(a) In general. A
husband and wife, as defined in section
235-1, HRS, may file a single joint
return. A joint return may be filed even though one of the spouses has neither
gross income nor deductions, and even though the spouses are not living
together at any time during the taxable year, except as provided below:
(1) No joint return shall be filed if the
spouses are legally separated under a decree of divorce or of separate
maintenance;
(2) No joint return
shall be filed if either spouse is a nonresident alien at any time during the
taxable year; provided that section 6013(g), IRC, (joint returns of income tax
by husband and wife) relating to the election to treat a nonresident alien
individual as a resident of the United States is incorporated by reference and
the election under the IRC shall be accepted as an election for the purposes of
chapter 235, HRS;
(3) No joint
return shall be filed if the husband and wife have different taxable years,
except that if the spouses' taxable years begin on the same day and end on
different days because of the death of either or both, then a joint return may
be filed with respect to their taxable year. This exception shall not apply if
the surviving spouse remarries before the close of the surviving spouse's
taxable year, or if the taxable year of either spouse is a fractional part of a
year due to a change of accounting period;
(4) In the case of the death of one or both
spouses, the decedent's joint return may be filed only by the executor or
administrator of each decedent's estate, except that in the case of the death
of one spouse a joint return may be made by the surviving spouse with respect
to both the surviving spouse and the decedent if no return for the taxable year
has been made by the decedent, no executor or administrator has been appointed,
and no executor or administrator is appointed before the last day for filing
the return of the surviving spouse. If an executor or administrator of the
decedent is appointed after the filing of a joint return by the surviving
spouse, the executor or administrator may disaffirm the joint return filing by
filing a separate return for the decedent's taxable year within one year after
the last day for filing a return of a surviving spouse. The return filed by the
surviving spouse shall constitute the surviving spouse's separate
return;
(5) No joint return shall
be filed if either spouse is a nonresident (i.e., resident of another state),
unless the nonresident spouse agrees to subject all sources of income to Hawaii
income tax.
(b) Effect
of filing a joint return. For any taxable year in which husband and wife have
filed a joint return, separate returns may not be made by either of the spouses
after the date for filing the return of either spouse has passed. However, an
executor or administrator may disaffirm a joint return as set out in subsection
(a)(4).
If a joint return has been filed, the liability of the
spouses is joint and several; therefore, any refund checks issued based on the
filing of a joint return shall be in the names of both spouses, even if the
spouses separate or divorce before the refund is issued. Divorced spouses
continue to be jointly and severally liable for those taxable years for which
they filed a joint return.
All or part of an overpayment from a joint return may be
retained by the department to offset any delinquent tax liability of the
taxpayers. Where the delinquent tax liability is a separate tax liability of
one of the taxpayers, only that taxpayer's proportionate share of the
overpayment shall be retained. A married taxpayer's proportionate share of the
overpayment shall be based on the taxpayer's respective tax liability,
calculated as if each married taxpayer had filed their respective tax returns
separately.
In order to determine a married taxpayer's proportionate
share of the tax liability, the amount of the joint tax liability shall be
multiplied by the ratio of the taxpayer's tax liability (calculated as if the
taxpayer had filed separately) as it bears to the total tax liability of the
taxpayers (calculated as if both taxpayers filed separately). From the
information available on the joint return, the department shall allocate the
income, deduction, and credit items to the appropriate individual taxpayer, in
order that they may calculate their separate tax liabilities. Income,
deduction, and credit items which the department cannot trace to either
taxpayer, from the information filed by the taxpayers, shall be allocated
equally between the taxpayers. Taxpayers may dispute the department's
allocation of any income, deduction, or credit item upon presentation of
sufficient evidence to the director of taxation. The director of taxation shall
make the appropriate adjustment to the allocation and refund.
Example: A and B are married and earn income of
$20,000 and $30,000, respectively. For 1990, A and B agree to file a joint tax
return.
Notwithstanding their joint tax liability of $3,825 for 1990
(using the tax tables set forth in section 235-51, HRS), B owes a separate
delinquent general excise tax liability from a prior year of $750. Withholding
in 1990 from A's wages totaled $1,500; withholding in 1990 from B's wages
totaled $2,500. Deductions of $2,000 are not directly traceable to either
spouse; an additional $500 in deductions are traceable to A.
