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INSTRUCTIONS STATE OF HAWAII—DEPARTMENT OF TAXATION
FORM N-220
(REV. 2023) INSTRUCTIONS FOR FORM N-220
Underpayment of Estimated Tax by Corporations
and S Corporations
Purpose of Form If the corporation is using only the annualized income installment method,
it must check box a of Part I and complete Parts I and III of Schedule A. If
Form N-220 is used by corporations, S corporations, and tax-exempt organi- the corporation is using only the adjusted seasonal installment method, it
zations subject to the unrelated business income tax, to determine whether must check box b of Part I and complete Parts II and III of Schedule A. If
they paid enough estimated income tax, whether they are subject to the pen- the corporation is using both methods, it must check boxes a and b of Part I
alty for underpayment of estimated tax, and, if so, the amount of the pen- and complete all three parts of Schedule A. Enter the amount from the cor-
alty due. The estimated tax is a corporation’s or S corporation’s expected responding column of line 38, Part III, Schedule A, in each column on line 7
income tax liability minus the allowable tax credits and look-back interest for of Form N-220.
completed long-term contracts included in the expected income tax liability.
A domestic corporation must make estimated tax payments if it can reason- Box c. If the corporation is a “large corporation,” check box c. A “large cor-
ably expect its estimated tax to be $500 or more. A foreign corporation must poration” is a corporation (other than an S corporation) that had, or its pre-
make estimated tax payments if 15% or more of the corporation’s business decessor had, taxable income of $1 million or more for any of the three tax
(entire gross income) for the taxable year will be attributable to Hawaii. The years immediately preceding the current tax year. For this purpose, taxable
Department of Taxation may excuse the filing of an estimate and payment of income is modified to exclude net operating loss or capital loss carrybacks
estimated taxes if it is satisfied that less than 15% of the foreign corporation’s or carryovers.
business for the taxable year will be attributable to the State. Part II. Figuring the Underpayment
Form N-220 includes the annualized income installment method and the Complete lines 1 through 15 of Part II.
adjusted seasonal installment method. These estimated tax computation
methods are incorporated in the Schedule A section. Under the annualized Line 1. — Enter the tax from line 11, Form N-30; sum of lines 22(a) and 22(b),
income installment method, a corporation or S corporation has three sets Form N-35; or line 16, Form N-70NP.
of periods over which it may annualize income. If the taxpayer is making an Line 2a. — Complete the worksheet below to determine the amount to enter
election to use one of the optional annualization periods for State estimated on line 2a. Do not include on the worksheet lines below estimated taxes paid,
tax purposes, a copy of the completed federal Form 8842 must be submitted credit for taxes withheld on the sale or disposition of Hawaii real property, the
to the Department of Taxation on or before the due date of the first required amount withheld by an S corporation for a nonresident shareholder, or an
installment payment. overpayment from the prior year to be applied to the current year’s tax liability.
Enter the amount of the applicable credit(s) from the income tax return on the
Who Must Pay the Underpayment Penalty appropriate line below:
Generally, a corporation is subject to the penalty if the tax shown on its 2023 CREDIT AMOUNT
tax return is $500 or more and it did not timely pay the smaller of: Carryover of the Energy Conservation Tax Credit
1. The tax shown on its 2023 return, or Enterprise Zone Tax Credit ..................................
2. The tax shown on its 2022 return if the 2022 return it filed showed Pass-Through Entity Tax Credit ...........................
some amount of tax and the return was for a full 12 month period. Low-Income Housing Tax Credit ..........................
A “large corporation,” however, may base only its first required tax install- Credit for Employment of Vocational Rehabilitation Referrals
ment on the prior year’s tax liability. In these instructions, “return” refers to the Carryover of the High Technology Business
corporation’s original tax return. An amended return is considered the original Investment Tax Credit ......................................
return if the amended return is filed by the due date (including extensions) of
the original return. Carryover of the Technology Infrastructure
Renovation Tax Credit .....................................
The penalty is figured separately for each installment due date. Therefore,
the corporation may owe a penalty for an earlier due date, even if the corpora- Credit for School Repair and Maintenance..........
tion paid enough tax later to make up the earlier underpayment of tax. This is Carryover of the Hotel Construction & Remodeling Tax Credit
true even if the corporation is due a refund when its return is filed. A corpora- Carryover of the Residential Construction and
tion may be able to reduce or eliminate the penalty by using the annualized Remodeling Tax Credit ....................................
income installment method or the adjusted seasonal installment method.
Carryover of the Renewable Energy Technologies
Income Tax Credit (For Systems Installed and
How To Use This Form Placed in Service Before July 1, 2009) ..........
Check one or more boxes (a, b, or c) in Part I if the corporation uses the annu- Carryover of the Capital Infrastructure Tax Credit
alized income installment method, the adjusted seasonal installment method,
or the corporation is a “large corporation.” Carryover of the Cesspool Upgrade, Conversion
or Connection Income Tax Credit ....................
