School District Property Tax Credit FAQs

How do I claim the credit for school district property taxes paid?

The credit for school district property taxes paid may be claimed by completing a Nebraska Property Tax Incentive Act Credit Computation, Form PTC, and submitting it with your Nebraska income tax return.

Use the Nebraska School District Property Tax Look-up Tool to calculate the amount of school district property taxes paid. Enter the information provided by the Look-up Tool on Form PTC.

Which Nebraska Property Tax Incentive Act Credit Computation, Form PTC should I file?

You must file a 2021 Form PTC with your 2021 income tax return. The 2021 Form PTC computes the credit for:

  • School district property taxes paid in the 2021 calendar year;
  • School district property taxes paid in the 2020 calendar year by a pass-through entity that did not previously allocate those taxes to its owners; and
  • School district property taxes paid in 2020 by a pass-through entity with a fiscal year ending in 2021 that were allocated to the owners of the pass-through entity.

You must file a 2020 Form PTC with your 2020 income tax return.

What property tax years qualify for the school district property tax credit?

All school district property taxes paid after December 31, 2019 qualify for the credit. This includes school district property taxes imposed in any prior year that were paid after December 31, 2019.

What property taxes qualify for the credit?

Only school district property taxes qualify for the credit.

No other taxes levied qualify for the credit. Taxes paid that are not within this definition include, but are not limited to:

  • School bonds.
  • Overrides of the levy limits approved by the voters.
  • Community colleges.
  • Educational service units.

Do property taxes levied by a Learning Community qualify for the credit?

Yes. The amount paid qualifies for the credit.

How do property tax credits affect the allowable school district property taxes on a parcel?

The school district property tax levied must be reduced by a portion of the homestead exemption and the credits. The Nebraska School District Property Tax Look-up Tool will perform the calculation automatically.

I sent a property tax payment to the county treasurer on or within a few days of December 31, 2021. In what year were those taxes paid?

The property taxes were paid to the county treasurer in 2021 when made:

  • In-person on or before January 3, 2022; 
  • Via United States mail postmarked on or before January 3, 2022; or
  • Online and processed on or before January 4, 2022. 

The property taxes were paid to the county treasurer in 2022 when made after the dates listed above. The year the above property taxes were paid is in accordance with Neb. Rev. Stat. § 49-1203.

Should the school district property tax credit be included in Nebraska taxable income?

The school district property tax credit will be included in Nebraska taxable income if it is included in federal adjusted gross income or federal taxable income. Please contact the IRS about the taxation of this credit.

I filed my Nebraska return without claiming the credit for school district property taxes I paid. How do I claim the credit?

The credit may be claimed by filing an Amended Nebraska Individual Income Tax Return, Form 1040XN, and attaching a completed Nebraska Property Tax Incentive Act Credit Computation, Form PTC, for the tax year corresponding to the tax return being amended.

If there is more than one owner listed on the property tax statement, who gets the credit?

Only the person or entity that paid the property tax to the county treasurer may receive the credit.

Who gets the credit when a parcel is sold during the year?

The taxpayer that paid the property tax on the parcel may claim the credit. The property tax is paid when received by the county treasurer. Enter the amount of property taxes you paid in the Look-up Tool to calculate the school district property taxes you paid.

Example 1: A parcel is sold on May 1, 2021. The seller paid the following property taxes:

  • $1,203 of the 2020 property tax was paid to the county treasurer on April 1, 2021;
  • $1,203 of the 2020 property tax was funded at closing and paid to the county treasurer in 2021; and
  • $798 of the 2021 property taxes was funded at closing (January 1, 2021 – May 1, 2021) and paid to the county treasurer in 2022.

The buyer paid $1,605 of 2021 property tax to the county treasurer in 2022.

The seller paid all the 2020 property taxes in 2021. The seller may claim a credit for the 2020 school district property taxes on the 2021 income tax return (enter $2,406 in the Look-up Tool). The seller paid part of the 2021 property taxes in 2022. The seller may claim a credit for the related school district property taxes on the 2022 income tax return in proportion to the amount of the property tax funded for 2021 at closing (enter $798 in the Look-up Tool).

