Hawaii 2010: Self-employment Tax Deduction

Certain customers may have an incorrect deduction related to their self-employment tax deduction on their 2010 Hawaii tax return.

A recent federal tax law allowed health insurance costs paid by a self-employed individual to reduce self-employment (SE) tax and the related one-half SE tax deduction (Form 1040, line 27.) Hawaii did not conform to this federal change. TurboTax did not take into account the difference between the federal and Hawaii deduction on the Hawaii return.

The issue was fixed on February 12, 2011.

 How to tell if you are impacted

You are affected if:

• You filed a 2010 Hawaii tax return prior to February 12, 2011 AND
• Your federal tax return included an amount in the “one-half of self-employment tax” deduction (Form 1040, line 27) AND
• Your federal return also included an amount in “self-employed health insurance deduction” (Form 1040, line 29)

If you are affected, you may have overpaid your Hawaii tax. If so, you will need to amend your Hawaii tax return.

If you need to contact us, please use the phone number in the email from TurboTax and tell the representative you’re calling about the Hawaii – Self-employment Tax Deduction.