How to File Your Nebraska Tax Return for 2020: Step-by-Step Guide

Filing your Nebraska state income tax return accurately and on time is essential to staying compliant and avoiding unnecessary penalties or interest. For the 2020 tax year, many Nebraska taxpayers faced unique circumstances, including extended deadlines and new credits designed to offer relief. Whether you are a resident, a partial-year resident, or a small business owner with Nebraska-sourced income, understanding the rules and forms is the first step toward a smooth filing process.

This guide is designed to walk you through each part of the Nebraska filing process, from determining whether you need to file to completing the correct forms, making payments, and checking your refund status. You will also find practical tips to avoid common mistakes and maximize available credits, such as the Nebraska Property Tax Incentive Act Credit and the Extremely Blighted Area Tax Credit.

With proper preparation and an understanding of the state’s requirements, filing your return does not have to be overwhelming. By following this step-by-step approach, you can meet all Nebraska Department of Revenue requirements while ensuring your return is accurate, complete, and processed as quickly as possible.

Overview of Nebraska State Income Tax for 2020

Nebraska’s individual income tax system follows a structure similar to federal returns, using your federal adjusted gross income (AGI) as the starting point. For 2020, the state also introduced several changes designed to provide tax relief for qualifying taxpayers. Understanding who needs to file, the key updates for the year, and how residency is determined will help you confidently begin the filing process.

Who Needs to File a Nebraska Return

You are generally required to file a Nebraska individual income tax return if you meet specific criteria:

Nebraska residents filing a federal return: If you are a resident and must file a federal income tax return that reports a tax liability before credits, you must also file a Nebraska return.
Residents with significant adjustments: If you are a resident with $5,000 or more in net Nebraska adjustments to federal AGI, you must file, even if you do not owe federal tax. These adjustments may include income from non-Nebraska municipal bonds exempt from federal tax.
Nonresidents and partial-year residents: If you earned income from Nebraska sources, you must file a return, even if you lived there for only part of the year.
Small business owners with Nebraska-sourced income: If any income originates from Nebraska, sole proprietors, partners, and S corporation shareholders must file.

For the 2020 tax year, the original April 15 filing deadline was extended to May 17, 2021, giving taxpayers additional time due to pandemic-related disruptions.

Key Changes Compared to 2019

The 2020 tax year brought several important updates that could affect your Nebraska tax return:

Nebraska Property Tax Incentive Act Credit (LB 1107): This refundable credit benefits taxpayers who paid Nebraska school district property taxes. To claim it, you must file Form PTC with your return.
School Readiness Tax Credit Act Changes (LB 266): Expanded eligibility for refundable and nonrefundable credits to support childcare providers and improve educational outcomes.
Extremely Blighted Area Tax Credit (LB 86): Provides a $5,000 nonrefundable credit for purchasing a primary residence in a designated extremely blighted area. This credit is claimed using Form 1040N-EB.

Knowing which credits apply to your situation can reduce your tax liability or increase your refund.

Definition of Nebraska Resident

For Nebraska tax purposes, residency is based on either your domicile or your physical presence in the state:

Domicile-based residency: You are a Nebraska resident if your permanent home is in the state, even if you spend part of the year elsewhere.
Physical presence residency: You are considered a resident if you maintain a permanent place of abode in Nebraska and are physically present for more than six months (183 days or more) during the tax year.

Your residency status determines which forms you use and how your income is taxed. Accurate classification is essential for avoiding filing errors and ensuring that the correct amount of tax is assessed.

What Forms to Use

Filing your Nebraska tax return begins with selecting the correct forms. The Nebraska Department of Revenue provides different forms and schedules depending on your filing status, income sources, and eligibility for certain credits. Using the correct paperwork ensures your return can be processed without delays.

Main Individual Income Tax Form

The primary form for Nebraska individual income tax filing is Form 1040N – Nebraska Individual Income Tax Return. Residents, partial-year residents, and nonresidents use this form to report income, calculate state tax, claim credits, and determine any refund or balance due. It closely follows the federal return layout, beginning with your federal AGI and applying Nebraska-specific adjustments.

