Discussion:Hawaii Excise Tax - Royalty Income

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Discussion Forum Index --> Hawaii User Group --> Hawaii Excise Tax - Royalty Income


Jhester321 (talk|edits) said:

8 January 2009

I have a client that resides in Hawaii. I'm wondering whether my Hawaii client is subject to the General Excise Tax. She earns artist royalty income and publishing royalty income from record labels in California/New York, etc. The royalty income is federal schedule C income to her. She's not really "doing business" in Hawaii. She's just collecting royalty checks.

I'm afraid Hawaii will see this as gross income to her and apply the 4.5% general excise tax to the gross royalty income. Does anyone have any thoughts on whether or not Hawaii will impose the GET or does anyone have any planning ideas on how to avoid this tax?

Thanks!

4Mikeand (talk|edits) said:

22 December 2010
Jhester321

I see you asked this question back on 1/8/2009. I have the same question on 12/21/2010.

Did you ever get an answer

mike CPA in the San Fernando Valley, CA

KatieJ (talk|edits) said:

22 December 2010
In a quick look on RIA and also the Hawaii DOT web site, I can't find anything that would exempt this royalty income from the GET. Even interest income from a business bank account is subject to the tax, which seems counterintuitive, but there you are. I'd suggest calling the Department and asking the question on a no-name basis. They put out a brochure (http://www6.hawaii.gov/tax/brochures/taxinfo.pdf) with some names and phone numbers. I might try calling someone at a higher level, maybe the field audit chief or the rules officer (whatever that is), in hopes of getting someone with some real technical expertise, as opposed to the regular taxpayer information number. Or you could use their e-mail system to ask a general question. Bear in mind, of course, that the tax authority will usually give you an answer that is aggressive from their viewpoint; ask them to cite chapter and verse.

Taxea (talk|edits) said:

11 July 2011
Hawaii GET is for Hawaii business income. If you have income from another state it is taxable on your Hawaii individual return which is a totally separate reporting form than the GET income forms. GET forms do not transfer amounts to your Hawaii individual tax return. The only time you would use the figures paid on a GET form is as a tax expense on your individual Sch C for a Hawaii based business.

In the case of out of state royalty income it goes on Sch E of the 1040 and the agi of the 1040 transfers to the Hawaii individual return. If the business that created the royalty was not a Hawaii based business then the royalty is not subject to GET.

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