The amount of tax liability owed by A and B shall be
determined based on their proportionate tax liability, calculated as if they
had filed separately. In this case, A's tax liability, calculated as if A had
filed separately, is $1,445; B's tax liability, calculated as if B had filed
separately, is $2,387.50. A and B's proportionate share of the joint tax
liability is calculated as follows:
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A and B's share of the tax liability is equal to the amount
withheld from A/B minus A/B's proportionate share of the joint tax liability.
Therefore:
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Therefore, the department may retain B's share of the
refund, or $117.17, to offset B's separate delinquent general excise tax
liability.
In the case of divorced taxpayers, all or part of an
overpayment from any joint return filed during the period of marriage also may
be retained to offset any separate delinquent tax liability of either divorced
taxpayer.
(c) Computation of taxable
income. The tax on a joint return is computed based on the aggregate income of
the spouses. The gross income, adjusted gross income, deductions allowed, and
taxable income are computed aggregately. Deductions limited to a percentage of
adjusted gross income, such as the deduction for charitable contributions, are
computed based on the aggregate amount of adjusted gross income. Similarly,
losses resulting from the sale or exchange of capital assets are aggregated and
the limitation on the loss deduction is applied against the combined taxable
income of the spouses; the maximum loss deduction allowance shall be applied to
the aggregate income of both spouses.
(d) Joint return after filing separate
return. Except as provided in subsection (e), an individual who has filed a
separate return for a taxable year in which a joint return could have been
filed pursuant to section
235-93, HRS, may nevertheless file a joint return if
the time prescribed by law for filing the return for the taxable year has not
expired. If a joint tax return is filed by a husband and wife under this
subsection:
(1) The return shall constitute
the tax return of the husband and wife for the taxable year;
(2) All payments, credits, or refunds made or
allowed with respect to the separate return of either spouse for the taxable
year shall be taken into account in determining the balance of tax owed based
on the joint liability;
(3) Any
election (other than the election to file a separate return) made by either
spouse in their separate return for the taxable year with respect to the
treatment of any income, deduction, or credit, shall not be changed in the
filing of the joint return where the election would have been irrevocable had
the joint return not been made; and
(4) After the death of either spouse, only
the executor or administrator of the decedent may file a joint tax return on
the decedent's behalf.
(e) When joint return may not be filed after
separate returns have been filed. The election to file jointly after separate
returns have been filed may not be made:
(1)
Unless the joint tax liability is paid in full at or prior to the filing of the
joint return;
(2) If a final
assessment of income tax of either spouse for a taxable year has been made (for
purposes of this section, a notice of proposed assessment does not constitute
an assessment);
(3) If either
spouse, for the taxable year, has entered into a closing agreement under
section 231-3(13), HRS, or a compromise of tax liability under section
231-3(10), HRS; or
(4) If the
requirements of subsection (f) are not met.
(f) Limitation period.
(1) A joint return under subsection (d) must
be filed within three years from the last date prescribed by law for filing the
return for the taxable year, determined without regard to any extension of time
granted to either spouse. The date of filing of the first of the separate
returns of the spouses shall be deemed the filing date of the joint
return.
(2) The filing of a joint
return after separate returns have been filed does not extend the limitation
period prescribed in section 235-111, HRS. The period, however, may be extended
by agreement between the taxpayers and the director of taxation as provided in
section 235-111(c), HRS.
(3) A
joint return may not be filed under subsection (d) more than three years after
the date of filing of the first of the separate returns of the spouses unless
the joint return is accompanied by an agreement between the taxpayers and the
director of taxation, extending the period of time as prescribed in section
235-111(c), HRS. If such an agreement no longer can be made because the three
year period of time prescribed in section 235-111, HRS, has expired, the joint
return may not be filed.
(g) Additions to the tax. Where a husband and
wife file a joint return under subsection (d) after filing separate returns and
the joint liability exceeds the aggregate amount of taxes due on the separate
returns of the spouses or exceeds the amount shown as tax on the separate
return of one of the spouses, the penalties and interest applicable to the
separate return of either spouse, under section 231-39, HRS, or to the failure,
neglect, or refusal of either spouse to make, authenticate, or file an income
tax return by the due date are not eliminated as a result of the election to
make a joint return. Additionally, any penal offense of either spouse in
relation to any separate return filed is not eliminated as a result of the
election to make a joint return.
