How to report your HARPTA early refund on your Hawaii State Income Tax returns

If you sold a home in Hawaii during the year, you will need to file a Hawaii state income tax form to report the sale. Before you start to prepare your tax return, make sure you have a copy of Form N-288A (not to be confused with Form N-288, which you will also receive). The N-288A shows the amount that was withheld for HARPTA when you sold the home, and if you cannot find a copy, you may be able to request another one from your escrow officer.

The HARPTA withheld is considered to be an "estimated tax payment". If you did not file for an early HARPTA refund, report the full amount of the withholding from Form N-288A on your tax return. Because you are likely a Hawaii non-resident, you will probably be reporting the home sale on a Hawaii N-15, which is the annual income tax form for non-residents.

However, how do you report the N-288A estimated tax payment if you've applied for an early refund? For example, let's say you had $40,000 in HARPTA withheld, but based on your numbers, your actual tax liability was $10,000. You are due the $30,000 difference from the State. According to the N-15 instructions, if you applied for an early HARPTA refund, you are supposed to report the amount withheld for HARPTA, less any refunds you've applied for. It does not matter if you've received the early refund or not. So in this example, since you've already applied for a $30,000 refund, you should list $10,000 as the estimated tax payment.

Also, please be aware that in tax year 2018 (filing in early 2019), taxpayers who had a HARPTA refund reported on their tax return were prohibited from filing electronically. Home sellers that had HARPTA withheld were required to attach a copy of Form N-288A to their tax return and "paper file" (mail in a signed/dated hard copy of the return). So if you cannot e-file your N-15 because of the N-288A attached, please do not be surprised.