How do I claim the Hawaii credit for taxes paid to another state or country?

If you report out-of-state income that is taxed by another state or foreign country and also by Hawaii, you may claim a credit against your Hawaii income for the tax paid to the other state/country if you meet the following requirements: 

• "The income was earned while you were a Hawaii resident (or you are married and filing a joint resident or joint part-year resident return) and was not exempt from Hawaii income tax;
• The income on which the state or foreign tax is imposed was derived or received from sources outside Hawaii;
• You were liable for and paid tax to the foreign jurisdiction (net amount of tax paid to a foreign jurisdiction after all credits, reductions, and refunds allowed or allowable by the laws of the foreign jurisdiction have been deducted);
• The tax paid to the other state or foreign country is an income-based tax that is imposed on both residents and nonresidents of the other state or foreign country, rather than a sales, gross receipts, withholding, or value added tax (i.e., taxes withheld on dividends paid from foreign investments do not qualify);
• No credit is allowed if the foreign income is excluded on the federal return;
• No credit is allowed if the foreign tax credit is allowed on the federal return;
• The income must be taxed by the other state or foreign country for the same taxable year for which the Hawaii credit is claimed;
• No credit is allowed for penalties or interest paid to the other state or foreign country; and
• No credit is allowed for city or local income taxes paid to another state." (Schedule CR Instructions)

If you have income that qualifies for the credit for taxes paid to another state you must manually add this into the program. You can do this by following this path:

1. Click State on the left side menu
2. Click the three dots to the right and select edit 
3. Click "Begin" on Credits
4. Click "Begin" on Non-Refundable Credits
5. Click "Begin" on "Credits for Taxes Paid to Another State"
6. Click + Add State
7. Fill in the required information

Please note: You will need to follow these steps for each state you need to add.

For additional refundable and nonrefundable credits that are listed in the instructions, please verify they are supported in the program by following this path:

1. Hawaii State Section
2. Credits
3. Nonrefundable Credits
4. Credit for Taxes Paid to Another State

For more information please see the Hawaii Department of Taxation website here