Nebraska Tax on Retired Veterans Pay

Forum|Forum|3 years ago
January 22, 2023
1 reply
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I do not pay state taxes on my Nebraska Military Retirement Pay. However, I did have them take out $90 each month to ensure I do not owe any state taxes when the time comes to file both Federal and State taxes. When I enter my 1099R for the amount earned the program still has me owing money for State. Where my refund should show the $1080 that I had them taken out of each month pay, it shows that I owe money even though I had a large sum for a refund prior to entering the numbers from my 1099R. Any help in rectifying this situation would be much appreciated. Thanks, Dwaine

Best answer by DMarkM1

There is no amount listed in 14-16 because I do not have to pay state taxes on my military retirement pay. However. the program still shows that I should be paying taxes and I owe money. Prior to me entering this 1099 I had several thousand coming back in Federal and three thousand coming back in state. Once I put in my gross distribution, they both change. Federal I understand until I enter the federal withholding taxes. My state refund should not have changed since I do not have to pay state taxes. I did pay $90 dollars each month to ensure I do not have to pay state taxes on any income I list. So, the $1080 that I did pay should have been added to my refund. Not sure how to explain this further. Either the program is not up-dated, or it is completely wrong in its calculations.

You are correct in that when you enter the 1099R in the federal interview the income does show as NE taxable income and your running refund total reflects the NE tax increase. However, you now need to go the NE state interview to exclude the military retirement pay from NE taxable income.

Go to your NE state return
"Update" the "Adjustments" section
Click through to the "Adjustments Decreasing Federal Income" page
Locate the box for Military Retirement Pay Exclusion
Enter the amount of your military retirement pay from box 1 of your 1099R

@dwaine1980

DMarkM1

Yes, you are correct. For tax years beginning with 2022 NE allows an exclusion of 100% of military retirement pay from NE taxable income. The NE forms are not quite ready for filing yet. The estimated date is 1/26/2023. The update should allow the new military retirement exclusion.

Click here for the forms availability tool.

Click here for more information on the NE military retirement exclusion.

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Mike305

Thanks, I am in the same situation. I thought I was doing something wrong.

MichaelG81

Make sure under your 1099-R for Military pension withdrawal that you put State information for boxes 14-16 from your 1099-R as long as the amount is there it should be reported as a payment to the state of NE. If this is a military plan make sure you choose Non Qualified Plan for, Was This Distribution From A Qualified Plan? After entering, select continue, for more interview questions next to add another 1099R. Unless you have other income like investments and other W2s, some other income maybe taxable using what was withheld from your military Retirement Pay, which in essence would be lowering your tax liability on other income possibly made. But when I enter it it gives it all back from NE. Is there anything else we need to know about additional income sources, spouse income if applicable, etc.?

@Mike305

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