N-356 Instructions — Hawaii Earned Income Tax Credit

# Part I STATE OF HAWAII - DEPARTMENT OF TAXATION

# EARNED INCOME TAX CREDIT

† See Instructions on back † Attach to Form N-11 or Form N-15 FORM 20__

Name(s) as shown on Form N-11 or N-15 Y our social security number Note: If you are only claiming a carryover of unused earned income tax credit from a prior year, skip lines 1 through 7 and begin on line 8.

# QUALIFYING INDIVIDUAL TAXPAYER

1 In order to claim the tax credit, you must meet the definition of a qualifying individual taxpayer. a Are you filing a federal income tax return and claiming the federal earned income credit for this tax year? ................ Yes No b Are you using the same filing status on your Form N-11 or Form N-15 as used on your federal income tax return? .. Y es No c Are you claiming the same dependents on your Form N-1 1 or Form N-15 as claimed on your federal income tax return? (Note: Also check "Yes" if you are not claiming any dependents on your Hawaii and federal income tax returns.) .......................................................................................................... Y es No If you answered "No" to any of the 3 questions, you are not a qualifying individual taxpayer. Y ou cannot claim this credit. Do not complete this form.

# REFUNDABLE TAX CREDIT COMPUTATION

2 Enter the amount of your federal earned income credit claimed on your federal income tax return for this tax year. ....... 2 3 Multiply line 2 by 40% ........................................................................................................................................................ 3 Note: Residents, skip lines 4 and 5, enter "1.00" on line 6, and go to line 7. Part-year residents and nonresidents, continue on to line 4. 4 Enter your Hawaii adjusted gross income from Form N-15, Column B ............................ 4 5 Enter your federal adjusted gross income from Form N-15 ............................................. 5 6 Divide line 4 by line 5. (Compute to 3 decimal places and round to 2 decimal places) ..................................................... 6 7 Total New Credit Claimed - Multiply line 3 by line 6. Also enter this amount on Schedule CR on the appropriate line for this tax credit ............................................................ 7

# UNUSED CARRYOVER COMPUTATION

Note: Unused tax credits from tax years 2018 through 2021 cannot be carried over for taxable years beginning after December 31, 2024. 8 Adjusted Tax Liability - Enter the amount from Form N-11 or Form N-15 .................................................................... 8 9 If you are claiming other nonrefundable tax credits, complete the worksheet in the instructions and enter the total here. If you are not claiming other nonrefundable credits, enter zero .................................................................. 9 10 Line 8 minus line 9. This represents your remaining tax liability. If the result is zero or less, enter zero ........................... 10 11 Carryover of unused earned income tax credit from prior year . Enter this amount on Schedule CR, in Column (a) of the appropriate line for this tax credit ............................................................................................................................. 11 12 Total Credit Applied - Enter the smaller of line 10 or line 11. This is your earned income tax credit to be applied to this tax year. Enter this amount, rounded to the nearest dollar, on Schedule CR, in Column (c) of the appropriate line for this tax credit ....................................................................................................................................... 12 13 Unused Credit to Carryover - Line 11 minus line 12. This represents your current year's carryover of unused credit. The amount of any unused credit may be carried over and used as a credit against your tax liability in subsequent years until exhausted. If this amount is more than zero, also enter it on Schedule CR in Column (d) of the appropriate line for this tax credit. ......................................................................................................................................................... 13

Part II Part III N356K1W3 ID NO 01 N356_I 2024A 01 VID01

FORM N-356 (REV. 2024) P AGE 2

# CHANGES YOU SHOULD NOTE

Act 163, Session Laws of Hawaii 2023, amends the earned income tax credit for taxable years 2023 to 2027 by increasing the tax credit amount from 20% to 40% of the federal earned income tax credit allowed and properly claimed on the individual's federal income tax return.

