Establishes a refundable tax credit for food, medical services, and nonprescription drugs.

A BILL FOR AN ACT

SECTION 1. The purpose of this Act is to provide economic relief for struggling working families earning $50,000 or less per year by establishing a refundable tax credit for food, medical services, and nonprescription drugs. This Act shall be known as the "Working Families' Tax Credit for Food, Medical Services, and Nonprescription Drugs."

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Tax credit for food, medical services, and nonprescription drugs. (a) Each resident individual taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, may claim a refundable tax credit for food, medical services, and nonprescription drugs against the taxpayer's individual income tax liability for the taxable year for which the individual income tax return is being filed; provided that a resident individual who has no income or no income taxable under this chapter and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for federal or Hawaii state individual income tax purposes may claim this credit.

(b) Each resident individual taxpayer with an adjusted gross income, as defined by the Internal Revenue Code, of $50,000 or less may claim a refundable tax credit for food, medical services, and nonprescription drugs in the amount of $100 multiplied by the number of qualified exemptions to which the taxpayer is entitled; provided further that a husband and wife filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled had a joint return been filed.

(c) For purposes of this section, a qualified exemption is defined to include those exemptions permitted under this chapter; provided that a person for whom an exemption is claimed was physically present in the State for more than nine months during the taxable year. For purposes of claiming this credit only, a minor child receiving support from the department of human services of the State, social security survivor's benefits, and the like, who would not otherwise be considered a dependent, may be considered a dependent and a qualified exemption of the parent or guardian.

(d) The tax credit under this section shall not be available to:

(e) The tax credit claimed by a resident taxpayer pursuant to this section shall be deductible from the resident taxpayer's individual income tax liability, if any, for the tax year in which they are properly claimed. If the tax credits claimed by a resident taxpayer exceed the amount of income tax payment due from the resident taxpayer, the excess of credits over payments due shall be refunded to the resident taxpayer; provided that tax credits properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payments on account of the tax credits allowed by this section shall be made for amounts less than $1.

(f) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provisions shall constitute a waiver of the right to claim the credit."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval

and shall apply to taxable years beginning after December 31, 2005.