2001 or 2002).

2001 and 2002 Forms N-11, N-12, N-13, N-15, and N-40 will be available in January 2002 and 2003 respectively.  When the forms become available, you may obtain the Forms N-11, N-12, N-13, N-15, and N-40 at (a) our website: Tax Forms or (b) our forms request line: 587-4242 or 1-800-222-3229 (toll free).

 If you have any questions, please contact Taxpayer Services at 587-4242 or 1-800-222-3229 (toll-free).