Updates for Taxpayers

Tax Year 2020 Deadline Extension

After careful consideration, the Hawaii State Department of Taxation has decided not to extend the Tax Year 2020 filing deadline. Taxpayers must file their returns by April 20, 2021.

While the law requires taxpayers to file by April 20, taxpayers are granted an automatic 6-month extension (no form is required to request the extension) to file the return through October 20, 2021 if one of these two conditions is met:

  1. The taxpayer is due a refund, or
  2. The taxpayer pays the properly estimated tax amount owed by April 20, 2021. Taxpayers who are not able to pay the properly estimated tax amount owed should pay as much as they can to avoid additional interest and penalties.

N-20 and N-40 MeF Availability Delayed

Despite our best efforts, we have encountered delays in supporting the N-20 (Partnership Tax Return) and N-40 (Fiduciary Income Tax Return) through Modernized eFile (MeF). We do not anticipate supporting these two forms through MeF until after the April 20, 2021 deadline. We apologize for any inconvenience this may cause. Our website will be updated when MeF is able to support the forms.

Adoption of Federal Tax Provisions

For more information on the adoption of the Federal Tax Provisions during the 2021 legislative session, please see page two (Act 89: Income and Estate Tax Conformity) of the following link: Tax Announcement 2021-06.

Schedule C and PPP Loans

Questions have arisen regarding Schedule C filers and how to report their forgiven PPP loans and expenses. More specifically, if Schedule C filers are allowed a double benefit for excluding forgiven PPP loans from income and still allow for expenses to be deducted. The treatment for including or excluding the expenses will depend upon what reason and amount the PPP loan application was filed.

  1. If a sole proprietor’s PPP loan was based upon their net income, aka their own wages, the PPP loan forgiven is excluded from income subject to the income tax and the sole proprietor is allowed to deduct all other expenses to determine their “wages.” There is no double benefit as the sole proprietor’s “wages” are never taken as a business expense of the sole proprietor.
  2. If the PPP loan application was submitted specifically to cover the amount of the employees’ wages and any qualified expenses, then the PPP loan forgiven is NOT reported as taxable income and the sole proprietor is NOT allowed the deductions for the PPP amounts that were received to specifically cover the wages and qualified expenses. In this case, TIR 2021-05 would apply.

For more information, please see Tax Information Release 2021-05 – Details and Timing of Paycheck Protection Program Loan Forgiveness.

Frequently Asked Questions

How do I get a six-month extension to file my return?

You are not required to file any form to request an automatic 6-month extension of time to file Form N-11 or N-15. The 6-month extension is automatically granted as long as all of the following conditions are met:

  • The properly estimated tax liability is paid on or before April 20;
  • The tax return is filed on or before October 20;
  • The tax return is accompanied by full payment of any tax not already paid; and
  • You are not bound by a court order to file a tax return on or before April 20.

Properly estimated tax liability means you have made a bona fide and reasonable attempt to locate and gather all of the necessary information to make a proper estimate of tax liability for the taxable year and at least 90% of your total tax liability shown on the return is paid.

How do I make a payment?

To make a tax payment on or before April 20, you can submit an electronic payment via Hawaii Tax Online (hitax.hawaii.gov) by selecting “Make Payment” under the “Quick Links” section with a payment type of “Estimated Payment.”

To pay by check, attach a completed Form N-200V to your payment then mail or hand-deliver to one of our drop-off boxes

See Tax Announcement No. 2007-20 for more information regarding “Extensions of Time to File Income Tax Returns.”

Does an extension to file my return give me more time to pay my taxes?

The automatic six-month extension only provides additional time to file your return. The extension does not give you more time to pay taxes owed. You must pay your properly estimated tax liability on or before April 20.

If you think you will owe tax but cannot pay the entire liability, you should pay as much as you can to avoid penalties and interest.

How do I know how much tax to pay to get the automatic extension?

You must make a bona fide and reasonable attempt to locate and account for all of the information necessary to make the estimate of the tax owed as of April 20. In addition to the information available for the current tax year, taxpayers should also consider the amount of tax owed in prior years. The Department suggests overestimating the tax owed when calculating your estimated payment to avoid penalties and interest and to qualify for the automatic extension.

What if we are waiting to see if the State will adopt any of the newly enacted federal tax reducing provisions?

The Hawaii State Legislature is currently in session and is considering adopting these provisions. We will not know whether these federal provisions will be adopted by Hawaii until after the legislative session adjourns on April 29.

The Department suggests calculating the properly estimated tax liability as if the federal provision were not adopted for Hawaii income tax when making a payment to qualify for the automatic six-month extension. If Hawaii does conform to any of the federal provisions that reduces the tax amount owed, any overpayment of estimated tax can be claimed on the return when filed.

For taxpayers who wish to file on or before April 20, the Department suggests preparing the return as if Hawaii did not conform to the federal provisions that reduce taxes. If Hawaii does conform to any of the federal provisions that reduces the tax amount owed after you’ve already submitted your return, an overpayment may be claimed by filing an amended return

What happens if my properly estimated tax liability is not paid by April 20th?

If you do not pay your properly estimated tax liability, which is at least 90% of your final tax liability as reported on your return, there is no extension. You will be assessed penalties and interest on the amount unpaid.

Will I still get the automatic extension if I don’t pay any outstanding tax liability with my return?

No, one of the conditions to receive the extension is that the full payment of any remaining unpaid tax be paid at the same time that the return is filed.

I electronically file my income tax return, how can the payment accompany the return when Hawaii does not allow for me to include my payment?

The Department deems electronic payments made on the same day that the return is electronically filed to be a payment accompanying the return.

Page Last Updated: November 18, 2021