Hawaii: For Certain Customers Who Deferred Tax Payments on Roth Conversions, State Tax is Incorrect

TurboTax may not have calculated the correct Hawaii state income tax for certain customers who converted a pension or IRA account to a Roth IRA, and deferred the payment of tax on that income to future years on their federal tax returns.

Hawaii does not conform to the federal tax law that allows taxpayers, with pensions or IRA accounts converted to a Roth IRA, to elect to pay the tax on that income in 2011 and 2012.

Payment must be made on the 2010 Hawaii tax return.

This issue was fixed on March 18, 2011.

You are affected if ALL of the following are true:

1. You filed a Hawaii state tax return prior to March 18, 2011, AND
2. You converted a pension or a traditional IRA to a Roth IRA AND
3. On your federal return, you elected to defer the payment of taxes on that converted income to tax years 2011 and 2012.
4. If you are affected, you may have underpaid your Hawaii tax.

If so, you will need to amend your Hawaii state tax return.

You will need to amend your Hawaii state tax return. You can choose to have us do it for you or you can amend it yourself.

Let us do the work for you. We highly recommend this.  

1. Please download and print this Authorization Form.
2. Complete the form and fax it to us at the number printed at the top of the form.
3. A TurboTax representative will contact you (within 6 days) when your corrected return is ready to be securely emailed back to you.
4. You can print, sign and mail the corrected return to the Hawaii Department of Revenue.   

Or you can make the corrections yourself. However, the amend process can be complex.

1. To do it yourself, please follow these step-by-step instructions.
2. After you make the changes to your tax return, you will need to mail a copy to the Hawaii Department of Taxation.

If you need assistance, call us at the phone number in the email and tell the representative that you are calling about Hawaii Roth Conversion.