Hawaii Tax Return for 2019: Filing as a Military Member

Active-duty military members face unique tax rules that impact their filing responsibilities and potential benefits. Their tax obligations depend on service status, duty location, and whether they or their spouses earn additional income. Understanding these obligations helps prevent costly mistakes and ensures compliance with both federal and state requirements. Special provisions exist to reduce burdens, recognizing the demands and relocations that come with military service.

Residency determines which state can tax a service member’s military income under the Servicemembers Civil Relief Act. Spouses may claim the same residency as the service member, simplifying tax filings across multiple states. Income sources beyond military pay, such as investments or part-time jobs, may still be taxable in different jurisdictions. Identifying residency and income origin ensures accurate returns and prevents double taxation or missed exemptions.

The 2019 tax year included changes to moving expense deductions, which affected most taxpayers but preserved them for active-duty relocations. Expanded eligibility for the Military Spouse Residency Relief Act allowed more spouses to retain their original state residency when moving. Adjustments to withholding rules required service members to review and update W-4 forms for accurate tax deductions. New IRS guidance clarified the treatment of specific combat zone pay exclusions, ensuring proper application for qualifying deployments.

Understanding Residency and Hawaii Income Tax for Military Members

Military members stationed in Hawaii need to understand how residency rules affect their Hawaii income tax obligations, especially when determining if they must file tax returns with the Hawaii Department of Taxation. The rules differ depending on whether Hawaii is your domicile state or simply your duty station, and they can directly impact your individual income tax return, state taxes, and eligibility for tax credits.

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1. Differentiate Your Domicile State from Your Duty Station

Your domicile is your permanent home state for income tax purposes, while your stationed location in Hawaii is your temporary duty assignment. If Hawaii is not your domicile, you generally will not owe Hawaii income tax on wages earned from military service. However, you may still need to file if you have Hawaii-sourced income, such as rental property or general excise business activity.

2. Filing Requirements Depend on Residency Status

Active-duty nonresident military members may still need to file tax returns if they earned Hawaii-based nonmilitary income during the calendar year. Part-year residents must file Form N-15 to report resident and nonresident income. Residents file Form N-11 for their income tax return, reporting all income from wages, withholding, and other sources.

3. Apply the Military Spouses Residency Relief Act (MSRRA)

Under the MSRRA, a military spouse can retain their legal domicile in another state and avoid paying Hawaii income tax on wages if their presence in Hawaii is solely to accompany their military spouse. However, they must properly follow instructions to file and claim this exemption on their tax return and still report any Hawaii income not covered by the act.

4. Use a Convenient and Secure Way to File and Pay

The Hawaii Department offers e-file and online services to handle tax forms, payments, and other everyday transactions. Taxpayers can submit a tax payment voucher, view accounts, and manage various forms for the current tax year. This convenient and secure way ensures faster processing of tax returns and avoids delays in applying for tax credits or refunds.

5. Be Aware of Additional Hawaii State Taxes

Even if you are exempt from individual income tax, you may still owe transient accommodations tax on rental income or general excise tax for business activities. Military members and spouses must check whether they have state taxes from commonline transactions, such as property rentals or side businesses, and follow the correct form and instructions to remain compliant. By clearly identifying your residency status, applying MSRRA rules correctly, and using Hawaii’s online systems for taxation, you can meet your filing obligations while avoiding overpayment of taxes.

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Military Pay Exclusions and Individual Income Tax Adjustments

Military members, particularly those in the Guard and Reserve, may qualify for specific income exclusions and tax adjustments that reduce their taxable income. Understanding these categories ensures you claim every benefit you are entitled to and file accurately.

Guard and Reserve Income Exclusions

• Annual Exclusion Cap: Eligible Guard and Reserve members can exclude up to $6,735 of qualified military pay from state taxable income.
  
  
• Eligibility Criteria: This exclusion applies only to pay earned for inactive duty training, annual training, and specific active duty periods.
  
  
• Documentation Requirement: Maintain detailed military pay statements (such as Leave and Earnings Statements) to support the excluded amount.
  
