What are Hawaii Qualified Tuition Programs?
Qualified Tuition Programs (QTPs), also known as 529 plans, are savings plans designed to help families save for higher education expenses. In Hawaii, the state conforms to federal tax rules regarding QTPs for higher education expenses. However, Hawaii does not adopt the federal provision that allows up to $10,000 per year in distributions for elementary and secondary school expenses to be tax-free.
Tax Treatment in Hawaii
- Higher Education Expenses: Distributions used for qualified higher education expenses are not taxable in Hawaii, aligning with federal guidelines.
- Elementary and Secondary School Expenses: If a distribution is used for elementary or secondary school expenses, the taxable portion must be reported on line i of Form N-11 or Form N-15, as these expenses are not considered qualified under Hawaii state law.
Reporting Requirements
When filing your Hawaii state tax return, you must report any taxable portion of QTP distributions used for elementary and secondary school expenses. This is done on Form N-11 or Form N-15, specifically on line i, which is designated for such adjustments.
Additional Notes
- Qualified tuition program distributions for higher education are excluded from Hawaii income tax if used for qualified expenses.
- For non-qualified uses (such as elementary/secondary school), the taxable amount must be included in your Hawaii taxable income.
- Online Taxes (OLT) software can guide you through adding QTP distributions under the "State Additions" section when filing your Hawaii return.
Source:
Form N-11 Instructions
Form N-15 Instructions
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.