Standard Schedules and Credit Forms

Depending on your situation, you may need to attach additional schedules or credit forms:

Schedule I – Adjustments to Income: Used to record Nebraska-specific additions or subtractions from your federal AGI.
Schedule II—Credit for Tax Paid to Another State: This form allows you to claim credit for taxes paid on the same income to another state, preventing double taxation.
Schedule III – Computation for Nonresidents or Partial-Year Residents: Calculates the Nebraska tax owed on only the Nebraska-source portion of your income.
Form PTC – Nebraska Property Tax Incentive Act Credit Computation: Required to claim the refundable credit for Nebraska school district property taxes paid.
Form 2441N—Nebraska Child and Dependent Care Expenses: This form mirrors the federal version but is used to determine state-level eligibility.
Form 1040N-EB – Purchase of Nebraska Residence in Designated Extremely Blighted Area Credit: Needed to claim the $5,000 nonrefundable credit for qualifying home purchases.
Form 3800N – Nebraska Incentives Credit Computation: Used for various Nebraska business and investment tax credits.
Form 2210N – Individual Underpayment of Estimated Tax: Calculates potential penalties for underpayment of Nebraska estimated taxes.

Forms for Small Business Owners

If you operate a small business or earn pass-through income, additional forms may be necessary:

Sole proprietors: Business income and expenses are first reported on federal Schedule C and then flow into your Nebraska return.
Partnerships and LLC members: Receive a Schedule K-1N from the entity, showing each partner’s share of Nebraska income.
S corporation shareholders: Also receive a Schedule K-1N detailing Nebraska-source income.

Official Nebraska forms and instructions are available on the Nebraska Department of Revenue website. Always use the most up-to-date versions to ensure accuracy.

Step-by-Step Instructions to Complete Your Return

Completing your Nebraska state income tax return is easier to manage when broken down into clear, organized steps. These steps will help you avoid mistakes, ensure accuracy, and file on time.

Step 1: Gather All Required Documents

Before you begin, make sure you have all the necessary paperwork in front of you. This includes your completed federal tax return for 2020, W-2 forms, any Form 1099, records of estimated tax payments made to Nebraska, and documentation for deductions or credits you intend to claim. Having your Social Security numbers, spouse’s information, and any dependents’ details ready will save time. Nebraska residents should also have their public high school district code ready, as it is required when filing the return.

Step 2: Complete Your Personal Information

On Form 1040N, fill in your name, address, Social Security number, and filing status. Your filing status must match your federal return. Indicate whether you are a resident, partial-year, or nonresident, and check the boxes for age or blindness if applicable. If you are a Nebraska resident, enter your public high school district code in the designated field.

Step 3: Enter Exemptions and Dependent Information

List yourself, your spouse, and any dependents on the form, providing their names and Social Security numbers. Each qualifying exemption may provide a personal exemption credit, reducing the total tax you owe. Double-check this section for accuracy, as errors here can cause delays.

Step 4: Transfer Your Federal Adjusted Gross Income (AGI)

Line 5 of Form 1040N requires your federal AGI from line 11 of your federal Form 1040 or 1040-SR. This amount is the starting point for determining your Nebraska taxable income. Any adjustments will be made on Schedule I if they apply to your situation.

Step 5: Calculate Nebraska Deductions

Choose between the Nebraska standard deduction and your itemized deductions. If you itemize, you must subtract state and local income taxes from your federal total before entering the amount. Enter this figure on the appropriate lines of Form 1040N.

Step 6: Determine Your Nebraska Taxable Income

Apply any Nebraska-specific additions or subtractions from Schedule I to your AGI to determine your Nebraska taxable income. Then, use the Nebraska Tax Table or Tax Calculation Schedule to determine your state tax due. Add any other applicable taxes, such as recapture taxes or underpayment penalties.

