Taxpayer relief on its way to Hawai'i
Advertiser Staff and News Services
In just a few weeks, tax-relief checks will start showing up in the mail, with some starting to hit Hawai'i as early as July 23.
The money, which will total $172 million for the state, is part of the federal Economic Growth and Tax Relief Reconciliation Act, which directs the U.S. Treasury to make advance payments of the 2001 tax credit.
Single Hawai'i taxpayers who paid federal income taxes in 2000 could receive up to $300, household heads as much as $500 and married couples with a joint return up to $600, according to local Internal Revenue Service officials.
Some frequently-asked questions about the refunds:
Q. Tell me more about that tax rebate.
A. It's really an advance refund on your 2001 taxes. Under the tax bill law, there will be a new 10 percent tax rate applied to the first $6,000 of taxable income for singles, $10,000 for single parents (a "head of household") and $12,000 for married couples. Because the current rate is 15 percent, that translates into a difference of up to $300 for singles, $500 for single parents and $600 for couples. But rather than wait until next April to send out the refund checks, the government will send out the money this summer and fall.
Q. But we haven't finished 2001 yet. How will they know how much money to send?
A. The refund will be based on your 2000 tax return. Don't worry if you worked in 2000 but left the work force in 2001 — you'll still get the money and the feds won't make you give it back. If you owe money for past tax debts, unpaid student loans or child support, that will be deducted from the check. And if you made less than $6,000 (single), $10,000 (single parent) or $12,000 (married couple) in taxable income in 2000 (so you don't get a full check) but make enough in 2001, you can apply to get the rest on your 2001 return.
Q. Wait a minute. You mean not everyone will get the full amount of the advance refund?
A. More than 50 million taxpayers will get less than the full amount, or nothing at all. That's because it's based on taxable income — your wages, tips and so forth, minus personal exemptions and deductions. So a couple with two children would need to make more than $30,000 a year to get the full $600; if they made $30,000 or less, after exemptions and deductions, their taxable income would be less than $12,000. Also, payroll taxes (such as those for Social Security) don't count.
Q. Do I have to do anything to get the check?
A. No, as long as you filed your 2000 return. If you've moved since you filed your 2000 return, your check will get to your new address if you filed a change-of-address form with the post office. If you got an extension, make sure you file your return by the end of September. Otherwise, you won't get the refund until you file your 2001 return.
Q. Do I have to declare the advance refund as income next year and pay taxes on it?
A. Not on federal tax returns. A handful of states allow taxpayers to deduct federal taxes from their state returns, so an advance refund — which reduces your federal taxes paid — may affect the amount a person owes on state taxes in those states.
Q. So how will this refund be addressed in next year's return?
A. The details haven't been decided, but people who received the full refund probably won't need to do a thing. There is likely to be a line added for taxpayers who want to claim the refund if for some reason they didn't get it or received a partial payment in error.
Q. So when can I expect the cash?
A. The Treasury Department will begin shipping out the checks late this month. The order will be determined by the last two digits of your Social Security number, so people with the digits 00 to 09 will get checks the first week. The Treasury plans to complete the mailing by the end of September, which is when people with the digits 90 to 99 should expect their checks.