  

Reporting Adjustments on Federal Returns

• Correct Form and Line Usage: Report federal income tax adjustments on Schedule 1 (Form 1040), which feeds into your primary return.
  
  
• Military Pay Exclusion Placement: Enter qualifying excluded income in the “Other Adjustments” section with a clear label, ensuring transparency for the IRS.
  
  
• State-Specific Reporting: Some states require entering military exclusions directly on their income adjustment line, separate from federal reporting.
  
  

Alimony, IRA Contributions, and Other Federal Adjustments

• Deductible Alimony Payments: If the divorce or separation agreement was finalized before 2019, you can deduct qualifying alimony payments from your income.
  
  
• Traditional IRA Contributions: You may deduct eligible contributions to a conventional IRA, lowering your annual taxable income.
  
  
• Educator Expenses and Student Loan Interest: Qualifying expenses for teachers and interest on student loans are also reportable adjustments on Schedule 1.

By accurately applying military pay exclusions and federal income tax adjustments, you can lawfully reduce your taxable income and potentially increase your refund. Careful documentation and correct form usage are key to maximizing these benefits.

Tax Forms Required by the Department of Taxation for Military Filers

Military filers must submit specific tax forms to the Department of Taxation to ensure compliance and claim the benefits available to them. Below is a breakdown of the essential forms, their purposes, and guidance on where to access them.

• Form N-11 for Full-Year Residents: Military members who are full-year residents must use Form N-11 to report all income, including military pay, and to calculate state tax liability accurately.
  
  
• Form N-15 for Nonresidents and Part-Year Residents: Service members who were moved into or out of the state during the tax year or maintained residence elsewhere while stationed locally must file using Form N-15 to report applicable in-state and out-of-state income separately.
  
  
• Schedule CR for Tax Credits: Military filers should complete Schedule CR to claim eligible tax credits, such as those for income taxes paid to another state or other qualifying expenses.
  
  
• Schedule X for Adjustments to Income: This schedule allows military filers to adjust taxable income for qualified deductions, including specific military allowances and relocation expenses.
  
  
• Form N-139 for Military-Specific Credits: Military members may use Form N-139 to claim the military reserve or National Guard service tax credit, which reduces tax liability for qualifying service.
  
  
• Download Forms from the Department of Taxation Website: To ensure accuracy and compliance with the latest regulations, all official tax forms, instructions, and related guidance can be downloaded directly from the Department of Taxation’s website.

By completing the correct forms and schedules, military filers can meet their tax obligations while taking advantage of the available benefits and credits.

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Hawaii Income Tax Deductions, Credits, and Tax Licenses for Military

Military personnel stationed in Hawaii can qualify for several state-level tax benefits and have specific obligations when running a side business. Understanding these rules can help maximize savings and ensure compliance with Hawaii’s tax laws compliance.

Overview of Applicable Tax Credits and Deductions for Military Personnel

• Nonresident Military Pay Exemption: Hawaii does not tax active-duty pay earned by military members who are legal residents of another state, provided they are in Hawaii solely under military orders.
  
  
• Combat Zone Tax Exclusion: Income earned in a designated combat zone is excluded from Hawaii income tax, mirroring the federal exclusion for combat pay.
  
  
• Reserve and National Guard Training Deduction: National Guard or Reserve members may deduct certain training-related expenses if they meet Hawaii’s criteria for unreimbursed business expenses.
  
  
• Mortgage Interest and Property Tax Deduction: Military homeowners can deduct mortgage interest and property taxes paid on Hawaii residences if they itemize deductions, aligning with federal rules but applying to Hawaii state tax filings.
  
  

When Military Members Need Hawaii General Excise or Tax Licenses

• Side Business Operations Require Licensing: Military members who run a side business in Hawaii—such as online sales, consulting, or home services—must obtain a Hawaii General Excise Tax (GET) license before starting operations.
  
