Instructions For Form N-342 - Department Of Taxation State Of Hawaii

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INSTRUCTIONS
STATE OF HAWAII—DEPARTMENT OF TAXATION
FORM N-342
INSTRUCTIONS FOR FORM N-342
(REV. 2012)
RENEWABLE ENERGY TECHNOLOGIES INCOME TAX CREDIT
(FOR SYSTEMS INSTALLED AND PLACED IN SERVICE ON OR AFTER JULY 1, 2009)
(NOTE: References to “married”, “unmarried”, “spouse”, and “husband and wife” also means “in a civil union”,
”not in a civil union”, “civil union partner”, and “civil union partners”, respectively.)
CHANGES YOU SHOULD NOTE
include the cost of consumer incentive premiums unrelated to the operation
of the system or offered with the sale of the system (such as “free gifts”,
offers to pay electricity bills, or rebates) and costs for which another credit
For taxable years beginning after December 31, 2008, Act 154, Session
is claimed. The dollar amount of any utility rebate shall be deducted from
Laws of Hawaii (SLH) 2009, made the following changes to the provisions
the cost of the qualifying system and its installation before determining the
of the renewable energy technologies income tax credit for renewable
energy technology systems that are installed and placed in service on or
State credit.
after July 1, 2009:
The tax credit cannot be claimed for a solar water heating system that
is required for new single-family residential property constructed on or after
Removes the solar thermal and photovoltaic classifications, and
January 1, 2010. The tax credit also cannot be claimed for a wind-powered
provides a single solar classification.
energy system that is used as a substitute for the required solar water
Applies a lower solar system cap to a system if the primary purpose of
heating system. For a solar energy system that is used as a substitute for
that system is to use energy from the sun to heat water for household
the required solar water heating system, the tax credit is reduced by the
use.
lesser of 35% of the actual system cost or $2,250.
Provides the taxpayer with an election to treat the tax credit as
A taxpayer may elect to treat the tax credit as nonrefundable or
refundable.
refundable. If a taxpayer elects to treat the tax credit as nonrefundable,
the tax credit allowed shall be claimed against the net income tax liability
Allows residential home developers to claim the tax credit.
for the taxable year. A tax credit that exceeds the taxpayer’s income tax
Clarifies that the tax credit cannot be claimed for a solar water heating
liability may be used as a credit against the taxpayer’s income tax liability
system that is required for new single-family residential property
in subsequent years until exhausted. A taxpayer may elect to treat the tax
constructed on or after January 1, 2010. The tax credit also cannot be
credit as refundable under the following circumstances:
claimed for a wind-powered energy system that is used as a substitute
For solar energy systems, a taxpayer may elect to reduce the eligible
for the required solar water heating system. The tax credit is reduced
credit amount by 30%. If this reduced amount exceeds the amount of
for a solar energy system that is used as a substitute for the required
income tax payment due from the taxpayer, the excess of the credit
solar water heating system.
amount over payments due will be refunded to the taxpayer.
See Department of Taxation Announcement No. 2009-09, Act 154, SLH
2009, Relating to Taxation, Tax Information Release (TIR) No. 2007-02,
For any renewable energy technology system, an individual taxpayer
Relating to the Renewable Energy Technologies Income Tax Credit, TIR
may elect to have any excess of the credit over payments due refunded
No. 2010-02, Further Guidance Regarding the Term “System” for Purposes
to the taxpayer without any further reduction if (1) ALL of the taxpayer’s
income is exempt from taxation under section 235-7(a)(2), Hawaii
of the Renewable Energy Technologies Income Tax Credit, HRS §235-
Revised Statues (HRS), i.e., distributions from a public retirement
12.5, TIR No. 2010-03, Further Technical Clarification Regarding the Term
plan or system, or section 235-7(a)(3), HRS, i.e., any compensation
“System” for Purposes of the Renewable Energy Technologies Income
received in the form of a pension for past services; or (2) the taxpayer
Tax Credit, HRS §235-12.5, and TIR No. 2010-10, Common Income Tax
has Hawaii adjusted gross income of $20,000 or less (or $40,000 or
& General Excise Tax Issues Associated with the Renewable Energy
less if filing a tax return as married filing jointly).
Technologies Income Tax Credit, HRS §235-12.5, for more information.
A husband and wife who do not file a joint tax return shall only be entitled
COMPOSITE FILING OF FORM N-342
to make this election to the extent that they would have been entitled to
make the election had they filed a joint tax return.
For taxable years that begin on or after January 1, 2011, any individual
A separate election may be made for each separate system that
or corporate taxpayer who is eligible to claim the renewable energy
generates a tax credit. Once an election is made to treat the tax credit
technologies income tax credit for 10 or more systems or distributive shares
as nonrefundable or refundable, the election cannot be revoked. An
of systems installed and placed in service in a single tax year may file a
amended return cannot be filed to change the tax credit from nonrefundable
composite Form N-342. A composite Form N-342, which is designated
to refundable or from refundable to nonrefundable.
with the word “COMPOSITE” printed in capital letters at the top of the
form, is used to report the total amounts from Form N-342C, Composite
All claims for credit, including any amended claims, must be filed
Schedule for Form N-342. For more information and instructions on filing
on or before the twelfth month following the close of the taxable year
a composite Form N-342, see Department of Taxation Announcement No.
for which the credit may be claimed.
2012-01 and the Instructions for Form N-342C. Note: Failing to properly
Multiple owners of a single renewable energy technology system shall
file and/or comply with the terms and conditions for composite filing (e.g.,
be entitled to a single tax credit. Further, the tax credit shall be apportioned
filing a composite Form N-342 to claim the renewable energy technologies
income tax credit for less than 10 systems installed and placed in service in
between the owners in proportion to their contribution to the cost of the system.
a single tax year) may result in the disallowance of all or part of the credits
The tax credit may be claimed for the following renewable energy technology
and the revocation of the election to composite file.
systems installed and placed in service in Hawaii on or after July 1, 2009:
GENERAL INSTRUCTIONS
Type of Renewable
Tax Credit
Energy Technology System
Rate
Note: For a carryover of the credit for systems installed and placed in
1.
Solar energy systems - Primary purpose is to use energy from
service before July 1, 2009, see Form N-323.
the sun to heat water for household use
Note: If you are claiming the Ethanol Facility Tax Credit, no other credit can
a. Single-family residential
The lesser of 35% of the actual
be claimed for the same taxable year.
property.
cost of the system or $2,250.
Note: Use a separate Form N-342 for each eligible system installed and
b. Multi-family residential
Per building unit:
placed in service.
property.
The lesser of 35% of each unit’s
REQUIREMENTS FOR CLAIMING THE TAX CREDIT
actual cost of the system
Each individual or corporate taxpayer may claim a tax credit against
or $350.
the Hawaii net income tax or franchise tax liability for an eligible renewable
c. Commercial property.
The lesser of 35% of the actual
energy technology system installed and placed in service in Hawaii. The
cost of the system or $250,000.
tax credit shall apply only to the actual cost of the solar or wind-powered
energy system, including their accessories and installation, and shall not
(Continued on back)

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