Nebraska allows a credit for income tax paid to another state, a political subdivision of another state, or the District of Columbia on income that is taxed by both Nebraska and the other jurisdiction.
If you prepared a nonresident return for the other state in your account, the program will generally calculate this credit automatically on your Nebraska resident return.
Important: Nebraska Schedule II is available only to full-year Nebraska residents. If you are a part-year resident, you must use Nebraska Schedule III to calculate your Nebraska tax, and any credit for taxes paid to another state must be calculated as part of that process.
General Requirements
- Complete a separate Nebraska Schedule II for each state where income tax was paid.
- The total credit cannot exceed your Nebraska tax liability.
- If the same income was taxed by both another state and a political subdivision within that state, complete only one Nebraska Schedule II and combine the state and political subdivision taxes paid.
- You must attach a complete copy of the other state's return, including all schedules, or the credit may be disallowed.
- Do not use the amount of tax withheld by the other state when determining the credit. Nebraska uses the actual tax due and paid to the other state.
Limitations
- Nebraska does not allow a credit for taxes paid to a foreign country or its political subdivisions.
- Dual-state residents and certain taxpayers with S corporation or LLC income may need to use Nebraska's Special Conversion Chart instructions when calculating the credit.
Part-Year Residents
If you filed or are filing as a part-year Nebraska resident, complete Nebraska Schedule III instead of Schedule II. A copy of the other state's return is not required when filing Schedule III.
If you need to manually enter information for the Credit for Taxes Paid to Another State:
- Select State
- Edit Nebraska Return (Click the 3 dots)
- Credits
- Credit for Taxes Paid to Another State
- Select the other state from the dropdown menu and enter the Adjusted Gross Income (AGI) reported on that state's return. Enter the income tax paid to that state, generally the total tax shown on the return. If the income entered is less than the other state's total income, enter only the prorated portion of the tax attributable to that income.
Note: DO NOT enter state tax withholding reported on your Form W-2 or any other tax document. Enter only the actual tax liability paid to the other state.
Additional Information
For additional information, see the Nebraska Individual Income Tax Instructions and Nebraska Schedule II Instructions.