003.01 Nebraska
adjusted gross income for a nonresident individual is the nonresident's income
from Nebraska sources after the adjustments provided in Reg-22-003.02. Income
derived from Nebraska sources shall include, but not be limited to, items
relating to real and tangible personal property, a business, trade, profession,
or occupation, compensation for services, intangible property, small business
corporations, partnerships, estates and trusts, and lottery and gambling
winnings.
003.01A
Real or tangible
personal property. The ownership of any interest in real or tangible
personal property located in Nebraska shall be sufficient to qualify any
income, gain, or loss from such real or tangible personal property as derived
from or connected with Nebraska sources. This would include rents or royalties
from property located in Nebraska for any period of time during the taxable
year, and any gain or loss from the sale of property located in
Nebraska.
003.01B
Business,
trade, profession, or occupation. Income from sources in Nebraska as it
relates to a business, trade, profession, or occupation carried on in Nebraska
shall mean that portion of an individual's gross income that is reasonably and
equitably attributable to Nebraska, irrespective of the accounting method
employed.
The Nebraska source income of a business, trade, profession,
or occupation shall be determined by use of the apportionment factor as
provided for the taxing of corporations under the Nebraska Revenue Act and
Reg-24-023. If
the portion of taxable income derived from sources in Nebraska so determined
does not reasonably and equitably reflect Nebraska source income, the Tax
Commissioner may allow alternative methods of determining income from Nebraska
sources.
003.01C
Compensation for Services.
003.01C(1)
Generally. Compensation received by a nonresident for services
performed which are directly related to a business, trade, or profession
carried on within Nebraska shall constitute income derived from Nebraska.
Compensation received by a nonresident will be considered
Nebraska source income if the nonresident's services are performed entirely
within Nebraska, if such services performed without Nebraska are incidental to
the services performed within Nebraska, or if the services that have to be
performed in Nebraska are an essential part of the services performed.
If the nonresident's service is performed without Nebraska
for his or her convenience, but the service is directly related to a business,
trade, or profession carried on within Nebraska and except for the
nonresident's convenience, the service could have been performed within
Nebraska, the compensation for such services shall be Nebraska source
income.
When a taxpayer has performed some service in this state and
the base of operations, or, if there is no base of operations, the place from
which the services are directed or controlled is in this state, the
compensation paid by a business, trade, or profession for all services of the
taxpayer shall be income from Nebraska sources.
003.01C(2)
Commissions. Income
from commissions earned by a nonresident traveling salesman, agent, or other
employee for services performed or sales made whose compensation depends
directly on the volume of business transacted by him or her, may be allocated
to Nebraska based upon specific identification of each item of income and
expense. Allocation may be used only when the books and records of either the
nonresident or his or her employer accurately reflect the business transacted
and expenses incurred in Nebraska by the nonresident in connection therewith.
If the books and records do not accurately reflect the business transacted and
expenses incurred in Nebraska by the nonresident, the nonresident will include
that proportion of the compensation received which the volume of business
transacted by such employee within the State of Nebraska bears to the total
volume of business transacted by him, or her, both within and without the
state. (See Reg-21-006.01 )
003.01C(3)
Periodic employment in
Nebraska. If a nonresident employee is employed in this state at
intervals throughout the year and is paid on an hourly, daily, weekly, or
monthly basis, the gross income from sources within this state must include
that portion of the total compensation for personal services which the total
number of working hours, days, weeks, or months employed within Nebraska
compare to the total number of such working intervals both within and without
the state. If the majority of the interval is spent within this state, then the
entire interval is within this state. (See Reg-21-006.02 and Reg-21-006.04 )
If a nonresident employee is paid on a mileage basis, the
gross income from sources within Nebraska must include that portion of the
total compensation for services which the number of miles traveled in Nebraska
bears to the total number of miles traveled both within and without Nebraska.
(See Reg-21-006.03 )
If the nonresident employee is paid on some other basis, the
total compensation for personal services must be apportioned between this state
and other states and foreign countries in such manner as to attribute to
Nebraska that portion of the total compensation which is reasonably
attributable to personal services performed in the state.
003.01C(4)
Services of fiduciary.
Compensation paid by a resident trust or estate, as defined in
Reg-23-001,
for services by a nonresident fiduciary shall constitute income from sources
within Nebraska.
003.01C(5)
Professional services. Nonresident attorneys, physicians,
engineers, architects, nurses, or any other professional people, even though
not regularly employed in carrying on their profession in Nebraska, must
include as income from sources within this state the entire amount of fees or
compensation received for services performed in Nebraska as defined in
Reg-21-003.01C(1)(1)
on behalf of their clients.