Complete Part II of Form N-220 to determine the underpayment for any of the
four installment due dates. If there is an underpayment on line 14 (column Renewable Energy Technologies Income Tax
(a), (b), (c), or (d)), go to Part III of the form to compute the penalty. Attach Credit (Nonrefundable) ....................................
Form N-220 to the income tax return and check the box on line 17, page 1 of Carryover of the Renewable Fuels Production Tax
Form N-30; line 24 of Form N-35; or line 22 of Form N-70NP. Credit For Tax Years Before 1/1/22 (Nonrefundable) ...
Part I. Reason for Filing Carryover of the Organic Foods Production Tax Credit.......
Box a and b. Annualized income installment method and/or adjusted sea- Historic Preservation Income Tax Credit..............
sonal installment method. If the corporation’s income varied during the year Capital Goods Excise Tax Credit .........................
because, for example, it operated its business on a seasonal basis, it may Fuel Tax Credit for Commercial Fishers ..............
be able to lower or eliminate the amount of one or more required installments
by using the annualized income installment method or the adjusted seasonal Motion Picture, Digital Media and Film
installment method. The annualized income installment or adjusted seasonal Production Income Tax Credit .........................
installment may by less than the required installment under the regular meth- Renewable Energy Technologies Income Tax
od for one or more due dates. This will reduce or eliminate the penalty for Credit (Refundable) .........................................
those installment due dates. Important Agricultural Land Qualified
To use one or both of these methods to figure one or more required install- Agricultural Cost Tax Credit .............................
ments, use Schedule A of Form N-220. If Schedule A is used for any payment Tax Credit for Research Activities ........................
due date, it must be used for all payment due dates. To arrive at the amount
of each required installment, Schedule A automatically selects the smallest Renewable Fuels Production Tax Credit For Tax
of: (a) the annualized income installment, (b) the adjusted seasonal install- Years After 12/31/21 ........................................
ment, if applicable, or (c) the regular installment under IRC section 6655(d) Total Credits to be entered on line 2a ..................
(increased by any reduction recaptured under IRC section 6655(e)(1)(B)).

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INSTRUCTIONS
FORM N-220 (REV. 2023) PAGE 2
Line 4. — All filers other than S corporations. Figure the corporation’s Schedule A
prior year’s tax in the same manner as the amount on line 3 of Form N-220
was determined, using the taxes and credits from the prior year’s tax return. Part I — Annualized Income Installment Method
Skip line 4 and enter the amount from line 3 on line 5 if either of the follow- Line 1. — Enter in the space on line 1, columns (a) through (d), respec-
ing applies: tively, the annualization period that the corporation used. A corporation or S
1. The corporation did not file a tax return for the prior year that corporation electing to use Option 1 or Option 2 periods and a tax exempt
showed a liability for at least some amount of tax; or organization subject to the unrelated business income tax using the Option 1
must have timely submitted a copy of the election form, federal Form 8842,
2. The corporation had a prior tax year of less than 12 months. Election To Use Different Annualization Periods For Corporate Estimated Tax
S Corporations. Enter on line 4 the sum of: (a) 100% of the built-in with the Department of Taxation. Otherwise, the Standard option for the ap-
gains tax shown on the return for the tax year and (b) 100% of any excess plicable entity must be used. The Standard option may be used without filing
net passive income tax shown on the S corporation’s tax return for the prior federal Form 8842. Option 2 is not available to tax exempt organizations and
tax year. If the prior tax year was less than 12 months, do not complete line private foundations.
4. Instead, enter the amount from line 3 on line 5.
CAUTION: Use Option 1 or Option 2 only if the corporation elected to do so
Line 7. — Required Installments. If Part I does not apply, enter 25% of line by submitting a copy of the federal Form 8842 on or before the due date of
5 in each column on line 7. the first required installment payment. Once made, the election is irrevocable
If Part I, box c (but not box a or b) applies and line 3 is smaller than line 4, for the particular tax year.
enter 25% of line 3 in columns (a) through (d) of line 7. Standard option for corporations. — Enter “3” in columns (a) and (b),
“6” in column (c), and “9” in column (d).
If Part I, box c (but not box a or b) applies and line 4 is smaller than line 3,
enter 25% of line 4 in column (a) of line 7. In column (b) of line 7, figure the Standard option for tax exempt organizations subject to the
amount to enter as follows: unrelated business income tax. — Enter “2” in column (a), “3” in column
(b), “6” in column (c), and “9” in column (d).
1. Subtract line 4 from line 3.
Option 1 for all organizations. — Enter “2” in column (a), “4” in column
2. Add the result to the amount on line 3. (b), “7” in column (c), and “10” in column (d).
3. Multiply the total in number 2 above by 25% and enter the result Option 2 for corporations. — Enter “3” in column (a), “5” in column (b),
on line 7, column (b). On line 7, column (c) and (d), enter 25% of “8” in column (c), and “11” in column (d).
line 3.
