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INSTRUCTIONS STATE OF HAWAII—DEPARTMENT OF TAXATION
FORM N-342
(REV. 2023) INSTRUCTIONS FOR FORM N-342
RENEWABLE ENERGY TECHNOLOGIES INCOME TAX CREDIT
(FOR SYSTEMS INSTALLED AND PLACED IN SERVICE ON OR AFTER JULY 1, 2009)
(NOTE: References to “married” and “spouse” are also references to “in a civil union”
and “civil union partner,” respectively.)
COMPOSITE FILING OF FORM N-342 WHEN THE CREDIT MAY NOT BE CLAIMED
Any individual or corporate taxpayer who is eligible to claim the This credit may not be claimed it any of the following apply:
renewable energy technologies income tax credit for 10 or more systems (1) You are using the entire cost of the system to claim another credit.
or distributive shares of systems installed and placed in service in a single
tax year may file a composite Form N-342. A composite Form N-342, (2) You are the lessee in a Power Purchase Agreement (PPA).
which is designated with the word “COMPOSITE” printed in capital letters (3) Your solar water heater system was required to be installed on new
at the top of the form, is used to report the total amounts from Form single-family residential property under section 196-6.5, HRS.
N-342C, Composite Schedule for Form N-342. For more information and (4) Your wind-powered energy system is a substitute for a required solar
instructions on filing a composite Form N-342, see Department of Taxation water heater system under section 196-6.5, HRS.
Announcement No. 2012-01 and the Instructions for Form N-342C. Note: (5) Your solar energy system is five megawatts in total output capacity or
Failing to properly file and/or comply with the terms and conditions for larger and requires a power purchase aggreement approved by the
composite filing (e.g., filing a composite Form N-342 to claim the renewable public utilities commission.
energy technologies income tax credit for less than 10 systems installed Note: If you install a solar energy system, such as a photovoltaic (PV)
and placed in service in a single tax year) may result in the disallowance of system as a substitute for a required solar water heater system under
all or part of the credits and the revocation of the election to composite file. section 196-6.5, HRS, then you must reduce your credit by the lesser of
35% of the actual system cost or $2,250.
GENERAL INSTRUCTIONS
CREDIT REQUIREMENTS
PURPOSE OF FORM
To claim this credit, you must complete and attach to your Hawaii
Use Form N-342 to figure and claim the RETITC under section 235- income tax return or Hawaii franchise tax return:
12.5, Hawaii Revised Statutes (HRS). Use one Form N-342 for each
system. If you have carryover credit(s), see the “Carryover Credit” section (1) Form N-342
below. (2) Schedule CR (For tax returns for which Schedule CR is required)
(3) Form N-342A (Required only if you are claiming a distributive
WHO MAY CLAIM THIS CREDIT share of a credit from a partnership, S corporation, estate, trust, or
If you are the economic owner of an eligible renewable energy condominium apartment association)
technology system that was installed and placed in service in Hawaii (4) Schedule K-1 (Required only if you are claiming a distributive share of
during the taxable year, you may claim this credit if: a credit from a partnership, S corporation, estate, or trust)
(1) You are an individual or corporate taxpayer subject to Hawaii income CARRYOVER CREDIT
tax under chapter 235, HRS; or
If you have a carryover credit from last year for a system installed and
(2) You are a taxpayer subject to Hawaii franchise tax under chapter 241, placed in service before July 1, 2009, use Form N-323 and its instructions
HRS. instead of this form. If you have a carryover credit(s) from last year for a
MULTIPLE OWNERS OF A SYSTEM system(s) installed and placed in service after July 1, 2009, complete one
Form N-342 for your carryover credit(s). If you are also claiming a credit(s)
Multiple owners of a single system are entitled to a single tax credit. for a system(s) installed and placed in service in the taxable year, complete
Each owner may claim a portion of the credit based on how much it paid a separate Form N-342 for each system.
towards the cost of the system subject to the tax credit cap. For example,
three individuals install and place in service a solar water heater on a DEADLINE FOR CLAIMING THE CREDIT
single-family residential property in Hawaii. They split the costs evenly. The
credit is the lesser of 35% of the actual cost or $2,250. Each individual may The deadline to claim the credit, including any amended claims, is 12
claim one-third of the credit. To claim the credit, each owner must complete months after the close of your taxable year. You cannot claim or amend the
Form N-342 and report its share of the total costs. credit after the deadline.
FLOW-THROUGH ENTITIES HOW TO TREAT THE TAX CREDIT
If you are a partnership, S corporation, estate, trust, or condominium NONREFUNDABLE: A nonrefundable credit means your credit will be
apartment association who is the economic owner of an eligible renewable applied towards the amount of income tax you owe. If your nonrefundable
energy technology system that was installed and placed in service in credit is greater than the amount of income tax that you owe, then you may
Hawaii during the taxable year, figure the amount of the credit at the entity carryover the remaining credit and apply it towards next year’s income tax.
level on Form N-342 and attach it to your return. Use a separate Form You may continue to carryover the credit until it is used up.
N-342 for each eligible renewable energy technology system. Prepare a REFUNDABLE (IRREVOCABLE): You may make an irrevocable election
separate Form N-342A, Information Statement Concerning the Renewable to claim the credit as refundable. A refundable credit means you will receive
Energy Technologies Income Tax Credit for Systems Placed in Service on a tax refund if your credit amount is greater than the amount of income tax
or After July 1, 2009, to report the distributive share of the credit for each you owe. You may elect to claim the credit as a refundable credit under the
partner, shareholder, member, or beneficiary for each eligible system. If following circumstances:
you are a partnership or S corporation, attach Form N-342A to each Reduced Credit
partner’s or shareholder’s Schedule K-1. Attach a copy of Form N-342A For a solar energy system, such as a solar water heater or PV system, you
given to each partner, shareholder, member, or beneficiary to your return. must reduce the credit amount by 30%, unless you meet the conditions
described in the “Full Credit” paragraph below.