003.01C(6)
Entertainers and
athletes. Nonresident actors, singers, performers, wrestlers, boxers,
professional athletes, etc., must include as income from sources within
Nebraska the gross amount received from performances within the
state.
003.01C(7)
Military
service members. Income derived from or connected with Nebraska sources
does not include compensation paid to nonresidents for active duty service in
the armed forces of the United States, even though such service is performed
within Nebraska. If the service member has elected to file a joint Nebraska
return with a Nebraska resident or partial-year resident, the nonresident's
military income is deducted as an adjustment on the Nebraska return. (See
Reg-22-013 ).
The term "service" means the service of an individual who is
a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard who is on
active duty, as defined in section 101(d)(1) of title 10, United States Code,
and in the case of an individual who is a member of the National Guard,
includes service under a call to active service authorized by the President or
the Secretary of Defense for a period of more than 30 consecutive days under
section 502(f) of title 32, United States Code, for purposes of responding to a
national emergency declared by the President and supported by Federal funds.
The term also includes active service by an individual who is a commissioned
officer of the federal Public Health Service or the National Oceanic and
Atmospheric Administration.
The term service as used herein does not include service of a
civilian in the employ of any branch of the armed forces nor does it include
any individual, partnership, corporation or other association which, as an
independent contractor, is performing service or supplying tangible property to
any branch of the armed forces. All other nonresident federal employees who
perform their services in Nebraska shall be deemed to have income derived from
or connected with Nebraska sources.
003.01C(8)
Pensions.
Nonresidents who are receiving pensions, deferred compensation, or
annuities based on services performed within Nebraska in an earlier tax year do
not have income from Nebraska sources.
003.01C(9)
Employees of Rail Carriers.
Compensation paid by a rail carrier to a nonresident employee who
performs regularly assigned duties on a railroad in more than one state is not
included in Nebraska source income.
003.01C(10)
Employees of Motor Carriers
or Private Carriers. Compensation paid by a private carrier or a motor
carrier providing transportation in interstate commerce subject to federal
regulation to a nonresident employee who performs regularly assigned duties
with respect to a motor vehicle in more than one state is not included in
Nebraska source income.
003.01C(11)
Employees of Air Carriers. Compensation paid by an air carrier to
a nonresident employee who is regularly assigned duties on aircraft in more
than one state is not included in Nebraska source income if the employee's
scheduled flight time in Nebraska is fifty percent or less of the total
scheduled flight time of the employee during the calendar year.
003.01D Intangible property.
003.01D(1)
Interest and dividends.
No tax is to be imposed on a nonresident receiving income which arises
from annuities, interest on bank deposits, interest on bonds, notes or other
interest bearing obligations, or dividends from corporations, except to the
extent to which the same shall be a part of the taxable income from any
business, trade, profession, or occupation carried on in Nebraska by the
nonresident. Income from intangible property shall be a part of taxable income
of a business, trade, profession, or occupation carried on within Nebraska when
such property is acquired or used in the course of such business, trade,
profession, or occupation.
003.01D(2)
Gains and losses.
Gains or losses from the sale, exchange, or other disposition of
intangibles are not subject to tax by Nebraska, except to the extent to which
the same shall be a part of the income from a business, trade, profession, or
occupation carried on in the State of Nebraska by the nonresident taxpayer,
even though the sale or disposition thereof may have been consummated within
the state.
Likewise, losses sustained from the sale, exchange, or other
disposition of stocks, bonds, or other intangibles under like conditions are
not deductible from the Nebraska source income of the nonresident taxpayer,
except to the extent that they are losses incurred in a business, trade,
profession, or occupation carried on within Nebraska by the nonresident
taxpayer.
003.01E S corporations.
003.01E(1)
Nebraska source income.
A nonresident stockholder of a small business corporation having an
election in effect under Subchapter S of the Internal Revenue Code shall file a
Nebraska income tax return and shall include as Nebraska source income that
portion of the S corporation's income derived from or attributable to Nebraska.
The nonresident shareholder shall file a Nebraska income tax return even though
the income derived from the S corporation is the nonresident's only income
derived from or attributable to Nebraska except as allowed under
Reg-22-003.01E(3)(3).
003.01E(2)
Agreement to pay tax.
