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Hawaii Free Printable Form N-168 Instructions, Rev. 2019 for 2021 Hawaii Income Averaging for Farmers and Fisherman

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Income Averaging for Farmers and Fisherman
Form N-168 Instructions, Rev. 2019

Clear Form STATE OF HAWAII — DEPARTMENT OF TAXATION 2019 Instructions For Form N-168 (Rev. 2019) Income Averaging for Farmers and Fishermen (NOTE: References to “married” and “spouse” are also references to “in a civil union” and “civil union partner,” respectively.) GENERAL INSTRUCTIONS Use Form N-168 to elect to figure your 2019 tax by averaging, over the previous three years (base years), all or part of your 2019 taxable income from your trade or business of farming or fishing. This election may give you a lower tax if your 2019 income from farming or fishing is high and your taxable income for one or more of the three prior years was low. In order to qualify for this election, you are not required to have been in the business of farming or fishing during any of the base years. You may elect to average farming or fishing income even if your filing status was not the same in the election year and the base years. You do not have to recompute, because of this election, the tax liability of any minor child who was required to use your tax rates in the prior years. You may need copies of your original or amended Forms N-11 or N-15 that you filed for 2016, 2017, and 2018 to figure your tax on Form N-168. If you do not have copies of those returns, you can get them by filing Form L-72, Request for Copies of Hawaii Tax Return. Form L-72 may be obtained from any district tax office, by mail, or via the Internet at:            tax.hawaii.gov Definitions Farming Business. A farming business is the trade or business of cultivating land or raising or harvesting any agricultural or horticultural commodity. This includes: 1. Operating a nursery or sod farm; 2. Raising or harvesting of trees bearing fruits, nuts, or other crops; 3. Raising ornamental trees (but not evergreen trees that are more than six years old when severed from the roots); 4. Raising, shearing, feeding, caring for, training, and managing animals; and 5. Leasing land to a tenant engaged in a farming business, but only if the lease payments are (a) based on a share of the tenant’s production (not a fixed amount), and (b) determined under a written agreement entered into before the tenant begins significant activities on the land. A farming business does not include: • Contract harvesting of an agricultural or horticultural commodity grown or raised by someone else, or • Merely buying or reselling plants or animals grown or raised by someone else. Fishing Business. A fishing business is the trade or business of fishing in which the fish harvested, either in whole or in part, are intended to enter commerce or enter commerce through sale, barter, or trade. This includes: 1. The catching, taking, or harvesting of fish; 2. The attempted catching, taking or harvesting of fish; 3. Any other activity which can reasonably be expected to result in the catching, taking, or harvesting of fish; 4. Any operations at sea in support of, or in preparation for, any activity described in (1) through (3) above; 5. Leasing a fishing vessel, but only if the lease payments are (a) based on a share of the catch (or a share of the proceeds from the sale of the catch) from the lessee’s use of the vessel in a fishing business (not a fixed payment), and (b) determined under a written lease entered into before the lessee begins any significant fishing activities resulting in the catch; and 6. Compensation as a crew member on a vessel engaged in a fishing business, but only if the compensation is based on a share of the catch (or a share of the proceeds from the sale of the catch). The word fish means finfish, mollusks, crustaceans, and all other forms of marine animal and plant life other than marine mammals and birds. A fishing business does not include any scientific research activity conducted by a scientific research vessel. Settlement from Exxon Valdez litigation. You will be treated as engaged in a fishing business with respect to any qualified settlement income you received if either of the following applies. 1. You were a plaintiff in the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska); or 2. All of the following apply: a. You were a beneficiary of a plaintiff described in (1) above. b. You acquired the right to receive qualified settlement income from that plaintiff. c. You were the spouse or an immediate relative of the plaintiff. Qualified settlement income is any taxable interest and punitive damage awards you received (whether as lump sums or periodic payments) in connection with the Exxon Valdez civil action described above. Qualified settlement income includes all such awards, whether received before or after the judgment and whether related to a settlement or a judgment. SPECIFIC INSTRUCTIONS Line 2 — To figure your elected farm income, first figure your taxable income from farming or fishing. This includes all income, gains, losses, and deductions attributable to your farming or fishing business. If you conduct both farming and fishing businesses, you must figure your elected farm income by combining income, gains, losses, and deductions attributable to your farming and fishing businesses. Elected farm income also includes any gain or loss from the sale or other disposition of property regularly used in your farming or fishing business for a substantial period of time. However, if such gain or loss is realized after cessation of the farming or fishing business, the gain or loss is treated as attributable to a farming or fishing business only if the property is sold within a reasonable time after cessation of the farming or fishing business. A sale or other disposition within one year of the cessation is considered to be within a reasonable time. Elected farm income does not include income, gain, or loss from the sale or other disposition of land or from the sale of development rights, grazing