Instructions For Form N-342 - Renewable Energy Technologies Income Tax Credit

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INSTRUCTIONS
STATE OF HAWAII—DEPARTMENT OF TAXATION
FORM N-342
INSTRUCTIONS FOR FORM N-342
(REV. 2016)
RENEWABLE ENERGY TECHNOLOGIES INCOME TAX CREDIT
(FOR SYSTEMS INSTALLED AND PLACED IN SERVICE ON OR AFTER JULY 1, 2009)
(NOTE: References to “married” and “spouse” are also references to “in a civil union”
and “civil union partner,” respectively.)
COMPOSITE FILING OF FORM N-342
(4) Your solar water heater system was required to be installed on new
single-family residential property under section 196-6.5, HRS.
Any individual or corporate taxpayer who is eligible to claim the
(5) Your wind-powered energy system is a substitute for a required solar
renewable energy technologies income tax credit for 10 or more systems
water heater system under section 196-6.5, HRS.
or distributive shares of systems installed and placed in service in a single
Note: If you install a solar energy system, such as a photovoltaic (PV)
tax year may file a composite Form N-342. A composite Form N-342,
system as a substitute for a required solar water heater system under
which is designated with the word “COMPOSITE” printed in capital letters
section 196-6.5, HRS, then you must reduce your credit by the lesser of
at the top of the form, is used to report the total amounts from Form
35% of the actual system cost or $2,250.
N-342C, Composite Schedule for Form N-342. For more information and
instructions on filing a composite Form N-342, see Department of Taxation
CREDIT REQUIREMENTS
Announcement No. 2012-01 and the Instructions for Form N-342C. Note:
Failing to properly file and/or comply with the terms and conditions for
To claim this credit, you must complete and attach to your Hawaii income
composite filing (e.g., filing a composite Form N-342 to claim the renewable
tax return or Hawaii franchise tax return:
energy technologies income tax credit for less than 10 systems installed
(1) Form N-342
and placed in service in a single tax year) may result in the disallowance of
all or part of the credits and the revocation of the election to composite file.
(2) Schedule CR (Not required if you file Form N-40 (for fiduciary’s share
of the credit), or Form F-1)
GENERAL INSTRUCTIONS
(3) Form N-342A (Required only if you are claiming a distributive
share of a credit from a partnership, S corporation, estate, trust, or
PURPOSE OF FORM
condominium apartment association)
Use Form N-342 to figure and claim the renewable energy technologies
(4) Schedule K-1 (Required only if you are claiming a distributive share of
income tax credit (RETITC) under section 235-12.5, Hawaii Revised
a credit from a partnership, S corporation, estate, or trust)
Statutes (HRS). Use one Form N-342 for each system. If you have
CARRYOVER CREDIT
carryover credit(s), see the “Carryover Credit” section below.
If you have a carryover credit from last year for a system installed and
WHO MAY CLAIM THIS CREDIT
placed in service before July 1, 2009, use Form N-323 and its instructions
instead of this form. If you have a carryover credit(s) from last year for a
If you are the economic owner of an eligible renewable energy technology
system(s) installed and placed in service after July 1, 2009, complete one
system that was installed and placed in service in Hawaii during the taxable
Form N-342 for your carryover credit(s). If you are also claiming a credit(s)
year, you may claim this credit if:
for a system(s) installed and placed in service in the taxable year, complete
(1) You are an individual or corporate taxpayer subject to Hawaii income
a separate Form N-342 for each system.
tax under chapter 235, HRS; or
DEADLINE FOR CLAIMING THE CREDIT
(2) You are a taxpayer subject to Hawaii franchise tax under chapter 241,
HRS.
The deadline to claim this credit, including any amended claims, is the
For more information, see Tax Information Release No. 2007-02, “Relating
twelfth month following the close of the taxable year. You cannot claim the
to the Renewable Energy Technologies Income Tax Credit.”
credit after the deadline.
MULTIPLE OWNERS OF A SYSTEM
HOW TO TREAT THE TAX CREDIT
Multiple owners of a single system are entitled to a single tax credit. Each
NONREFUNDABLE: A nonrefundable credit means your credit will be
owner may claim a portion of the credit based on how much it paid towards
applied towards the amount of income tax you owe. If your nonrefundable
the cost of the system subject to the tax credit cap. For example, three
credit is greater than the amount of income tax that you owe, then you may
individuals install and place in service a solar water heater on a single-
carryover the remaining credit and apply it towards next year’s income tax.
family residential property in Hawaii. They split the costs evenly. The credit
You may continue to carryover the credit until it is used up.
is the lesser of 35% of the actual cost or $2,250. Each individual may claim
REFUNDABLE (IRREVOCABLE): You may make an irrevocable election
one-third of the credit. To claim the credit, each owner must complete Form
to claim the credit as refundable. A refundable credit means you will receive
N-342 and report its share of the total costs.
a tax refund if your credit amount is greater than the amount of income tax
FLOW-THROUGH ENTITIES
you owe. You may elect to claim the credit as a refundable credit under the
following circumstances:
If you are a partnership, S corporation, estate, trust, or condominium
Reduced Credit
apartment association who is the economic owner of an eligible renewable
energy technology system that was installed and placed in service in Hawaii
For a solar energy system, such as a solar water heater or PV system, you
during the taxable year, figure the amount of the credit at the entity level
must reduce the credit amount by 30%, unless you meet the conditions
on Form N-342 and attach it to your return. Use a separate Form N-342
described in the “Full Credit” paragraph below.
for each eligible renewable energy technology system. Prepare a separate
Full Credit
Form N-342A, Information Statement Concerning the Renewable Energy
For a solar or wind energy system, you may claim the full credit as a
Technologies Income Tax Credit for Systems Placed in Service on or After
refundable credit if you are an individual taxpayer and any of the following
July 1, 2009, to report the distributive share of the credit for each partner,
apply:
shareholder, member, or beneficiary for each eligible system. If you are
a partnership or S corporation, attach Form N-342A to each partner’s or
(1) All of your (and your spouse’s) income is retirement income such as
shareholder’s Schedule K-1. Attach a copy of Form N-342A given to each
pension distributions, social security, or distributions from a public
partner, shareholder, member, or beneficiary to your return.
retirement system that is exempt from Hawaii income tax; or
(2) Your Hawaii adjusted gross income (AGI) is $20,000 or less ($40,000
WHEN THE CREDIT MAY NOT BE CLAIMED
or less if you are married filing a joint return).
This credit may not be claimed it any of the following apply:
Irrevocable Election
(1) You are claiming the Ethanol Facility Tax credit for the same tax year.
A separate election may be made for each separate system that generates
a tax credit. Once an election is made to treat the tax credit as
(2) You are using the entire cost of the system to claim another credit.
refundable, the election cannot be revoked. An amended return cannot
(3) You are the lessee in a Power Purchase Agreement (PPA).

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