N-405: Tax on Accumulation Distribution of Trusts (2025)
Hawaii · Hawaii DoTax · Used for tax years 2025
Hawaii Form N-405 calculates a trust beneficiary’s partial tax on an accumulation distribution, which is a distribution of income the trust accumulated rather than distributed currently. It uses the distribution amount, taxes paid by the trust, and the beneficiary’s prior-year ta
Who files this form
Complete Form N-405 if you received a distribution during 2025 from a trust that accumulated income instead of distributing it to you each year, and the trust paid taxes on that income. The form figures any additional tax liability.
The tax does not apply to most domestic trusts. It applies to foreign trusts, certain domestic trusts that were once foreign trusts, and certain domestic trusts created before March 1, 1984.
If you received accumulation distributions from more than one trust, prepare a separate Form N-405 for each trust.
What you'll need
- Completed Part IV of Schedule J (Form N-40). The trustee must give this to you so you can complete Form N-405.
- Your taxable income and tax information for 2020 through 2024. Use amounts as reported, amended, or changed by the Hawaii Department of Taxation, with the required adjustments for prior accumulation distributions.
- Tax tables or tax rate schedules for the earlier years used in the calculation. Prior-year forms and tax rate schedules are available from any taxation district office.
- Forms for any credits you refigure. Attach the proper form for each such credit.
- Identifying information. The form asks for your name, Social Security number, date of birth, the trust's name and mailing address, its federal employer identification number, and whether it is domestic or foreign.
How to file
Attach Form N-405 to the beneficiary's current income tax return. If line 26 is greater than zero, add that amount to the return's total tax liability before tax credits.
Attach the proper form for any tax credit you refigure. If you received accumulation distributions from multiple trusts, complete a separate Form N-405 for each trust.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Limiting the calculation to five throwback years. The instructions note that there can be more than five throwback years.
- Leaving out years on line 13. Enter taxable income for all years 2020 through 2024, even if the trust accumulated income for fewer than five years after you turned 21.
- Entering negative amounts where zero is required. Enter zero if adjusted taxable income on line 13 is less than zero. Line 26 also requires zero if the calculated partial tax is negative.
- Using the wrong year's tax rates. For line 17, use the rates in effect for the particular earlier year shown in each column.
- Forgetting credit attachments. Attach the proper form for any credit you refigure.
Questions people ask
What does Form N-405 calculate?
It calculates the beneficiary's partial tax on an accumulation distribution from a trust.
How will I know I received an accumulation distribution?
The fiduciary notifies you by completing Part IV of Schedule J (Form N-40). The trustee must give you that completed part so you can prepare Form N-405.
What if I received distributions from several trusts?
Prepare a separate Form N-405 for each trust. You may arrange the distributions in any order you want them considered to have been made.
Which earlier income years are used for the 2025 form?
Enter your taxable income for 2020 through 2024 on line 13. For line 14, eliminate the highest and lowest taxable income years and use the remaining three years.
What goes on line 1 for a nonresident individual or foreign corporation?
Include only the part of the accumulation distribution attributable to Hawaii sources or effectively connected with a trade or business carried on in Hawaii.