  
• License Obligation Exists Regardless of Residency: Even if the military member is a nonresident for income tax purposes, they must still obtain a GET license and pay GET on Hawaii-based business income.
  
  
• Annual Filing and Payment Requirements: Businesses with a GET license must file periodic returns (monthly, quarterly, or semiannually) and remit the tax, even if no income is earned during the period.
  
  

Low-Income Credits, Dependent Care, and Moving Expense Eligibility

• Low-Income Household Rent Credit: Eligible military families renting in Hawaii may claim this credit if their adjusted gross income meets Hawaii’s low-income thresholds.
  
  
• Child and Dependent Care Expenses Credit: Military taxpayers who pay for child or dependent care to allow them (and their spouse, if applicable) to work or attend school full-time may qualify for this credit, with Hawaii limits based on income.
  
  
• Moving Expense Deduction for Active-Duty Orders: Military members on active-duty orders who move due to a permanent change of station (PCS) may deduct unreimbursed moving expenses for Hawaii tax purposes, provided the move meets the IRS distance and time tests.

By understanding and applying these Hawaii-specific rules, military personnel can utilize available tax savings while complying with licensing and filing obligations. This knowledge ensures that both service-related benefits and side-business responsibilities are fully addressed.

How to E-File Your Tax Return for 2019 as a Military Member

E-filing your 2019 tax return as a military member has unique advantages and considerations, especially when using Hawaii Tax Online. Below is a detailed breakdown of the process, benefits, and potential drawbacks so you can make an informed decision.

Using Hawaii Tax Online for Military Tax Returns

Hawaii Tax Online allows military members to file state returns and make payments from anywhere, which is ideal for those stationed away from home. The system supports multiple tax types, including individual income tax, making it a one-stop portal for filing and payment. Military members can access specific residency and nonresidency filing guidance directly through the platform’s help resources.

Pros of Electronic Filing for Military Families

E-filing reduces the risk of errors because Hawaii Tax Online performs basic error checks before submission. Military members benefit from faster processing and refunds compared to paper filing. The online system saves time and postage, making it easier to meet deadlines even when deployed.

Cons of Electronic Filing for Military Families

E-filing requires reliable internet access, which may be challenging during overseas assignments or field operations. Some military-specific deductions or credits might require manual review, leading to processing delays. Technical glitches or account lockouts can cause filing setbacks close to deadlines.

Direct Deposit, Submission Confirmation, and Processing Timelines

Choosing direct deposit ensures the fastest possible refund delivery to your bank account. Hawaii Tax Online provides instant submission confirmation and recording of the filing date and time. Most electronically filed returns are processed within a few weeks, but returns with special military adjustments may take longer for manual verification. By understanding the available tools, weighing the pros and cons, and knowing what to expect from the process, military members can file their 2019 Hawaii taxes efficiently and confidently.

Paper Filing Process with the Department of Taxation for Military

The paper filing process for military members with the Department of Taxation requires attention to state-specific guidelines and deadlines. Always confirm the correct mailing address based on whether you owe taxes or expect a refund. Use certified mail to track delivery and ensure your documents reach the department safely. Include a completed tax return, supporting schedules, and any forms specific to your military status.

When claiming benefits under the MSRRA, provide proof of residency, such as a current LES or state ID. Attach military orders showing your duty station if you are stationed outside your home state. Include any additional forms required by the state to validate your residency status. Ensure all copies are legible and match the information provided on your tax return to prevent processing delays.

Common paper filing errors include missing signatures, incorrect Social Security numbers, and outdated mailing addresses. Before sealing the envelope, double-check your return for missing attachments or schedules. Avoid stapling documents in ways that obscure key information for scanners or reviewers. Verify postage requirements to prevent returned mail and delayed processing of your military tax return.

Final Filing Checklist for Hawaii Tax Return for 2019 (Military)

Here’s a clear and practical breakdown of what you must consider before submitting your 2019 Hawaii tax return as a military filer, ensuring accuracy, compliance, and timely processing.

