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‘You have to claim it’: Experts walk through Nebraska’s new school tax credit for property owners

Published: Feb. 19, 2021 at 4:45 PM CST
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OMAHA, Neb. (WOWT) - There is good news for property owners in Nebraska: Finally, some relief is in sight.

The legislature passed LB1107 last year and it kicks in for filing our 2020 state taxes.

“For the first time ever, you’ll be able to claim a refundable income tax credit for a portion of the school district taxes you’ve paid,” said Tony Fulton, Nebraska tax commissioner.

He says property owners across the state will be refunded a percentage of what they paid in school taxes on their 2020 state returns. Even if your state income tax liability is zero, you will still receive the balance of the credit as a refund from the state — but you have to claim it,” he said.

The credit can be calculated through the state revenue department’s website. A lookup tool is provided so property owners can see their credit; the form has step-by-step instructions.

“This year, the percentage of credit is 6% based on the funds available and so in this example, this taxpayer would enter $163. And then this amount would go on your Nebraska income tax return to show the credit,” said Ruth Sorensen, Nebraska Department of Revenue Property Tax Administrator.

This is a dollar-for-dollar refund, so the amount calculated will be refunded or applied to any owed taxes.

CPA Cindy Brenneman explains how it works in Douglas County.

“The school portion in Douglas County is a little over 48% of your total, so that number is $2,422; and then that school tax portion is taken times 6% and that is your credit. So it will give you $144 refundable credit for $5,000 real estate tax,” said Cindy Brenneman, Partner of Frankel Zacharia LLC.

But what if we’ve already completed our taxes?

“Nebraska and the IRS didn’t start accepting E-file tax returns until last Friday so I don’t think there will be too many people who filed without the credit unless they didn’t know about it going forward. If they did file, they’ll have to go back in on their Nebraska returns and take advantage of the credit,” said Brenneman.

Brenneman says the lookup tool makes filing for the credit easier.

Cindy Brenneman suggests using a tax consultant, if possible, because each county’s filing is a little different.

“Douglas County has a school tax credit and then they have another smaller credit that’s related to the school tax credit, so it all qualifies,” Brenneman said.

The state estimates the refundable school tax credit will provide $125 million in tax relief this year alone.

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