rights, and other similar rights. Generally, income, gains, losses, and deductions from farming or fishing are reported on: • Form N-11 or N-15, income from wages and other compensation you received (a) as a shareholder in an S corporation engaged in a farming or fishing business or (b) as a crew member on a vessel engaged in a fishing business (but see Fishing business on this page); • Form N-11 or N-15, income from Exxon Valdez litigation; • Form N-11 or N-15, deductible part of self-employment tax, but only to the extent that deduction is attributable to your farming or fishing business; • Form N-11 or N-15, CCF reduction, except to the extent that any earnings (without regard to the carryback of any net operating or net capital loss) from the operation of agreement vessels in the fisheries of the United States or in the foreign or domestic commerce of the United States are not attributable to your fishing business; • Federal Schedule C or C-EZ; • Form N-11, capital gain or loss, or Capital Gain/Loss Worksheet in the Form N-15 instruction booklet; • Federal Schedule E, Part II; • Federal Schedule F; • Schedule D-1; • Federal Form 4835; and • Federal Form 8949. Your elected farm income is the amount of your taxable income from farming or fishing that you elect to include on line 2. You do not have to include all of your taxable income from farming or fishing on line 2. It may be to your advantage to include less than the entire amount, depending on how the amount you include on line 2 affects your tax bracket for the current and prior three tax years. The excess farm loss rules don’t apply in 2019. The excess business loss disallowance rule replaces the limitation on excess farm loss. Your elected farm income cannot include excess business losses. See the instructions for federal Schedule F (Form 1040) and federal Form 461. Your elected farm income cannot exceed your taxable income. Also, the portion of your elected farm income treated as a net capital gain cannot exceed the smaller of your total net capital gain or the net capital gain attributable to your farming or fishing business. If your elected farm income includes net capital gain, you must allocate an equal portion of the net capital gain to each of the base years. If, for any base year, you had a capital loss that resulted in a capital loss carryover to the next tax year, do not reduce the elected farm income allocated to that base year by any part of the carryover. Line 4 — Figure the tax on the amount on line 3 using the 2019 Tax Table, Tax Rate Schedules, or Capital Gains Tax Worksheet from your 2019 Form N-11 or Form N-15 instruction booklet. Enter the tax on line 4. Line 5 — If you used Form N-168 to figure your tax for 2018 (that is, you entered the amount from the 2018 Form N-168, line 22, on your 2018 Form N-11, line 27 or Form N-15, line 44), enter on line 5 the amount from your Instructions for Form N-168 (Rev. 2019) 2018 Form N-168, line 11. If you used Form N-168 to figure your tax for 2017 but not 2018, enter on line 5 the amount from your 2017 Form N-168, line 15. If you used Form N-168 to figure your tax for 2016 but not 2017 or 2018, enter on line 5 the amount from your 2016 Form N-168, line 3. If you figured your tax for 2016, 2017, and 2018 without using Form N-168, enter on line 5 the taxable income from your 2016 return (or as previously adjusted by the Department of Taxation (Department), an amended return, etc.). But if that amount is zero or less, complete the worksheet in the instructions to federal Schedule J to figure the amount to enter on line 5. If you did not file a tax return for 2016, use the amount you would have reported as your taxable income had you been required to file a tax return. Line 8 — If line 7 is zero, enter -0- on line 8. Otherwise, figure the tax on the amount on line 7 using either the 2016 Tax Rate Schedules on this page or the Tax on Capital Gains Worksheet on page 4 of the instructions. Line 9 — If you used Form N-168 to figure your tax for 2018 (that is, you entered the amount from the 2018 Form N-168, line 22, on your 2018 Form N-11, line 27 or Form N-15, line 44), enter on line 9 the amount from your 2018 Form N-168, line 15. If you used Form N-168 to figure your tax for 2017 but not 2018, enter on line 9 the amount from your 2017 Form N-168, line 3. If you figured your tax for both 2017 and 2018 without using Form N-168, enter on line 9 the taxable income from your 2017 return (or as previously adjusted by the Department, an amended return, etc.). But if that amount is zero or less, complete the worksheet in the instructions to federal Schedule J to figure the amount to enter on line 9. If you did not file a tax return for 2017, use the amount you would have reported as your taxable income had you been required to file a tax return. Line 12 — If line 11 is zero or less, enter -0- on line 12. Otherwise, figure the tax on the amount on line 11 using either the 2017 Tax Rate Schedules Page 2 on this page or the Tax on Capital Gains Worksheet on page 4 of the instructions. Line 13 — If you used Form N-168 to figure your tax for 2018 (that is, you entered the amount from the 2018 Form N-168, line 22, on your 2018 Form N-11, line 27 or Form N-15, line 44), enter on line 13 the amount from your 2018 Form N-168, line 3. If you did not use Form N-168 to figure your tax for 2018, enter on line 13 the taxable income from your 2018 return (or as previously adjusted by the Department, an amended return, etc.). But if that amount is zero or less, complete the worksheet in the instructions to federal Schedule J to figure the amount to enter on line 13. If you did not file a tax return for 2018, use the amount you would have reported as your taxable income had you been required to file a tax return. Line 16 — If line 15 is zero or less, enter -0- on line 16. Otherwise, figure the tax on the amount on line 15 using either the 2018 Tax Rate Schedules on page 3 or the Tax on Capital Gains Worksheet on page 4 of the instructions. Lines 18, 19, and 20 — If you used Form N-168 to figure your tax for 2018, enter the amount from the appropriate lines of that Form N-168 on lines 18, 19, and 20. If you used Form N-168 to figure your tax for 2017 but not 2018, enter the amount from the appropriate lines of your 2017 Form N-168 on lines 18 and 19. If you used Form N-168 for 2016 but not 2017 or 2018, enter the amount from line 4 of your 2016 Form N-168 on line 18. Otherwise, enter your tax for the applicable year. If you amended your return or the Department made changes to it, enter the corrected amount. Do not include any amount from Forms N-2, N-103, N-152, N-312, N-338, N-344, N-348, N-405, N-586, or N-814. Tax Rate Schedules for Years 2016 and 2017 Schedule I – Use if your filing status is Single or Married Filing Separately If your taxable income is: Your tax is: Not over $2,400....................................................... 