Hawaii Exemption from Withholding on Nonresident Employee's Wages

Exemption from Withholding on Nonresident Employee's Wages
Form HW-7, Rev 2022, Exemption From Withholding on Nonresident Employee's Wages
FORM HW-7
(REV. 2022)

STATE OF HAWAII — DEPARTMENT OF TAXATION

EXEMPTION FROM WITHHOLDING ON NONRESIDENT
EMPLOYEE’S WAGES

(To be filed by the employer.)
(Attach Form HW-6 to this form.)
(NOTE: References to “spouse” are also references to “civil union partner.”)

Clear Form

Year
2023

Employer’s Name, including DBA name (if applicable)
Employer’s Address (Street, City, State, and Postal/ZIP Code)
Employer’s Hawaii Tax I.D. No.
WH - __ __ __ - __ __ __ - __ __ __ __ - __ __

1.	 Employee’s name	
2.	 Are your employee’s services being performed in Hawaii?...................................................................... Yes 	No 
	 If you checked “No,” where are the services being performed?	
3.	 State the approximate number of days, in the aggregate, you expect your employee to perform
services in Hawaii during calendar year 2023.	
4.	 Is your employee paid for the employee’s services in Hawaii from an office outside Hawaii?.................. Yes 	No 
5.	 Is your employee’s regular place of employment (where your employee regularly performs
services for you) outside Hawaii?............................................................................................................. Yes 	No 
6.	 Are you a contractor as defined in section 237-6(1), Hawaii Revised Statutes (HRS)? (Section
237-6(1), HRS, defines a contractor as every person engaging in the business of contracting to
erect, construct, repair, or improve buildings or structures, of any kind or description, including
any portion thereof, or to make any installation therein, or to make, construct, repair, or improve
any highway, road, street, sidewalk, ditch, excavation, fill, bridge, shaft, well, culvert, sewer,
water system, drainage system, dredging or harbor improvement project, electric or steam rail,
lighting or power system, transmission line, tower, dock, wharf, or other improvements.)....................... Yes 	No 
	 If you checked “Yes,” is your employee performing work for a construction project located
in Hawaii?.................................................................................................................................................Yes 	No 
7.	 Is your employee claiming exemption from withholding under the Military Spouses Residency Relief
Act which mandates that income received by a servicemember’s nonresident civilian spouse for
services performed in Hawaii as an employee is not subject to Hawaii’s income tax?............................. Yes 	No 
I declare under the penalties of section 231-36, HRS, that I have answered all the above questions and that my answers are true
and correct.
		

Employer’s Signature:	

Title:	

Date:

FOR TAX OFFICE USE ONLY
Withholding of income tax is:
	 Required because the employee is a Hawaii resident.
	 Required because the employee performs services in Hawaii an aggregate of more than 60 days during the
calendar year.
	 Required because the employee is paid for services performed in Hawaii from an office in Hawaii.
	 Required because the employee’s regular place of employment for services for the employer is in Hawaii.
	 Required because you are a contractor as defined in section 237-6(1), HRS, and your employee is performing
work for a construction project located in Hawaii.
Income Tax Assessor/Assistant Assessor:		

Date:

		
FORM HW-7
HW7_I 2022A 01 VID01

ID NO 01

INSTRUCTIONS
FORM HW-7
(REV. 2022)		

General Information
Purpose of Form

If your employee is a nonresident employee and
withholding is not required on your employee’s
wages under items (a) or (b) of “When Withholding
is Not Required” (see below), you must file Form
HW-7, along with the Form HW-6 completed by your
employee, with the Department of Taxation (Department) in order to qualify for the exemption from withholding on your employee’s wages.
Note: If your employee is a nonresident employee
and withholding is not required on your employee’s
wages under item (c) of “When Withholding is Not
Required” (see below), you do not have to file Form
HW-7 with the Department. Withholding is not required on your employee’s wages. Keep your employee’s Form HW-6 for your records.

When Withholding is Required

Withholding is required on:
(a)	 Wages for services performed in Hawaii, and
(b)	Wages for services performed outside Hawaii
if:
•	 The services are performed by an employee whose regular place of employment for
services for the employer is in Hawaii, or
•	 The wages are paid out of an office in
Hawaii, or the field office of an employer
whose head office is in Hawaii.

When Withholding is Not Required

(Note: Employers and employees who are exempt
from the withholding provisions are not necessarily
exempt from the Hawaii Income Tax Law.)
Withholding is not required on:
(a)	 Wages for services performed in Hawaii, if all
of the following conditions are met:
•	 The employee establishes that the employee is a nonresident,
•	 The employee is performing services in
the State for an aggregate of not more
than 60 days during the calendar year,
•	 The employee is paid for the employee’s
services in the State from an office outside
the State,
•	 The employee’s regular place of employment (where the employee regularly performs services for the employer) is outside
the State, and
•	 The employer does not reasonably expect
the employee to perform services in the
State an aggregate of more than 60 days
during the calendar year.
However, a nonresident employee performing services for a contractor as defined in section 237-6(1),
HRS, will not qualify for a withholding exemption
when the contractor is performing work for a construction project located in Hawaii. Additionally, if
the Director of Taxation finds that the withholding
requirement is unduly onerous or impracticable of
enforcement, the Director may grant permission
to an employer for exception from the withholding
requirement.
(b)	 Wages, salaries, tips, commissions, and other
compensation received on or after January 1,
2009, by a servicemember’s civilian spouse for
services performed by the servicemember’s
spouse in Hawaii as an employee, if all of the
following conditions are met:

•	 The servicemember (as defined in 10
U.S.C. section 101(a)(5)) is present in Hawaii solely in compliance with military or
naval orders and
•	 The spouse is in Hawaii solely to be with
the servicemember,
•	 The spouse and servicemember are domiciled in the same state and that state is not
Hawaii. Sec. 302 of the Veterans Benefits
and Transitions Act of 2018 - Residence
of spouses for servicemembers amends
SCRA to allow the spouse of a servicemember to elect to use the same state of
residence as the servicemember for state
or local tax purposes.
For more information see Tax Information Release
(TIR) No. 2010-01, “Military Spouses Residency
Relief Act” and Tax Announcement 2019-1 “Military
Spouses Relief Act.”
(c)	 Wages for services performed outside Hawaii
if the employee establishes that the employee
is a nonresident.
The following examples should help to illustrate
when withholding is or is not required:
Employee, a resident of Oregon, is engaged to
teach in Hawaii for one summer. Though Employee
is a nonresident, withholding is required on Employee’s wages.
Employee, a resident of Hawaii, is sent to the mainland for special training. Withholding is required on
Employee’s entire wages.
Employee, a resident of Hawaii, is a promotional
sales representative for a mainland manufacturer.
Employee has a home in Honolulu and covers all of
the islands. From time to time, Employee goes to the
mainland to attend sales conferences. Withholding
is required on Employee’s entire wages.
Employee, a resident of California, is brought to the
State by a firm having a contract to conduct a survey
for a local company. The work commences in February and is not completed until June. During this time,
Employee makes a trip back to the mainland for consultations. Withholding is required on the wages for
the period of service in the State, but is not required
on the wages for the period Employee is outside the
State, if Employee is a nonresident of the State.
Employee, a resident of Washington, is hired on the
mainland by a local company having a construction contract for work on a Pacific island not part of
the State. All of Employee’s services are performed
on that island. Withholding is not required on Employee’s wages if Employee is a nonresident of the
State. On the other hand, withholding is required on
the wages of employees performing like services for
this company who are Hawaii residents or do not
make the required showing of nonresidence.
Employee, a resident of Nevada, is hired on the
mainland by a construction industry contractor
to work in Hawaii on a federal contract. All of Employee’s services are performed in Hawaii during a
period that is less than 60 days in the aggregate for
the calendar year. Withholding is required on any
employee of a construction industry contractor engaged in contracting work in Hawaii regardless of
the employee’s state of residency or how long the
employee is in Hawaii.

Line-by-line Instructions

At the top of the form:
(1)	 Enter your name, including any business or
trade name (if applicable).
(2)	 Enter your current mailing address.

PAGE 2
(3)	 Enter your Hawaii Tax I.D. number.
Line 1. Enter your employee’s name.
Line 2. Check “Yes” if your employee’s services are
performed in Hawaii. Also check “Yes” if your employee’s services are performed on a cruise ship or
research vessel. Interisland voyages are considered
to be completely within Hawaii and, therefore, all
wages earned are subject to withholding.
Line 3. Enter the total number of days you expect
your employee to perform services within Hawaii
during 2023.
Lines 4 to 7. Answer all the questions.
Signature & Date. Sign and date your form. It is not
considered a valid form unless you sign it.
Filing the Form. If you are required to file Form
HW-7 (see “Purpose of Form” above), send Form
HW-7, along with the original Form HW-6, Employee’s Statement to Employer Concerning Nonresidence in the State of Hawaii, (keep a copy of your
employee’s Form HW-6 for your records) to:
Hawaii Department of Taxation
P.O. Box 1425
Honolulu, Hawaii 96812-1425
Telephone: 808-587-4242
Toll-Free: 1-800-222-3229
Note: If your employee is a nonresident employee
and withholding is not required on your employee’s
wages under item (c) of “When Withholding is Not
Required,” you do not have to file Form HW-7 with
the Department. Withholding is not required on your
employee’s wages. Keep your employee’s Form
HW-6 for your records.
Effective Date. You shall stop withholding taxes
from your nonresident employee’s wages on or
after the first payroll period or the first payment of
wages after Form HW-7 and Form HW-6 are filed
with the Department. If you are not required to file
Form HW-7 with the Department, you shall stop
withholding taxes from your nonresident employee’s
wages on or after the first payroll period or the first
payment of wages after your employee gives you
Form HW-6.
Investigation of Nonresidency Status. You shall
withhold taxes from the wages of your nonresident
employee if you are notified by the Department that
your employee’s residency status is being investigated. Notice of the investigation and the Department’s determination will be sent to both you and
your employee. A notice of the Department’s determination shall be effective for the first payment of
wages made on or after the first day of the calendar
month which is at least 30 days after notice from the
Department is received. At your option, the Department’s determination may go into effect at an earlier
payroll period.
Change of Status. If at any time your employee’s
residency status changes, your employee must notify you of the change in status within 10 days. You
then must notify the Department of the change in
your employee’s residency status. The change in
status shall go into effect for the first payment of
wages made on or after the first day of the calendar
month which is at least 30 days after the Department
is notified. At your option, the change in residency
status may go into effect at an earlier payroll period
if your employee is notified of the change.
Returning Form HW-7 to the Employer. The Department will only return the Form HW-7 to the employer if withholding is required.