A nonresident shareholder of an S corporation which has Nebraska income,
may execute and forward to the corporation a Nebraska Nonresident Income Tax
Agreement, Form 12N, which states that the nonresident will file a Nebraska
income tax return and pay tax on all income derived from or connected with
Nebraska sources. This agreement must be forwarded to the S corporation before
the filing of the original corporate return.
003.01E(3)
Withholding by an S
corporation. In the absence of the above agreement, the S corporation
must remit to the Nebraska Department of Revenue a percentage of the
nonresident shareholder's Nebraska income. The percentage shall be the highest
rate applicable to individuals. Upon request by any nonresident shareholder,
the S corporation must complete a Statement of Nebraska Income Tax Withheld for
Nonresident Individual, Form 14N. When an S corporation has made a remittance
to the Nebraska Department of Revenue on behalf of a nonresident shareholder,
such nonresident may choose not to file a return, and the amount withheld shall
be retained in satisfaction of the liability, or such nonresident may file a
return and claim the corporation's remittance as a credit against his or her
Nebraska income tax liability.
003.01F Partnerships.
003.01F(1)
Nebraska source income.
A nonresident partner of a partnership shall file a Nebraska income tax
return and shall include his or her distributive share of partnership income,
gain, loss, and deduction from sources within Nebraska, except as allowed under
Reg-22-003.01F(3)(3).
003.01F(2)
Agreement to pay tax.
A nonresident partner of a partnership which has Nebraska income may
execute and forward to the partnership a Nebraska Nonresident Income Tax
Agreement, Form 12N, which states that the nonresident will file a Nebraska
income tax return and pay tax on all income derived from or connected with
Nebraska sources. This agreement must be forwarded to the partnership before
the filing of the original partnership return.
003.01F(3)
Withholding by partnership.
In the absence of the above agreement, the partnership must remit to the
Nebraska Department of Revenue a percentage of the nonresident partner's
Nebraska income. The percentage shall be the highest rate applicable to
individuals. Upon request by any nonresident partner, the partnership must
complete a Statement of Nebraska Income Tax Withheld for Nonresident
Individual, Form 14N. When a partnership has made a remittance to the Nebraska
Department of Revenue on behalf of a nonresident partner, the nonresident
partner may choose not to file a return and the amount withheld shall be
retained in satisfaction of the liability, or such nonresident partner may file
a return and claim the partnership's remittance as a credit against his or her
Nebraska income tax liability.
003.01G Limited Liability Companies (LLC's).
003.01G(1)
Nebraska source income.
A nonresident member of an LLC shall file a Nebraska income tax return
and shall include as Nebraska source income that portion of the LLC's income
derived from or attributed to Nebraska, except as allowed under
Reg-22-003.01G(3)(3).
003.01G(2)
Agreement to pay tax.
A nonresident member of an LLC which has Nebraska income may execute and
forward to the LLC a Nebraska Nonresident Income Tax Agreement, Form 12N, which
states that the nonresident will file a Nebraska income tax return and pay tax
on all income derived from or connected with Nebraska sources. This agreement
must be forwarded to the LLC before the filing of the original partnership
return.
003.01G(3)
Withholding by LLC. In the absence of the above agreement, the LLC
must remit to the Nebraska Department of Revenue a percentage of the
nonresident member's Nebraska income. The percentage shall be the highest rate
applicable to individuals. Upon request by any nonresident member, the LLC must
complete a Statement of Nebraska Income Tax Withheld for Nonresident
Individual, Form 14N. When an LLC has made a remittance to the Nebraska
Department of Revenue on behalf of a nonresident member, the nonresident member
may choose not to file a return and the amount withheld shall be retained in
satisfaction of the liability, or such nonresident member may file a return and
claim the LLC's remittance as a credit against his or her Nebraska income tax
liability.
003.01H
Estates and trusts.
003.01H(1)
Nebraska
source income. A nonresident beneficiary of a trust or estate shall be
taxed only on items of income, gain, loss, or deduction which were derived from
or connected with sources within Nebraska and which were taxable to him or her
for federal income tax purposes. If a trust is classified as a Grantor Trust
for federal income tax purposes, the nonresident grantor thereof shall be taxed
on all items of income, gain, loss, or deduction which were derived from or
connected with Nebraska sources, regardless of whether or not actually
received. (See
Reg-23-003 and
Reg-23-004.04A(1)(1)
).
The residence of the fiduciary of an estate or trust will not
be determinative as to whether income from intangibles is Nebraska source
income. Nor shall the classification of a trust or estate as resident or
nonresident have any effect upon the taxation of a nonresident beneficiary for
his or her share of trust income, gain, or loss.