The buyer did not pay any 2020 property tax. The buyer cannot claim a credit for any 2020 school district property taxes. The buyer paid part of the 2021 property taxes, but they were not paid to the county treasurer until 2022. The buyer may claim a credit for the related school district property taxes on the 2022 income tax return (enter $1,605 in the Look-up Tool).

Example 2:  An individual sold a parcel located in Douglas County on October 9, 2021. The Douglas County Treasurer’s records show that the 2020 property tax was paid in two installments ($4,738.57 on 4/1/2021 and $4,738.57 on 7/1/2021). The seller paid all the 2020 school district property tax to the Douglas County Treasurer (enter $9,477 in the Look-up Tool). The seller may claim the credit on the 2020 school district property taxes paid on the 2021 income tax return, because the tax was paid to the Douglas County Treasurer.

At closing, the buyer reimbursed the seller $2,175.08 of the 2020 property tax the seller already paid to the county. The buyer cannot claim the credit for any of the 2020 school district property tax, because the tax had already been paid to the Douglas County Treasurer prior to closing. The reimbursement shown on the closing statement does not change who can claim the credit when the tax is remitted to the county treasurer prior to the closing.

Who gets the credit on a leased parcel?

The person or entity that paid the property tax to the county treasurer may claim the credit. If the lessee paid the county treasurer, the lessee may claim the credit. If the lessor paid the county treasurer, the lessor may claim the credit.

Can a pass-through entity claim the school district property tax credit?

Yes. A pass-through entity may claim a credit for the school district property tax it paid for tax years beginning on and after January 1, 2021. The owners of the pass-through entity cannot claim the credit for any property taxes paid by the pass-through entity on or after January 1, 2021.

The credit for the entity includes:

  • The credit computed on the school district property tax paid during the year covered by the return; and
  • For the 2021 tax year only, the credit computed on the school district property tax paid in 2020 if the pass-through entity did not allocate the school district property tax paid to its owners.

Different rules may apply to fiscal year and short-year returns.

Can a nonresident individual claim the school district property tax credit?

Yes. The nonresident individual must file a Nebraska Individual Income Tax Return, Form 1040N, and Form PTC. Those forms are required even if the nonresident individual would otherwise not have a Nebraska filing requirement.

What school district property tax payments may a fiscal-year filer include on its Form PTC?

Due to the enactment of LB 181 (2021), a fiscal year taxpayer will complete the Form PTC for the school district property taxes paid during the calendar year in which its fiscal year begins.

Example: A taxpayer’s fiscal year begins April 1, 2020 and ends March 31, 2021. The taxpayer paid its 2019 property tax in two installments. The county treasurer received the first payment on March 27, 2020 and the second payment on July 28, 2020. Those payments included school district property taxes totaling $4,412.

The taxpayer’s 2020 Form PTC may include $4,412 of school district property tax.

A parcel is owned by a disregarded LLC that paid the property tax. Who is required to complete a Form PTC?

The owner of the LLC will complete Part A and Part B of Form PTC. The LLC is not required to file a Nebraska income tax return or complete Form PTC.

How does a tax-exempt organization claim the school district property tax credit?

Tax-exempt corporations must file a Nebraska Corporation Income Tax Return, Form 1120N, and Form PTC. Tax-exempt trusts must file a Nebraska Fiduciary Income Tax Return, Form 1041N, and Form PTC.

In a divorce situation, who gets the credit?

The individual that paid the property tax to the county treasurer may receive the credit. If payment was made from a joint bank or escrow account, then the credit may be split between the parties based on:

  • A divorce decree;
  • An agreement between the parties;
  • An even division; or
  • Any other method that fairly represents each party’s contribution to the payment.

If excess credits are claimed, both parties may be required to provide information to DOR supporting the credit they claimed.

Does TIF have any effect on the amount of credit?

No, the school district property taxes used for the redevelopment project are eligible for the credit. The Nebraska School District Property Tax Look-up Tool will automatically compute the school district property tax paid on parcels with TIF.

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