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Property Tax Relief Through State Income Tax

Property Tax Relief Through State Income Tax
Extension Educator and Agricultural Systems Economist
Inome tax form photo.

A quick note for those putting together their tax information for filing for 2020.

Nebraska, through LB 1107, is building in some property tax relief issued through state income tax.  To do this, a new form Nebraska Property Tax Incentive Act Credit, Form PTC, was created.  While the Form is not overly difficult, it can be time-consuming and also requires you to file a Nebraska Tax Return.  For farmers and ranchers with multiple parcels, you will need to list each identification number separately.  The Form allows ten parcels to be listed under a part, but multiple forms may be required if you possess more properties than ten.  

The Nebraska Department of Revenue has created a website that has a handy tool for finding eligible amounts paid to school districts and instructional videos on the legislation.  The Nebraska School District Property Tax Look-up Toolwill walk you through the process of finding your parcels and pulling out the needed information for Form PTC.  There is even a tool within the tool to help you find your parcel numbers necessary for the primary tool to function via your county’s assessor or treasurer office.  The tool also allows you a printable version of each result.  These printable pages will serve as backup information when filing your taxes.  You can also find the amounts on the tax statement mailed to you by your local courthouse if you do not use the internet.  

Finding all of your parcels is not a process I would leave up to your tax preparer.  First, it can be challenging to navigate a county's tax roll to discover ownership and to pull eligible school district payments.  Searching for parcels owned by multiple individuals or listed under different names can be challenging to find in some instances unless you have extensive knowledge of an individual’s operation.  Also, there is the chance that multiple years could be eligible, depending on what year the tax was paid.  The legislation looks at the taxes paid in the calendar year 2020.  If you miss listing a parcel, that is money left on the table, and incorrect amounts could be problematic.  

The second fact is that the ownership period and percentage of ownership matters.  As mentioned previously, properties owned by multiple individuals need to be addressed on the form.  You also must state the period of ownership.  Buying and selling properties will change the credit depending on the length the parcel was held.  

Last, and most important, this all takes time, and time is money for tax preparers.  For some individuals, the cost to discover the eligible amounts might offset or be more than the credit.  As you will see in my example below, the credit is $47 for that particular parcel.  Based on the time it took me to find the information and fill out the form, I would estimate it cost me $10-$20 if I had a tax preparer do the research and fill out the form.  That is for a one and done parcel on escrow.  If you start throwing in some of the factors above, you could see that credit shrink even further or disappear.

It does not take long to gather the information yourself and gives you the peace of mind that it was done correctly.  Below you will find an example of a parcel I pulled using the Nebraska Department of Revenues tool and then using that information to fill out a Form PTC.

Parcels screenshot.

Parcels screenshot.

Note: The above Form PTC is a fillable pdf from the linked website. One note of interest is while the form does not specify you need, “ – or /,” between the month, day and year without them I struggled to get the proper date to show on the form.