Review of Forms, Attachments, and Income Reporting

• Verify completion of all required Hawaii tax forms: Confirm that Form N-11 or N-15 is filled out, signed, and dated before submission.
  
  
• Attach all necessary supporting documents: Include W-2s, 1099s, and any military-specific forms such as LES statements to substantiate reported income.
  
  
• Report all sources of taxable and non-taxable income: Accurately account for basic pay, allowances, and taxable benefits, including income earned outside Hawaii if applicable under residency rules.
  
  
• Double-check personal information: Ensure these details match military and IRS records to prevent processing delays.
  
  

Checklist to Avoid Common Errors and Filing Delays

• Confirm residency status for state tax purposes: Indicate whether you are a Hawaii resident, part-year resident, or nonresident based on your military assignment and home of record.
  
  
• Match all reported income with the attached documentation: Cross-reference entries on your return with official forms to prevent mismatch notices.
  
  
• Review eligibility for Hawaii-specific military exemptions: Apply credits or exclusions like the Combat Zone Tax Exclusion where applicable.
  
  
• Check deadlines and submission method: File by April 20, 2020, for the 2019 tax year unless an extension is requested correctly.
  
  

Tips for Choosing Between Standard and Itemized Deductions

• Calculate both deduction types before deciding: Use Schedule A to compare total itemized deductions against the standard deduction for your filing status.
  
  
• Consider unique military-related deductible expenses: Include unreimbursed moving costs (if applicable under 2019 rules), certain uniform expenses, and qualified travel tied to service.
  
  
• Account for Hawaii-specific allowable deductions: Review state guidelines for deductible medical expenses, charitable contributions, and real property taxes paid in Hawaii.
  
  
• Select the deduction method that lowers your taxable income the most. Prioritize the option that results in the most significant overall tax savings after factoring in both state and federal implications.

By carefully reviewing your forms, avoiding common mistakes, and making an informed deduction choice, you can confidently file your Hawaii 2019 military tax return and reduce the risk of costly delays.

FAQs

Do I owe state taxes if stationed in Hawaii but not a resident?

The Servicemembers Civil Relief Act (SCRA) generally exempts your military pay from Hawaii state income tax if you're stationed in Hawaii on military orders but are not a Hawaii resident. However, non-military income earned in Hawaii (like off-duty jobs or rental income) is taxable by the state. You must maintain legal residence elsewhere and meet SCRA requirements to avoid Hawaii tax on military pay. Always verify your situation with Hawaii’s Department of Taxation.

Which military income is excluded from Hawaii income tax?

Hawaii excludes from state income tax the compensation for active duty pay received by members of the armed forces stationed outside the State of Hawaii under military orders. This exclusion applies only to income earned while serving outside Hawaii; other military pay (such as Reserve or National Guard income earned within the state) is generally taxable. The exclusion does not cover non-military income, allowances like Basic Allowance for Housing (BAH), or subsistence.

Can I file jointly with a spouse under MSRRA?

Yes, under the Military Spouses Residency Relief Act (MSRRA), you and your spouse can generally file a joint state tax return if both share the same legal residence and meet MSRRA requirements. This typically applies when the non-military spouse keeps their home state for tax purposes while living elsewhere due to the service member’s orders. However, states have rules, so you should check that your chosen filing status is allowed in your resident state.

What tax forms should I use as a part-year resident?

If you were a part-year resident of a U.S. state, you typically file a state part-year resident income tax return for that state (form name varies by state). For your federal return, you’ll usually still file Form 1040. Some states require a second return for the other state you lived in, using its part-year resident form. Report income earned while living in each state, plus any state-specific adjustments. Check your state’s tax website for exact form names.

How do I e-file if I’m deployed or out of state?

If you’re deployed or out of state, you can still e-file using a secure online tax filing service from anywhere with internet access. Gather your tax documents, log in to the IRS Free File system or a trusted provider, and submit electronically. If you need more time, file Form 4868 online for an extension. For deployed military personnel, the IRS often grants automatic deadline extensions—check the IRS “Military Tax Benefits” page for details.