The character of income, gain, or loss from intangible
personal property held in a trust or estate shall be the same with regard to a
nonresident beneficiary (or a nonresident grantor of a Grantor Trust) as if
said beneficiary (or grantor) had received the income, gain, or loss without
the trust or estate.
003.01H(2)
Agreement to pay tax.
A nonresident beneficiary deriving Nebraska income from a trust or
estate may execute and forward to the trust or estate a Nebraska Nonresident
Income Tax Agreement, Form 12N, which states that the nonresident will file a
Nebraska income tax return and pay tax on all income derived from or connected
with Nebraska sources. This agreement must be forwarded to the trust or estate
before the filing of the original fiduciary return.
003.01H(3)
Withholding by fiduciary.
In the absence of the above agreement, the estate or trust must remit to
the Nebraska Department of Revenue a percentage of the nonresident
beneficiary's income which was derived from or attributable to Nebraska
sources. The percentage shall be the highest rate applicable to individuals.
Upon request by any nonresident beneficiary, the estate or trust must complete
a Statement of Nebraska Income Tax Withheld for Nonresident Individual, Form
14N. When a trust or estate has made a remittance to the Nebraska Department of
Revenue on behalf of a nonresident beneficiary, the nonresident beneficiary may
choose to file a return and the amount withheld shall be retained in
satisfaction of the liability, or such nonresident beneficiary may file a
return and claim the remittance made by the trust or estate as a credit against
his or her Nebraska income tax liability.
003.01I
Lottery and gambling winnings.
All lottery winnings from a lottery game conducted pursuant to a
Nebraska lottery are Nebraska source income. All winnings from any game or
operation licensed under the Nebraska Bingo Act, the Nebraska Lottery and
Raffle Act, the Nebraska County and City Lottery Act, the Nebraska Pickle Card
Lottery
Act, the Nebraska Small Lottery and Raffle Act or the State
Lottery Act are Nebraska source income. All winnings from any other licensed or
unlicensed operation involving any game of chance are Nebraska source income if
the wager was placed in Nebraska, or any ticket, chance, or any other entry fee
was purchased in Nebraska.
003.02 In determining Nebraska adjusted gross
income of a nonresident individual, the following adjustments are made to the
nonresident's income from Nebraska sources:
003.02A
Payment as a self-employed
person or partner to a ( self-employed SEP, SIMPLE, or other qualified
retirement plan. A nonresident who is self-employed or a partner who
pays into a qualified pension, profit sharing, annuity, or bond purchasing plan
shall be allowed this federal deduction only to the extent of the ratio of the
Nebraska self-employed or partnership income to the total self-employed or
partnership income.
003.02B
Payment to an IRA. A nonresident who pays into an IRA shall be
allowed the federal deduction only to the extent of the ratio of the Nebraska
self-employed income and wages to total self-employed income and
wages.
003.02C
One-half of
self-employment tax. A nonresident individual shall be allowed this
deduction only to the extent of the ratio of the Nebraska self-employed income
to the total self-employed income.
003.02D
Penalty on early savings
withdrawal. A nonresident individual shall be allowed this deduction
only to the extent that the penalty relates to interest reported as Nebraska
source income.
003.02E
Moving
expenses. A nonresident individual may not deduct moving expenses
allowed on the federal return.
003.02F
Domestic production activities
. A nonresident individual shall be allowed this deduction to the extent
it is directly related to Nebraska source income.
003.02G
Alimony paid. A
nonresident individual shall be allowed this deduction only to the extent of
the ratio of the Nebraska adjusted gross income to federal adjusted gross
income after Nebraska adjustments.
003.02H
Educator expenses. A
nonresident individual shall be allowed this deduction only as it relates to
educational wages reported as Nebraska source income.
003.02I
Student Loan Interest. A
nonresident individual shall be allowed this deduction only to the extent of
the ratio of the Nebraska adjusted gross income to federal adjusted gross
income after Nebraska adjustments.
003.02J
Tuition and fees. A
nonresident individual shall be allowed this deduction only to the extent of
the ratio of the Nebraska adjusted gross income to federal adjusted gross
income after Nebraska adjustments.
003.02K
Health Savings Account.
A nonresident individual shall be allowed this deduction only to the
extent of the ratio of the Nebraska adjusted gross income to federal adjusted
gross income after Nebraska adjustments.
003.02L
Certain business expenses of
reservists, performing artists, and fee-basis government officials. A
nonresident individual shall be allowed this deduction to the extent it is
directly related to Nebraska source income.