If Part I, box a or b and box c apply, follow the above instructions by substi- Line 3. — Enter the annualization amount for the option used on line 1 above.
tuting the amounts from Schedule A, line 35 for line 7 and completing the Standard option for corporations. — Enter “4” in columns (a) and (b),
remainder of the lines in Part III of Schedule A. “2” in column (c), and “1.33333” in column (d).
Line 8. — Enter the estimated tax payments made by the corporation for its Standard option for tax exempt organizations subject to the
tax year, as indicated below: unrelated business income tax. — Enter “6” in column (a), “4” in column
(b), “2” in column (c), and ”1.33333” in column (d).
In column (a), enter the estimated tax payments made by the 20th day
of the 4th month of the corporation’s tax year. Private foundations Option 1 for all organizations. — Enter “6” in column (a), “3” in column
enter payments made by the 20th day of the 5th month. (b), “1.71429” in column (c), and “1.2” in column (d).
In column (b), enter payments made after the 20th day of the 4th Option 2 for corporations. — Enter “4” in column (a), “2.4” in column
month through the 20th day of the 6th month of the tax year. (b), “1.5” in column (c), and “1.09091” in column (d).
Private foundations enter payments made after the 20th day of Line 6. — Enter the amount from Form N-30, Schedule J, line 22, or the total
the 5th month through the 20th day of the 6th month. of the amounts from Form N-70NP, lines 11 through 15. Otherwise, enter -0-.
In column (c), enter payments made after the 20th day of the 6th Line 8. — Enter the tax credits allowed due to events that occurred during the
month through the 20th day of the 9th month of the tax year. months shown in column headings used to figure annualized taxable income.
In column (d), enter payments made after the 20th day of the 9th Complete the tax credits based on Part II, line 2a.
month through the 20th day of the 1st month following the close
of the tax year. Part II — Adjusted Seasonal Installment Method
Include in the estimated tax payments any overpayment of tax from the The corporation may use the adjusted seasonal installment method only if
corporation’s prior year’s tax return that was credited to the corporation’s the corporation’s base period percentage for any 6 consecutive months of
current year estimated tax. the tax year is 70% or more. The base period percentage for any period of 6
consecutive months is the average of the 3 percentages figured by dividing
Line 14. — If any of the columns in line 14 shows an underpayment, com- the taxable income for the corresponding 6 consecutive month period in each
plete Part III to figure the penalty. of the 3 preceding tax years by the taxable income for each of their respec-
tive tax years.
Part III. Figuring the Penalty Example. An amusement park that has a calendar year as its tax year
Complete lines 16 through 21 to determine the amount of the penalty. The receives the largest part of its taxable income during the 6 month period
penalty is figured for the period of underpayment determined under section from May through October. To compute its base period percentage for the
235-97(f), HRS. period May through October 2023, it must figure its taxable income for the
The penalty at the rate of 8% a year is imposed on the amount of the under- period May through October in each of the years: 2020, 2021, and 2022.
payment of estimated tax at the rate of 2/3 of 1% a month or part of a month. The taxable income for each May through October period is then divided
A monthly factor of .00667 is used on the form. by the total taxable income for the tax year in which the period is included,
resulting in the following quotients: .69 for May through October 2020, .74
Line 16. — A payment of estimated tax is applied against underpayments of for May through October 2021, and .67 for May through October 2022. Since
required installments in the order that installments are required to be paid, the average of .69, .74, and .67 is equal to .70, the base period percentage
regardless of which installment the payment pertains to. for May through October 2023 is 70%. Therefore, the amusement park
Line 19. — Count the number of months from the due date of the installment qualifies for the adjusted seasonal installment method.
payment on line 17 to the date shown on line 18. Enter the number of months,
rounding up any fractions of a month. A fraction of a month is counted as one Line 28. — Enter the same amount as Schedule A, line 6.
month. Line 30. — Enter the tax credits the corporation is entitled to for the months
For example, a corporation has an underpayment for the April 20 shown in each column.
installment of $1,000. The June 20 installment requires a payment of
$2,500. On June 10, the corporation deposits $2,500 to cover the June 20 Part III — Required Installments
installment. However, $1,000 of this payment is considered to be for the Line 33. — Before completing line 33 in columns (b) through (d), complete
April 20 installment. The penalty for the April 20 installment is figured to lines 34 through 38 in each of the preceding columns. For example, complete
June 10 (2 months). The payment to be applied to the June 20 installment lines 34 through 38 for column (a) before completing line 33 in column (b).
will then be $1,500.
If the corporation has made more than one payment for a required
installment, attach a separate computation for each payment.

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