Hawaii Department of Taxation Conforms to Federal 1099 Return Thresholds, IRS IRIS, and Combined Fed/State Filing
On October 6, 2026, the State of Hawaiʻi Department of Taxation issued Tax Announcement No. 2026-10, announcing that the state is officially adopting federal information return reporting thresholds under Internal Revenue Code (IRC) Sections 6041 and 6041A.
New Reporting Thresholds for Hawaii Businesses
Under the announcement, any person or entity engaged in a trade or business within Hawaii must file an information return with the Department if they make payments totaling $2,000 or more during the calendar year in the course of their trade or business to another person for:
- Salaries, wages, commissions, fees, and other forms of compensation for services (such as nonemployee compensation reported on Form 1099-NEC).
- Rents, royalties, annuities, pensions, gains, and profits.
- Interest (except as provided under IRC Section 6049) and foreign items.
Conformity for Third-Party Settlement Organizations (Form 1099-K)
For third-party settlement organizations (TPSOs), Hawaii aligns directly with IRC Section 6050W. For the 2026 tax year, an information return must be filed with the Hawaii Department of Taxation only if payments exceed $20,000 and the aggregate number of transactions exceeds 200.
Filing Methods: CF/SF Program, IRS IRIS, and Form N-196
Taxpayers preparing state returns should take note of critical transmission requirements:
- Combined Federal/State Filing (CF/SF) Program: The Department strongly urges businesses to transmit information returns through the IRS CF/SF Program. When filers include the proper Hawaii state code in their federal transmission, the IRS automatically forwards the data to the state, eliminating the need to submit a separate return to Hawaii. Employers can leverage the new IRS Information Returns Intake System (IRIS) portal to e-file and automatically participate in the CF/SF program for eligible 1099 forms.
- No Direct Taxpayer E-Filing: The Department explicitly clarified that it does not currently accept direct electronic submissions of information returns from taxpayers.
- Paper Filings with Form N-196: Payers not participating in CF/SF must transmit physical copies of their information returns directly to the Department accompanied by transmittal Form N-196, delivered by mail or in person to the Honolulu office.
Hawaii businesses can use W2 Mate 2026 1099 software to submit returns via the IRS IRIS system, leveraging the Combined Federal/State Filing (CF/SF) Program to fulfill their state reporting obligations in a single transmission.