Nebraska Earned Income Tax Credit

Nebraska has its own Earned Income Tax Credit. It equals 10 percent of the federal earned income credit you are allowed. So if you claim the federal credit, you can add a Nebraska credit worth one-tenth of that amount. You claim it on your Nebraska individual income tax return, Form 1040N, after you claim the federal credit.

The best part is that the Nebraska credit is refundable. Refundable means you can receive it as a refund even if you owe no Nebraska income tax. So the money can come back to you as cash, not just cancel a tax bill. For a working family with a low tax bill, that is real money in hand.

Because the state credit is a percentage of the federal one, the two move together. A larger federal EITC means a larger Nebraska credit. So it pays to claim the full federal credit you qualify for. Getting the federal number right also gets your Nebraska number right.

Eligibility tracks the federal EITC. In general, if you qualify for the federal earned income credit, you qualify for the Nebraska credit too. This page cannot confirm your exact amount, since it depends on your federal credit and your tax return. The Nebraska Department of Revenue processes the return and applies the credit.

This 10 percent refundable structure has been in place for a while. It applies to tax years beginning on or after January 1, 2015. So it is not a one-time thing. If you qualified in past years and did not claim it, it may be worth checking with a tax preparer about prior returns.

To claim it, first make sure you claim the federal EITC. Then file your Nebraska return, Form 1040N, and claim the state credit there. Free tax-help sites can walk you through both credits at once. If you need help finding one, dial 2-1-1 to look for free tax preparation near you.