Step 7: Apply Credits

Reduce your calculated tax using any credits you qualify for. These may include the personal exemption credit, credit for tax paid to another state (Schedule II), or notable credits, such as the Nebraska Property Tax Incentive Act Credit. Be sure to attach the required forms for each credit claimed.

Step 8: Enter Payments

Report any Nebraska income tax withheld from your W-2s or 1099s, estimated payments made during the year, and any refundable credits. This will determine whether you will receive a refund or owe additional tax.

Step 9: Determine Refund or Amount Due

Subtract your total payments and credits from your total tax due. You are entitled to a refund if your payments exceed the tax owed. If your tax due is greater, you must pay by the due date to avoid interest or penalties.

Step 10: Sign and Attach Required Documents

Sign and date your return before filing. If filing jointly, both spouses must sign. Attach all required documents, such as W-2s, 1099s, Schedule K-1Ns, and any credit forms. If you claim a credit for tax paid to another state, include a copy of that state’s return.

Special Instructions for Nonresidents and Partial-Year Residents

Start with Form 1040N through line 14: Complete the same initial sections as a full-year resident so all income sources are recorded.
Use Schedule III for Nebraska-source income: This schedule calculates the portion of your income that Nebraska taxes, applying the state’s rates only to earnings from Nebraska sources.
Transfer results correctly: Enter the amount from line 9 of Schedule III onto line 15 of Form 1040N to ensure the correct tax amount is applied.
Attach supporting documents: Include Schedule III along with W-2s, 1099s, or other forms showing Nebraska withholding. Proper attachments help prevent processing delays.

Special Instructions for Small Business Owners

Report business income on your federal return first: Sole proprietors file Schedule C, while partners and S corporation shareholders receive a Schedule K-1N showing their Nebraska income share.
Make Nebraska-specific adjustments on Schedule I: Adjustments may apply for certain income earned outside Nebraska, or the state does not allow deductions.
Review available business tax credits: Credits such as the Nebraska Advantage Microenterprise Tax Credit or the Child Care and Education Provider Credit can reduce your state tax liability.
Attach necessary forms for claimed credits: Ensure each credit claimed is supported by its required form to avoid delays or disallowance.

Common Mistakes to Avoid

Not completing your federal return first: Nebraska’s Form 1040N starts with your federal AGI, so you must finish your federal return before beginning your state return. Skipping this step can lead to errors and force you to redo the form.
Leaving line 5 blank. This is where your federal AGI is entered. If it is missing, your return cannot be processed, and you may face delays in receiving your refund.
Including cents instead of rounding to whole dollars: Nebraska returns must be completed in whole dollar amounts. Using cents can cause processing errors or mismatched totals.
Failing to attach required forms: Missing W-2s, 1099s, or credit-related forms can result in delayed refunds or denied credits. Always double-check that all necessary documentation is included.
Forgetting your public high school district code: Nebraska residents must include it on their return. Leaving it out can cause delays and require follow-up from the Department of Revenue.
Using the wrong mailing address: Nebraska has separate addresses for returns with payments and those expecting refunds. Sending your return to the incorrect address can significantly slow down processing.
Not keeping copies of your return: Retaining a complete copy, including all attachments, is essential for your records and in case of future audits or inquiries.

How to File Your Return

Nebraska residents and nonresidents can file their state income tax returns electronically or on paper. E-filing is faster and more accurate, and it is the recommended option.

Electronic Filing (E-File) Options

NebFile: Free online filing for the simple returns. Available on the Nebraska Department of Revenue website.
Fed/State E-File: File your federal and Nebraska returns using approved software. This makes completing forms and schedules easier.
Tax Professional: A preparer can e-file for you, help with Schedule II credits, and handle estimated tax or underpayment issues.

E-filing offers faster refunds, automatic error checking, and instant confirmation that the state received your return. It also significantly reduces the processing time compared to mailing a paper return.

