Tax Issues

Employers: Are you ready for payroll and related changes in 2020?

There are numerous payroll changes for 2020, mostly on the Federal level. You can toss out the old Form W-4- there’s a new one. 2020 is a leap year, which may throw off payroll calendars. Finally, there are a few interesting state laws taking effect in the upcoming year. While the new Hawaii laws are not directly tied to payroll, they may have an impact on personnel. Federal Changes FICA Taxes Social Security tax For 2020, employers and employees must each pay Social Security tax at 6.2%, up to [...]

REIT – Tax Dodge or Good Investment?

A special kind of real estate related corporation is under Legislative scrutiny- again. A “real estate investment trust,” or REIT, provides significant benefits under the federal tax code. In Hawaii however, State lawmakers are looking to close tax loopholes. Background REITs are related to investing in real estate or loans secured by real estate. Established by Congress in 1960, certain requirements must be met to maintain a REIT. In addition to how it is organized and owned, a REIT must also [...]

Pros and cons of proposed constitutional amendment

UPDATE: The Hawai‘i Supreme Court on Friday, Oct. 19, 2018, ended the future of a proposed Hawai‘i constitutional amendment aimed at raising investment property taxes for education, making the question invalid and preventing it from being voted upon during next month’s general election. The Governor, Legislative and education group representatives expressed their disappointment and vowed to still pursue school funding.  Hawaii residents will be asked to vote to make a change to Hawaii’s consti [...]

HARPTA Increases to 7.25%

  The State of Hawaii Department of Taxation has announced that the rate will increase from 5% to 7.25% of the sales price for the withholding of tax on the sale of Hawaii properties by non-Hawaii resident persons/entities on or after September 15, 2018.  This withholding is commonly known as “HARPTA”. According to Tom Yamachika, President of the Tax Foundation, HARPTA is not a tax, but rather “a means for the state to collect capital gains taxes from absentee owners.” The increase was an [...]

Condo and Homeowner Associations Must File GET Returns or Pay the Price

There are different types of nonprofits, including homeowner and condominium associations. However, not all nonprofits are the same when it comes to tax deductions and tax liability. You may have heard the term “501(c)(3) organization” associated with your favorite nonprofit charity. The reference, 501(c)(3), comes from the section of the federal Internal Revenue Code describing such entities. Contributions to 501(c)(3)s are usually deductible on a donor’s income tax return. There are a host o [...]

Tax Issues for Owners in Homeowner Type Associations

There are various income and related tax issues faced by unit owners in homeowner type associations. Due to space limitations, it is not meant to be a comprehensive discussion of these tax issues. Such a document would easily run to several hundred pages. Our hope is that you are made aware of these issues and to stimulate discussions with your professional tax preparer. This paper addresses tax returns filed by individuals. It does not deal with corporations, S-corporations, partnerships, tim [...]

2017-10-17T19:19:43-10:00Tax Issues|

GET, TAT & TOT Requirements for Homeowner Associations

Do you get confused distinguishing between GET, TAT and TOT for Homeowner Associations? Hawaii General Excise Tax (“GET”), Hawaii Transient Accommodations Tax (“TAT”) and the Hawaii Time-Share Occupancy Tax (“TOT”)- these three taxes are based on gross income or receipts. In other words, they are separate and distinct from the Hawaii income tax which is based on the net income. Hawaii GET – It is Not a Sales Tax Referring to the GET as a sales tax is wrong. The GET is an excise tax, not a s [...]

2017-10-17T19:26:46-10:00Tax Issues|

Taxation of Condominium, Community and Homeowner Associations

The law is clear that an association’s Board of Directors is responsible for the filing of the annual federal and State income tax returns, regardless of who actually prepares them. In addition, the law imposes a fiduciary duty on directors. As a result, Board members should take an active role in understanding the tax issues involved because a substantial overpayment or underpayment of an association’s income taxes could be construed as a breach of their fiduciary duty. This memorandum deals [...]

2017-10-17T18:56:00-10:00Tax Issues|