N-362: Pass-Through Entity Tax Credit (2024)
Hawaii · Hawaii DoTax · Used for tax years 2024
Hawaii Form N-362 is used to figure and claim the nonrefundable Pass-Through Entity Tax Credit. It reports credit amounts from electing pass-through entities, the credit applied for the year, and unused credit available to carry forward.
Who files this form
Use Form N-362 to figure and claim Hawaii’s pass-through entity (PTE) tax credit.
A qualified member of an electing PTE may claim a credit equal to their share of the Hawaii income tax paid by the entity. A qualified member is an individual, trust, or estate that is a member of the electing PTE.
An electing PTE is an eligible partnership or S corporation that elects to be subject to tax. Members can include partners, S corporation shareholders, and members of an LLC treated as a partnership or S corporation for federal income tax purposes.
What you'll need
To claim the credit, complete and attach these items to your Hawaii income tax return:
- Form N-362.
- Schedule CR, if your tax return requires it.
- A completed Schedule K-1.
You will also need each electing PTE’s name, federal employer identification number (FEIN), and PTE tax credit amount for the taxable year.
For adjusted tax liability, use the applicable amount from Form N-11, line 34; Form N-15, line 51; or Form N-40, Schedule G, line 3. If you claim other nonrefundable credits listed in the credit worksheet, have those amounts available.
How to file
Attach Form N-362 to Schedule CR and include the required credit documents with your Hawaii income tax return. Schedule CR is required only for returns that require that schedule.
To complete the credit calculation:
- List each PTE’s name, FEIN, and credit amount in Part I. Add the credit amounts on line 2 and enter that total in Schedule CR, column (b), on the appropriate line.
- Enter your adjusted tax liability on line 3. Form N-20 and Form N-35 filers do not complete line 3.
- Complete the credit worksheet for other listed nonrefundable credits and enter the total on line 4. If none apply, enter zero.
- Subtract line 4 from line 3 on line 5. Enter zero if the result is zero or less.
- On line 6, enter the smaller of line 2 or line 5, rounded to the nearest dollar. Enter it in Schedule CR, column (c), on the appropriate line.
- Subtract line 6 from line 2 to find the unused credit on line 7. If it is more than zero, enter it in Schedule CR, column (d), on the appropriate line.
The supplied text does not give a mailing address or e-file instructions.
Common mistakes
- Missing the taxpayer or spouse checkbox: If married filing jointly, you must check “T” for taxpayer or “S” for spouse to show whose credit it is.
- Not marking additional forms: If you need more space, use additional Forms N-362 and check the box at the top of the form.
- Skipping other credits that must be used first: Certain other nonrefundable credits must offset your tax liability before the PTE credit. Complete the credit worksheet when applicable.
- Completing line 3 when it does not apply: Form N-20 and Form N-35 filers must not complete line 3.
- Forgetting required attachments: Include Form N-362, a completed Schedule K-1, and Schedule CR when required with your Hawaii income tax return.
Questions people ask
Is the PTE tax credit refundable?
No. It is a nonrefundable income tax credit claimed against your net tax liability for the taxable year.
What happens if my credit exceeds my income tax liability?
Unused credit may be carried forward and used against your income tax liability in subsequent years until exhausted. Line 7 calculates the current year’s unused credit.
Can I list more than one PTE?
Yes. Part I provides spaces for multiple PTEs. If you need more space, use additional Forms N-362 and check the additional-forms box at the top.
How much credit can I apply for the year?
Line 6 uses the smaller of your total credit on line 2 or your remaining tax liability on line 5, rounded to the nearest dollar. Certain other nonrefundable credits must be applied before the PTE credit.