Paper Filing

Use official forms from the state website: Always download the most updated Form 1040N and any needed schedules to ensure your filing is accurate.
Attach all required documents to your return: Include W-2s, 1099s, Schedule II, and any credit forms so your return can be processed without delays.
Mail your return to the correct address for your situation: Refunds or returns with no balance due go to PO Box 98912, while returns with taxes owed go to PO Box 98934 in Lincoln, NE.
Keep a complete copy for your records: Retain all pages, schedules, and attachments if you need to check your filing or respond to a state inquiry.

Paper returns can take three months or more to process, so most taxpayers benefit from choosing e-filing whenever possible.

How to Make a Payment

If you owe taxes to the state of Nebraska, there are several ways to make your payment. Choosing the right method can help avoid late penalties, underpayment charges, and unnecessary delays.

Electronic Payment Options

Electronic Funds Withdrawal (EFW): When you e-file your return, you can authorize the Nebraska Department of Revenue to withdraw the payment directly from your bank account. This method lets you choose the payment date, as long as it is on or before the tax deadline, and it ensures your payment is posted quickly.
Nebraska e-pay system: This secure online portal allows you to pay taxes directly through the Department of Revenue website, whether you e-filed or filed a paper return. It is available 24/7, making scheduling or viewing payments at your convenience easy.
Credit or debit card: Payments can be made through Official Payments online or by phone at 800-272-9829. A small convenience fee applies, but this method allows for immediate processing and is helpful if you want to earn card rewards or need to pay quickly.

Electronic payment options are generally the fastest and most reliable, offering instant confirmation and reducing the risk of lost or delayed payments.

Paying by Check

Make checks payable to “Nebraska Department of Revenue”: Always include your Social Security number and “2020 Form 1040N” on the memo line to ensure proper credit to your account. This helps the state match your payment to your return quickly.
Include Form 1040N-V if paying separately: If your check is not mailed with your tax return, you should complete and send the payment voucher. This form provides essential details for the department to apply your payment correctly.
Mail to the correct payment address: Send check payments to PO Box 98934, Lincoln, NE 68509-8934. Mailing to the incorrect address could lead to processing delays and potential penalties if you don't apply the payment promptly.

Paying by check works well for taxpayers who prefer paper records, but it can take longer for the state to process than electronic payments.

Payment Deadlines and Late Payment Consequences

Nebraska’s deadline for paying 2020 taxes was May 17, 2021, matching the extended filing date. Even if you filed for an extension, the payment was still due by that date. Late payments may result in a 0.5% monthly penalty on unpaid taxes, an underpayment interest rate of 3% annually, and additional charges if the delay continues.

Payment Plan Options

If you cannot pay your full tax balance immediately, Nebraska offers payment plans after processing your return. You must file your return on time, pay as much as possible upfront, and wait for a balance due notice before applying for a plan online. Interest will continue to accrue until the balance is fully paid, so larger or quicker payments can reduce the total cost.

How to Track Your Refund or Balance Due

After filing your Nebraska tax return, it is important to know how to check the status of your refund or view any balance you may still owe. The Nebraska Department of Revenue offers online and phone options to keep taxpayers informed.

Checking Your Refund Status

Use the Nebraska Department of Revenue’s online refund tool: Visit the state’s refund information page and enter your Social Security number and expected refund amount. The system provides the most up-to-date status and can be checked anytime.
Call the automated refund line: To check refund progress, you can call 800-742-7474 (Nebraska and Iowa) or 402-471-5729. This option works well if you do not have internet access or prefer speaking with a representative.

Keeping track of your refund helps you confirm that your return is being processed and lets you address any unexpected delays quickly.

Refund Processing Times

E-filed returns: Most refunds for error-free e-filed returns are issued within 30 days. This faster turnaround is one of the most significant benefits of e-filing taxes.
Paper returns: Paper-filed returns generally take at least three months to process. The extra time is due to manual entry and additional verification steps by the state.