1.40% of taxable income Over $2,400 but not over $4,800............................. $ 34 plus 3.20% over $2,400 Over $4,800 but not over $9,600............................. $ 110 plus 5.50% over $4,800 Over $9,600 but not over $14,400........................... $ 374 plus 6.40% over $9,600 Over $14,400 but not over $19,200......................... $ 682 plus 6.80% over $14,400 Over $19,200 but not over $24,000......................... $ 1,008 plus 7.20% over $19,200 Over $24,000 but not over $36,000......................... $ 1,354 plus 7.60% over $24,000 Over $36,000 but not over $48,000......................... $ 2,266 plus 7.90% over $36,000 Over $48,000........................................................... $ 3,214 plus 8.25% over $48,000 Schedule II – Use if your filing status is Married Filing Jointly or Qualifying Widow(er) If your taxable income is: Your tax is: Not over $4,800....................................................... 1.40% of taxable income Over $4,800 but not over $9,600............................. $ 67 plus 3.20% over $4,800 Over $9,600 but not over $19,200........................... $ 221 plus 5.50% over $9,600 Over $19,200 but not over $28,800......................... $ 749 plus 6.40% over $19,200 Over $28,800 but not over $38,400......................... $ 1,363 plus 6.80% over $28,800 Over $38,400 but not over $48,000......................... $ 2,016 plus 7.20% over $38,400 Over $48,000 but not over $72,000......................... $ 2,707 plus 7.60% over $48,000 Over $72,000 but not over $96,000......................... $ 4,531 plus 7.90% over $72,000 Over $96,000........................................................... $ 6,427 plus 8.25% over $96,000 Schedule III – Use if your filing status is Head of Household If your taxable income is: Your tax is: Not over $3,600....................................................... 1.40% of taxable income Over $3,600 but not over $7,200............................. $ 50 plus 3.20% over $3,600 Over $7,200 but not over $14,400........................... $ 166 plus 5.50% over $7,200 Over $14,400 but not over $21,600......................... $ 562 plus 6.40% over $14,400 Over $21,600 but not over $28,800......................... $ 1,022 plus 6.80% over $21,600 Over $28,800 but not over $36,000......................... $ 1,512 plus 7.20% over $28,800 Over $36,000 but not over $54,000......................... $ 2,030 plus 7.60% over $36,000 Over $54,000 but not over $72,000......................... $ 3,398 plus 7.90% over $54,000 Over $72,000........................................................... $ 4,820 plus 8.25% over $72,000 Page 3 Tax Rate Schedules for Year 2018 Schedule I – Use if your filing status is Single or Married Filing Separately If your taxable income is: Your tax is: Not over $2,400....................................................... 1.40% of taxable income Over $2,400 but not over $4,800............................. $ 34 plus 3.20% over $2,400 Over $4,800 but not over $9,600............................. $ 110 plus 5.50% over $4,800 Over $9,600 but not over $14,400........................... $ 374 plus 6.40% over $9,600 Over $14,400 but not over $19,200......................... $ 682 plus 6.80% over $14,400 Over $19,200 but not over $24,000......................... $ 1,008 plus 7.20% over $19,200 Over $24,000 but not over $36,000......................... $ 1,354 plus 7.60% over $24,000 Over $36,000 but not over $48,000......................... $ 2,266 plus 7.90% over $36,000 Over $48,000 but not over $150,000....................... $ 3,214 plus 8.25% over $48,000 Over $150,000 but not over $175,000..................... $ 11,629 plus 9.00% over $150,000 Over $175,000 but not over $200,000..................... $ 13,879 plus 10.00% over $175,000 Over $200,000......................................................... $ 16,379 plus 11.00% over $200,000 Schedule II – Use if your filing status is Married Filing Jointly or Qualifying Widow(er) If your taxable income is: Your tax is: Not over $4,800....................................................... 1.40% of taxable income Over $4,800 but not over $9,600............................. $ 67 plus 3.20% over $4,800 Over $9,600 but not over $19,200........................... $ 221 plus 5.50% over $9,600 Over $19,200 but not over $28,800......................... $ 749 plus 6.40% over $19,200 Over $28,800 but not over $38,400......................... $ 1,363 plus 6.80% over $28,800 Over $38,400 but not over $48,000......................... $ 2,016 plus 7.20% over $38,400 Over $48,000 but not over $72,000......................... $ 2,707 plus 7.60% over $48,000 Over $72,000 but not over $96,000......................... $ 4,531 plus 7.90% over $72,000 Over $96,000 but not over $300,000....................... $ 6,427 plus 8.25% over $96,000 Over $300,000 but not over $350,000..................... $ 23,257 plus 9.00% over $300,000 Over $350,000 but not over $400,000..................... $ 27,757 plus 10.00% over $350,000 Over $400,000......................................................... $ 32,757 plus 11.00% over $400,000 Schedule III – Use if your filing status is Head of Household If your taxable income is: Your tax is: Not over $3,600....................................................... 1.40% of taxable income Over $3,600 but not over $7,200............................. $ 50 plus 3.20% over $3,600 Over $7,200 but not over $14,400........................... $ 166 plus 5.50% over $7,200 Over $14,400 but not over $21,600......................... $ 562 plus 6.40% over $14,400 Over $21,600 but not over $28,800......................... $ 1,022 plus 6.80% over $21,600 Over $28,800 but not over $36,000......................... $ 1,512 plus 7.20% over $28,800 Over $36,000 but not over $54,000......................... $ 2,030 plus 7.60% over $36,000 Over $54,000 but not over $72,000......................... $ 3,398 plus 7.90% over $54,000 Over $72,000 but not over $225,000....................... $ 4,820 plus 8.25% over $72,000 Over $225,000 but not over $262,500..................... $ 17,443 plus 9.00% over $225,000 Over $262,500 but not over $300,000..................... $ 20,818 plus 10.00% over $262,500 Over $300,000......................................................... $ 24,568 plus 11.00% over $300,000 Instructions for Form N-168 (Rev. 2019) Instructions for Form N-168 (Rev. 2019) Form N-11 Filers - Tax on Capital Gains Worksheet for Years 2016, 2017, and 2018 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Enter your taxable income..................................................................................................................... Enter your net long-term capital gain (Form 1040 or Schedule D) (as refigured).................................. Combine your Hawaii long-term adjustments, if any, and enter the total here (as refigured)................. Combine lines 2 and 3. This is your Hawaii net long-term capital gain.................................................. Enter your net capital gain (Form 1040 or Schedule D) (as refigured).................................................. Combine your Hawaii short-term adjustments, if any, and enter the total here (as refigured)............... Combine lines 3, 5, and 6. This is your Hawaii net capital gain............................................................. Enter the smaller of line 4 or line 7....................................................................................................... If you filed Form N-158, enter the amount from line 4e of Form N-158................................................. Line 8 minus line 9. If this amount is zero or less, stop here; you cannot use this worksheet to figure your tax. Instead, use the Tax Rate Schedules shown on page 2 or page 3................................ Line 1 minus line 10............................................................................................................................... Enter the amount shown below for the filing status you claimed............................................................ Single or Married filing separately— $24,000 Married filing jointly or Qualifying widow(er)— 48,000 Head of household— 36,000 13. Enter the greater of line 11 or line 12.................................................................................................... 14. Line 1 minus line 13. This is the amount of net capital gains eligible for alternative tax......................... 15. Compute the tax on the amount on line 13 using the Tax Rate Schedules shown on page 2 or page 3..... 16. Multiply line 14 by 7.25% (.0725) and enter the result........................................................................... 17. Line 15 plus line 16................................................................................................................................ 18. Compute the tax on the amount on line 1. Use the Tax Rate Schedules shown on page 2 or page 3........ 19. Tax. Enter the smaller of line 17 or line 18 here and on the appropriate line of Form N-168............... N-15 Filers - Tax on Capital Gains Worksheet for Years 2016, 2017, and 2018 1. 2. 3. 4. 5. 6. Enter your taxable income..................................................................................................................... Enter the smaller of your Hawaii net long-term capital gain* or your Hawaii net capital gain* (Capital Gain/Loss Worksheet in the Form N-15 instruction booklet) (as refigured).............................. If you filed Form N-158, enter the amount from line 4e of Form N-158................................................. Line 2 minus line 3. If this amount is zero or less, stop here; you cannot use this worksheet to figure your tax. Instead, use the Tax Rate Schedules shown on page 2 or page 3................................ Line 1 minus line 4................................................................................................................................. Enter the amount shown below for the filing status you claimed............................................................ Single or Married filing separately— $24,000 Married filing jointly or Qualifying widow(er)— 48,000 Head of household— 36,000 7. Enter the greater of line 5 or line 6........................................................................................................ 8. Line 1 minus line 7.  This is the amount of net capital gains eligible for alternative tax.......................... 9. Compute the tax on the amount on line 7 using the Tax Rate Schedules shown on page 2 or page 3...... 10. Multiply line 8 by 7.25% (.0725) and enter the result............................................................................. 11. Line 9 plus line 10.................................................................................................................................. 12. Compute the tax on the amount on line 1. Use the Tax Rate Schedules shown on page 2 or page 3........ 13. Tax. Enter the smaller of line 11 or line 12 here and on the appropriate line of Form N-168................ *Note: If you filed Form N-15, the computation to figure taxable income uses Hawaii income and deduction amounts from Column B. Therefore, the Tax on Capital Gains Worksheet should be completed using amounts from Column B of Form N-15. Page 4
Extracted from PDF file 2019-hawaii-form-n-168.pdf, last modified August 2003

