For Hawaii state income tax purposes, distributions from a Qualified Tuition Program (QTP) used to pay for elementary and secondary school expenses are taxable. Unlike the federal tax code, which allows up to $10,000 per year in elementary and secondary school expenses to be considered qualified expenses for QTP distributions, Hawaii has not adopted this provision. Therefore, any distribution used for such expenses must be included in your Hawaii taxable income.
Key Points
- State vs. Federal Treatment: While the federal government permits QTP distributions for elementary and secondary school expenses (up to $10,000 annually) to be tax-free, Hawaii does not recognize this exclusion.
- Reporting Requirement: Taxpayers must report the taxable portion of Qualified Tuition Program (QTP) distributions used for elementary and secondary school expenses as item (i) under "Other Hawaii Additions to Federal AGI." If applicable, include the amount on the Other Hawaii Additions to Federal AGI worksheet and carry the total to the appropriate additions line on Form N-11 or Form N-15, as instructed.
- Source of Guidance: This treatment is explicitly stated in both Form N-11 and Form N-15 , confirming Hawaii’s non-adoption of the federal provision.
Source:
Form N-11
Form N-15
Disclaimer: Always verify with the most current Federal and State Department of Revenue Forms and Instructions. For complex situations, consult a CPA or tax attorney.