This is for Hawaii state tax for pass-through entity tax credit. This allows hawaii state tax to be paid from an S corp. The S corp only has one shareholder the question is: Are the payments made to be applied as a payment on the shareholders individual return?

Yes, the payments made by the S corporation for the Hawaii state pass-through entity (PTE) tax credit can be applied as a payment on the shareholder's individual return. Here's how it generally works: 1. **PTE Tax Election**: The S corporation elects to pay the Hawaii state tax at the entity level. This is often done to take advantage of the state and local tax (SALT) deduction workaround, which allows the entity to deduct state taxes at the federal level. 2. **Credit to Shareholder**: The amount of state tax paid by the S corporation is then passed through to the shareholder. The shareholder receives a credit for the state tax paid by the S corporation on their individual Hawaii state tax return. 3. **Reporting**: The S corporation will report the state tax payment on the shareholder's Schedule K-1, which is then used by the shareholder to claim the credit on their individual Hawaii state tax return. 4. **Individual Tax Return**: When the shareholder files their individual Hawaii state tax return, they will include the credit for the state tax paid by the S corporation. This credit will reduce the amount of state tax the shareholder owes on their individual return. It's important to ensure that all necessary forms and documentation are properly completed and filed. Consulting with a tax professional or accountant who is familiar with Hawaii state tax laws and the specific details of the PTE tax credit can help ensure compliance and optimize your tax situation.

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