SB197.DOC

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235‑ Caregiver tax credit. (a) There shall be allowed a caregiver tax credit to each eligible taxpayer subject to the tax imposed by this chapter who is not claimed, and is not otherwise eligible to be claimed, as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes and who files an individual net income tax return for a taxable year.

(b) The caregiver tax credit shall not exceed $ , based on the following schedule; provided 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:

TAX CREDIT SCHEDULE

Adjusted Gross Income Tax Credit Percentage of $

Under $30,000 100 per cent

$30,000 to under $50,000 70 per cent

$50,000 to under $75,000 40 per cent

$75,000 and over 10 per cent

(c) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. For the purpose of deducting this tax credit, "net income tax" liability means net income tax liability reduced by all other credits allowed to the eligible taxpayer under this chapter.

(d) An eligible taxpayer may claim the tax credit for every taxable year or part thereof that the eligible taxpayer provides care to a qualified care recipient. Only one eligible taxpayer per household may claim a tax credit for any eligible care recipient cared for in a taxable year. An eligible taxpayer shall not claim multiple tax credits under this section in a taxable year, regardless of the number of eligible care recipients receiving care from the eligible taxpayer.

(e) If the tax credit claimed by the eligible taxpayer under this section exceeds the amount of income tax payments due from the eligible taxpayer, the excess of credit over payments due shall be refunded to the eligible taxpayer; provided that the tax credit properly claimed by an eligible taxpayer who has no income tax liability shall be paid to the eligible taxpayer; and provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1.

(f) Every claim, including amended claims, for the tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the tax credit may be claimed. Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

(g) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require proof of the claim for the tax credit; and

(3) May adopt rules pursuant to chapter 91 to effectuate this section.

(h) Every eligible taxpayer, no later than March 31 of each year, shall submit a written, certified statement to the executive office on aging, in the form specified by the director of the executive office on aging, identifying the amount of tax credits claimed pursuant to this section, if any, in the previous taxable year.

The executive office on aging shall maintain records of the names of eligible taxpayers and the total amount of tax credit that the taxpayer is allowed to use for the taxable year and shall verify no more than $10,000,000 in credits in the aggregate for all taxpayers for each taxable year.

The executive office on aging shall provide information on caregiver services to each eligible taxpayer who claims the tax credit.

(i) The department, with the assistance of the executive office on aging, shall report to the legislature annually, no later than twenty days prior to the convening of each regular session, on the number of eligible taxpayers claiming the tax credit and the total cost of the tax credit to the State during the past year.

(j) A maximum of $10,000,000 of tax credits in the aggregate for all eligible taxpayers may be used in any one taxable year.

(k) As used in this section:

"Cognitive impairment" means a diminished mental capacity or a loss of the ability to process, learn, and remember information.

"Eligible taxpayer" means a caregiver or person who cares for a qualified care recipient.

"Qualified care recipient" means a person with a disability as that term is defined under section 515-2. The term also means a person who is sixty years of age or older, a citizen or resident alien of the United States, and a relative of an eligible taxpayer who:

(1) Has resided with the eligible taxpayer for at least six months of the taxable year for which the credit is claimed or has received more than fifty per cent of the qualified care recipient's financial support during the taxable year from the eligible taxpayer; and

(2) Is certified by a physician licensed under chapter 453, or an advanced practice registered nurse licensed under chapter 457, as requiring one of the following:

(A) Substantial supervision to protect the qualified care recipient's health or safety due to a cognitive impairment; or

(B) Substantial assistance to perform at least two of the following activities of daily living:

(i) Bathing;

(ii) Eating;

(iii) Using the toilet;

(iv) Dressing; or

(v) Transferring, such as from a bed to a wheelchair.

"Relative" means a spouse, child, parent, sibling, legal guardian, a reciprocal beneficiary as that term is defined in section 572C-3, or any other person who is related to a qualified care recipient by blood, marriage, or adoption."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2009, and shall apply to taxable years beginning after December 31, 2008.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	197
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII