With the help of different platforms, you have more opportunities to rent a private home rather than book a hotel in Hawaii. So property owners have the chance to receive extra income and meet new people.
However, it is not so easy as you think because new income opportunities have new tax requirements. Short-term rentals in Hawaii are subject to tax the same as hotels. Property owners are required to collect applicable rental taxes from the tourists and send them to the proper authorities. If you don't comply with state and local tax laws, it can lead to fines and interest penalties.
If you are going to start a new business like operating a short-term rental, you don't know much about lodging taxes but maybe you're familiar with income tax. You must understand the difference between these taxes.
Lodging taxes in Hawaii work not in the way like in other states. Lodging taxes are collected on gross rental proceeds from a short-term rental. Property owners may pass their transient accommodation tax Hawaii on to their guests.
What about income taxes? You should pay them annually to the federal government on “taxable” income that includes income after allowed expense deductions.
The ta tax Hawaii is a tax levied on the gross rental proceeds from a transient accommodation, on the fair market rental value of a time share vacation unit in Hawaii and on the gross receipts of transient accommodations from arranging to furnish transient accommodations at noncommissioned negotiated contract rates.
And what is a transient accommodation? It includes rooms, hotel rooms, houses, beach houses, apartments or similar living accommodations that are rented to a transient person for less than 180 consecutive days in exchange for payment in cash, goods, or services.
So a transient person is a person, who has a permanent house elsewhere or does not plan to make their property a permanent place of residence, so this person is considered as a “transient” with respect to the accommodation.
The Hawaii ta tax on the gross income received for the furnishing of transient accommodations, is currently at 9.25%. It is levied on the person who actually provides the transient accommodations.
The TAT number and local contact information must be shown in all advertisement such as print, websites, internet, social media, TV, etc. If you don't include this information you will receive fine per each violation: For the first violation is $500/day, for the second - $1,000/day and for the third violation - $5,000/day.
Sales tax should be paid on the sale of certain goods and services. In Hawaii, people pay a 4 percent general excise tax (GET). General excise tax is imposed on a business for the sale of goods and services. The seller should pay this tax to state tax authorities but they can pass the charge on to customers. The Hawaii Department of Taxation controls GET in Hawaii.
When you have Hawaii ge license, you should remember, GET that you collect from customers, will belong to the state of Hawaii. You are responsible for the collected taxes and you should follow state and local laws if don't want to get penalties and interest charges.
So ge tax Hawaii is not a sales tax but is similar in some respects to it. For example, when people buy something at a store, the purchase price also includes GET. It is also used for such independent contractors as landlords and realtors. The State of Hawaii collects GET at several different levels.
As we mentioned before, in Hawaii GET is currently 4.0% of the gross income (before any deductions). Let's discuss what can be subject to tax:
And what is not subject to ge taxes Hawaii:
If you want to apply for the licenses in the traditional way, you need to complete the BB-1 form and send it with the application fee (approximately $20). If you're getting the licenses for a transient rental, make sure an apply for both the TAT license and ge tax license Hawaii. If you operate with long-term rentals, a GET license will be enough for you.
Also you can apply for the licenses of TAT and ge tax Hawaii online! You need to visit the Hawaii Business Express website and fill the forms.
There are some situations when you don't need to collect lodging taxes in Hawaii especially if your guests who rent your property for a long term. So they are exempt from short-term lodging taxes.
So if your guests meet these requirements, they can be exempt from TAT:
Both, form G-45 (GET) and form TA-1 (TAT) are filed by the 20th of the month following the end of this period. You can file and pay TAT and ge tax online Hawaii.
Also owners of rental properties need to file the Annual Return and Reconciliation using form G-49 and form T-2 by April 20th of the following year.
In 2016 the Hawaii State Department of Taxation eases the filing and paying processes with TAT and Hawaii ge tax online. So you have all chances to file and pay taxes on time. For this purpose, we recommend you to visit the State of Hawaii’s site that is called Hawaii Tax Online.