Nebraska Military Filing Information
The place an individual considers his or her permanent home. A domicile, once established, continues until a new, fixed and permanent home is established. There is no change in domicile when moving to a new location if the individual’s intention is to remain for a limited time, even if it is several years.
An individual who is domiciled in Nebraska or who maintained a permanent place of abode and resided in Nebraska for six months or more during 2016.
An individual who is domiciled for the entire year in a state other than Nebraska, and did not reside in Nebraska for more than six months during 2016.
An individual who either begins or ends his or her domicile in Nebraska during the tax year or who resides in Nebraska for more than six months during the year.
Active Duty Military Servicemembers
Your active duty military pay is taxed only by the state where you are a legal resident. Your place of legal residence at the time of entry into the service is presumed to be your state of legal residence. Your state of legal residence stays the same until it is established in another state. Moving to a new location for a limited period of time, including a permanent change of station, does not change your legal residence. Nebraska income tax is imposed on the total federal AGI of a Nebraska resident who is a member of the armed forces, regardless of where the income is received.
Check the box “Active Military” on Form 1040N if you or your spouse are active military servicemembers at any time during the tax year (including National Guard or Reserve personnel called to active duty). Taxpayers receiving combat pay have the same extended due date for filing a Nebraska return as for the federal return.
Military pay received by a nonresident servicemember stationed in Nebraska is not subject to Nebraska income tax. Other income derived from Nebraska sources by a servicemember, such as income earned from a separate job not connected with the servicemember’s military service, is subject to Nebraska income tax. See special instructions for line 59, Nebraska Schedule I.
The Federal Military Spouses Residency Act provides that Nebraska cannot tax the income of a nonresident servicemember’s spouse when the spouse has the same state of residence as the servicemember and is in Nebraska only in support of the servicemember.
Qualified spouses must complete and file the Nebraska Employee Certificate for Allocation of Withholding Tax, Form 9N, with their employers. On Form 9N, check the box certifying that you are a qualified spouse. If your employer has done any withholding for 2016, an adjustment can be made on a future paycheck to refund this prior withholding.
A qualified spouse may be due a refund of Nebraska income tax withheld. To receive this refund of Nebraska tax, a Nebraska Individual Income Tax Return, Form 1040N, must be filed, along with a Schedule III - Computation of Nebraska Tax for Nonresidents and Partial-Year Residents Only. On line 66 of Schedule III, write “Exempt Nonresident Military Spouse,” and enter zero as the amount of Nebraska source income.
This would require you to print and mail your nonresident Nebraska return.
Also, a Nebraska resident servicemember’s spouse who works and resides in another state will now be required to file a Nebraska income tax return. More information is available in the instructions for lines 59 and 66, Nebraska Schedule I, or at the Department’s website.
Military Retirement Pay Exclusion- Beginning July 18, 2014, an individual may elect to exclude a portion of his or her military retirement benefit from Nebraska taxable income. Although the election may be made beginning July 18, 2014, the exclusion is not available until tax year 2015.
An individual who retired from the uniformed services before July 18, 2012, or who fails to make the election within two years of his/her retirement date is not eligible for the exclusion.
The individual may elect:
- To exclude 40% of his or her military retirement benefit income for seven consecutive taxable years, beginning with the year in which the election is made; or
- To exclude 15% of his or her military retirement benefit income for all taxable years, beginning with the year in which he or she turns 67 years of age.
Once an election is made, it cannot be changed. For more information, please refer to the Nebraska State Website.
For Nebraska Income Tax For Military Servicemembers (Their Spouses) and Civilians Working with U.S. Forces in Combat Zones information click here
For additional information, please refer to the Nebraska state website regarding military personnel.