Nebraska Additions to Income
Interest Income from all State and Local Obligations Exempt from Federal Tax
Enter the amount of tax exempt interest and dividends from line 8b of Federal Form 1040 or Form 1040A. This includes state and local bond (municipal bonds) income from all states. Although this income is exempt from federal tax, it is taxable income in Nebraska. Expenses related to this income which have not been previously deducted can be deducted from line 46 only if you itemized deductions on your federal return. Interest income from a regulated investment company (including certain mutual funds) attributable to state and local obligations must also be included.
Exempt Interest Income from Nebraska Sources
Enter interest and dividend income included on line 46a from bonds issued by Nebraska state and local government subdivisions. Income from regulated investment companies attributable to Nebraska source bonds may be included. Note: Any federally taxable interest received in 2011 on a Build American Bond previously issued by a Nebraska governmental subdivision may be deducted on line 58, Other Adjustments Decreasing Federal AGI.
Financial Institution Tax of a Shareholder
Only shareholders receiving a Statement of Nebraska Financial Institution Tax Credit, Form NFC, from a qualified Nebraska financial institution may claim this deduction. Enter the amount of the tax credit available to you as stated on the 2011 Form NFC. The same amount must be entered on both lines 25 and 46. A copy of Form NFC must be attached to your return.
Long-Term Care Savings Plan Recapture
If you close a Nebraska Long Term Care Savings Plan for any reason other than the death of the participant or make any unqualified withdrawal, the amounts previously claimed as a deduction is subject to recapture. Enter the recapture amount calculated on unqualified withdrawals. There is a ten percent (10%) penalty for unqualified withdrawals. The amount of penalty will reduce your refund or increase your balance. The Department will bill you for this penalty, or your may pay the penalty with your return.
College Savings Plan Recapture
If you cancel your Nebraska College Savings Plan account or withdraw funds for a non-qualified purpose, the amount previously claimed as a deduction is subject to recapture. A qualified rollover to a section 529 plan sponsored by a state (or entity) other than Nebraska is considered to be a cancellation subject to recapture. The total maximum amount of recapture is the amount previously deducted on all Nebraska returns prior to the cancellation of the college savings plan account. Enter the calculated recapture amount.
Other Adjustments Increasing Federal AGI - Report any adjustments increasing federal AGI including, but not limited to:
- Federal net operating loss deduction - Enter the amount deducted as a federal net operating loss carryforward from your federal AGI. You must include this loss as an increase to AGI. A previously established Nebraska net operating loss may be deducted on line 58, Schedule I (Adjustments to Income).
- S Corporation and Limited Liability Company (LLC) Non-Nebraska loss - Enter the amount of loss from an S corporation or LLC that is not from Nebraska sources. You must include this loss as an increase to AGI.