Refund delays can occur if the department conducts additional fraud prevention or identity verification checks.

Reviewing a Balance Due

Check your account online: The Nebraska Department of Revenue’s online services allow you to view your balance, check recent payments, and see any updated charges. This tool is available year-round for both individuals and small business owners.
Call for balance information: Contact the Taxpayer Assistance office at 800-742-7474 (Nebraska and Iowa) or 402-471-5729 to confirm your amount due and discuss payment arrangements.

Regularly checking your balance due can help you avoid unexpected underpayment penalties and allow you to make payments before interest builds up.

Final Filing Checklist

Before sending your Nebraska tax return, take a moment to review these important items. A final check helps prevent delays, reduce the risk of penalties, and ensure your return is complete.

Confirm your return is fully completed: Make sure all lines are filled in where required, all schedules are attached, and all figures are rounded to whole dollars. Missing or incomplete information can cause the Department of Revenue to reject or delay your return.
Attach all income forms: Include every W-2, 1099, and Schedule K-1N that shows Nebraska withholding or income. These forms verify the income you reported and help confirm the amount of tax already paid.
Include all credit and deduction forms: If you claim credits like those on Schedule II or the Nebraska Property Tax Incentive Act Credit, ensure the correct forms are filled out and attached. Missing these can cause credits to be denied until you provide them.
Select your payment or refund method: Double-check your bank account information if you request direct deposit, or confirm your payment method if you owe taxes. Incorrect details can delay payment posting or refund delivery.
Use the correct mailing address: Nebraska has different addresses for returns with payments and those expecting refunds. Sending your return to the wrong address can extend the processing time by weeks.
Sign and date the return: If filing jointly, both spouses must sign. Unsigned returns are considered incomplete and will not be processed until corrected.
Keep a complete copy for your records: Store your filed return, schedules, and all attachments safely. You may need them for future filings, audits, or to check past reported amounts.

A careful review before submitting your return ensures that you have followed every step correctly and that your Nebraska tax return is ready for smooth processing.

Frequently Asked Questions

What if I missed the filing deadline for May 17, 2021?

If you missed the Nebraska filing deadline, file your tax return as soon as possible to reduce penalties and interest. The state may charge a late filing penalty, a late payment penalty, and interest on unpaid taxes. Even if you cannot pay in full, filing promptly helps limit costs and allows you to set up a payment plan.

Can I e-file for free?

Most Nebraska residents can use NebFile, the state’s free e-filing system, for simple tax returns. If you qualify for the IRS Free File program for your federal return, you may also be eligible for free Nebraska e-filing through participating providers. These fast, accurate options include built-in error checks to prevent mistakes.

What deductions or credits are most commonly missed?

Many Nebraska taxpayers overlook credits such as the Property Tax Incentive Act Credit, the credit for taxes paid to another state (Schedule II), and the Nebraska earned income credit. Other missed benefits include deductions for contributions to the Nebraska college savings plan and the Extremely Blighted Area Tax Credit. Reviewing all available credits can reduce your state tax liability.

How do I request an extension?

Nebraska accepts the federal extension to file. If you have a federal extension, no separate state form is needed unless you are making a payment with your extension. File Nebraska Form 4868N only if requesting a state-only extension or submitting payment. The extension allows more filing time, but taxes are due by the original deadline.

Can I file jointly if I moved mid-year?

Married taxpayers may file jointly even if one spouse moved into or out of Nebraska during the year. You can file as a full-year resident or separate Nebraska returns using Schedule III for the nonresident spouse. Compare both filing options to see which results in a lower total tax, as income sourcing rules can affect your liability.

As a sole proprietor, how do I report my business income?

Sole proprietors report business income and expenses on the federal Schedule C. The net result transfers to your Nebraska return through your federal AGI. Any Nebraska-specific adjustments should be recorded on Schedule I. You may also qualify for business-related credits, such as the Nebraska Advantage Microenterprise Tax Credit, which can help lower your overall state tax liability.