More about the Hawaii Form N-168 Individual Income Tax

We last updated the Income Averaging for Farmers and Fisherman in March 2020, and the latest form we have available is for tax year 2019. This means that we don't yet have the updated form for the current tax year. Please check this page regularly, as we will post the updated form as soon as it is released by the Hawaii Department of Taxation. You can print other Hawaii tax forms here.


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Other Hawaii Individual Income Tax Forms:

TaxFormFinder has an additional 164 Hawaii income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form N-11 Individual Income Tax Return (Resident Form)
Form N-200V Individual Income Tax Payment Voucher
Form N-15 Individual Income Tax Return (Nonresidents and Part Year Residents)
Income Tax Instructions Hawaii Income Tax Instruction Booklet
Form N-1 Declaration of Estimated Income Tax for Individuals

Download all HI tax forms View all 165 Hawaii Income Tax Forms


Form Sources:

Hawaii usually releases forms for the current tax year between January and April. We last updated Hawaii Form N-168 from the Department of Taxation in March 2020.

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About the Individual Income Tax

The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.

Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!

Historical Past-Year Versions of Hawaii Form N-168

We have a total of eight past-year versions of Form N-168 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:


2019 Form N-168

Form N-168 Instructions, Rev. 2019

2018 Form N-168

Form N-168 Instructions, Rev. 2018

2017 Form N-168

Form N-168, Rev. 2017, Income Averaging for Farmers and Fishermen

2016 Form N-168

Form N-168, Rev. 2016, Income Averaging for Farmers and Fishermen

Forms 2015 2015 Form N-168

Form N-168, Rev. 2015, Income Averaging for Farmers and Fishermen

Forms 2014 2014 Form N-168

Form N-168, Rev. 2014, Income Averaging for Farmers and Fishermen

Forms 2012 2012 Form N-168

Form N-168, Rev. 2012, Income Averaging for Farmers and Fishermen

Forms 2011 - CD Fillable 2011 Form N-168

Form N-168, Rev. 2011, Income Averaging for Farmers and Fishermen


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