# GENERAL INSTRUCTIONS

The earned income tax credit is refundable and 40% of the federal earned income credit claimed on the taxpayer's federal income tax return. For part-year residents and nonresidents, the tax credit is multiplied by the ratio of Hawaii adjusted gross income to federal adjusted gross income. Any unused carryover of the tax credit shall be claimed against the net income tax liability for the taxable year. A tax credit that exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted, provided that no credit carried forward amounts from tax years 2018, 2019, 2020, and 2021 shall be used as a credit for taxable years beginning after December 31, 2024. Purpose of Form Use Form N-356 to figure and claim the earned income tax credit under section 235- 55.75, Hawaii Revised Statutes. Who May Claim This Credit Each qualifying individual taxpayer may claim this credit. A qualifying individual taxpayer means a taxpayer that: (1) files a federal income tax return for the taxable year and claims the earned income credit under Internal Revenue Code section 32, and (2) files a Hawaii income tax return for the taxable year using the same filing status used on the federal income tax return, and claiming the same dependents claimed on the federal income tax return. When the Credit May Not Be Claimed This credit may not be claimed if any of the following apply: (1) There was a final administrative or judicial decision within the prior ten taxable years that your claim for the tax credit was due to fraud. (2) There was a final administrative or judicial decision within the prior two taxable years disallowing your claim for the tax credit. Credit Requirements To claim this credit or use any carry over, you must complete and attach to your Hawaii income tax return: (1) Form N-356 (2) Schedule CR Deadline for Claiming the Credit The deadline to claim the credit, including amended claims, is 12 months after the close of your taxable year. You cannot claim or amend the credit after the deadline. Note: If the Internal Revenue Service (IRS) makes an adjustment to the federal earned in - come credit (due to an adjustment to federal taxable income) after the 12-month deadline, you must amend the Hawaii earned income tax credit even if the 12-month deadline has passed. The amended Hawaii income tax return must be filed within 90 days after the adjustment by the IRS is finally determined.

# SPECIFIC INSTRUCTIONS

Note: If you are only claiming a carryover of un - used earned income tax credit from a prior year, skip lines 1 through 7 and begin on line 8. Part I, Qualifying Individual Taxpayer Line 1 - Answer the questions to determine whether you meet the definition of a qualifying individual taxpayer. If you are not a qualifying individual taxpayer, you cannot claim this credit.

Part II, Applied Tax Credit and Unused Carryover Computation

# Line 2 - Enter the amount of your federal earned income credit from federal Form 1040 or

1040-SR. Note: If you choose to have the IRS compute your federal earned income credit and do not receive the credit amount from the IRS before the deadline to file your Hawaii tax return, you should complete Form N-11 or Form N-15 without claiming the tax credit. Once the IRS sends you the federal earned income credit amount, you may file an amended tax return to claim the tax credit. Line 6 - Divide line 4 by line 5. Compute the ratio to 3 decimal places and round it to 2 decimal places. For example, line 4 is $60,000; and line 5 is $90,000. The ratio of Hawaii AGI to federal AGI is 0.67 (60,000/90,000 = 0.666 rounded to 0.67). Note: If line 5 is zero or a negative number (loss) and line 4 is a positive number, enter 1.00 on line 6. If line 4 is zero or a negative number (loss), enter zero on line 6. If both lines 4 and 5 are negative numbers (losses), enter zero on line 6. If line 4 is greater than line 5, enter 1.00 on line 6. Line 7 - Refundable Credit Claimed. Multiply line 3 by line 6. You MUST also enter this amount on Schedule CR on the appropriate line for this tax credit. Line 9 - Certain other tax credits must be used to offset a taxpayer's tax liability before the earned income tax credit may be used. If you are claiming other nonrefundable tax credits, complete the Credit Worksheet and enter the result on line 9. If you are not claiming any of the non - refundable tax credits listed on the worksheet, enter zero on line 9.

# Line 11 - Enter the amount of unused earned income tax credit from tax years 2018 through

2022, provided that no credit carried forward amounts from tax years 2018, 2019, 2020, and 2021 shall be used as a credit for taxable years beginning after December 31, 2024. You MUST also enter this amount on Schedule CR in Column (a) of the appropriate line for this tax credit. Line 12 - Total Credit Applied. Compare the amounts on lines 10 and 11. Enter the smaller of line 10 or 11 here, rounded to the nearest dollar. This is your credit applied for this taxable year. You MUST also enter this amount on Schedule CR in Column (c) of the appropriate line for this tax credit. Line 13 - Unused Credit to Carryover. Line 11 minus line 12. This represents your carryover of unused earned income tax credit which exceeds your net income tax liability and may be used as a carryover credit against your net income tax li - ability in subsequent years until exhausted, pro - vided that no credit carried forward amounts from tax years 2018, 2019, 2020, and 2021 shall be used as a credit for taxable years beginning after December 31, 2024. You MUST enter this amount on Schedule CR in Column (d) of the appropriate line for this tax credit.

# EARNED INCOME TAX CREDIT WORKSHEET

Tax Credit Amount a. Income Taxes Paid to Another State or Foreign Country . b. Enterprise Zone Tax Credit . c. Carryover of the Energy Conservation Tax Credit .. d. Credit for Employment of Vocational Rehabilitation Referrals .......................... e. Credit for School Repair and Maintenance .................... f. Carryover of the Renewable Energy Technologies Income Tax Credit (For Systems Installed and Placed In Service Before July 1, 2009) .................... g. Renewable Energy Technologies Income Tax Credit (Nonrefundable) ..... h. Carryover of the Cesspool Upgrade, Conversion or Connection Income Tax Credit ......................... i. Add lines a through h. Enter the amount here and on Part II, line 9 ................