State & Local Tax Impacts of COVID-19 for Nebraska – 2021

Thoughtware Alert Published: May 03, 2021 | Updated: Aug 24, 2021

Information current as of July 31, 2021.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Nebraska

  • Nebraska updated guidance to taxpayers that monies received from Nebraska’s stabilization programs must be included in gross income when calculating Nebraska income tax. The grant programs were established from federal funding received under the CARES Act. However, the PPP loans aren’t included in taxable income, and businesses can deduct expenses paid with the PPP loans.
    • Nebraska DOR, Business Income Taxes FAQ, February 17, 2021.
  • Nebraska announced it’s following the federal extension for the 2020 individual income tax return and payments. The return and payment deadlines are extended to May 17, 2021. However, the extension doesn’t apply to estimated tax payments.
    • Nebraska DOR, News Release, March 19, 2021.
  • Nebraska updated guidance for the tax treatment of 2020 unemployment benefits. The American Rescue Plan Act of 2021 (ARPA) excludes up to $10,200 of 2020 unemployment benefits from federal individual income tax if the taxpayer’s adjusted gross income (AGI) for the tax year is less than $150,000. The starting point for computing Nebraska taxable income is the taxpayer’s federal AGI. Nebraska is a rolling IRC conformity state, so it automatically adopts changes to federal AGI, unless it enacts decoupling legislation. As such, Nebraska follows the federal exclusion for 2020 unemployment compensation benefits. Taxpayers who previously filed and didn’t claim the benefit shouldn’t file amended Nebraska returns until the DOR determines the process for correcting the returns.
    • Nebraska DOR, FAQs About COVID-19 Income Tax Changes; April 6, 2021.
  • Nebraska updated guidance on employers’ requirements to report or remit income tax withholdings for employees who were working on site before the COVID-19 pandemic but are now working from an alternative location or home. Through July 29, 2021, employers aren’t required to change a remote employee’s state, which was previously established in their payroll systems for individual income and corporate income tax withholding. Beginning July 30, employers must review their payroll systems for income tax withholding purposes for employees working at a location that is in a different state to ensure compliance with Nebraska requirements. 
    • Nebraska DOR, Income Tax Withholding FAQ; July 20, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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