FOR IMMEDIATE RELEASE:
January 17, 2008

FOR INFORMATION CONTACT:
Douglas A. Ewald, Tax Commissioner
402/471-5604
Leonard J. Sloup, Director of Operations
and Administative Services
402/471-5805

TAX YEAR 2007 STATE INCOME TAX FILING SEASON KICKS OFF

LINCOLN -- Nebraska strongly encourages taxpayers to file electronically (e-file) – it is the fastest way to receive an income tax refund, makes filing easier, and is more secure. Many taxpayers qualify for FREE e-filing (see below).

Last tax year, the Nebraska Department of Revenue processed over 530,000 e-filed individual income tax returns. This is about 62% of all individual income tax returns filed in Nebraska.

There are three (3) ways to e-file:

1. FREE FEDERAL E-FILE;

If your Federal adjusted gross income is $54,000 or less, you can e-file your Federal return for FREE.You can access the IRS website at www.irs.gov and click on “freefile”.

2. FREE STATE E-FILE;

NebFile is a new and improved way for Nebraska taxpayers to e-file their state tax return for FREE. Criteria include:

• No income limitation;
• You must be a full year Nebraska resident;
• You must have filed a tax year 2006 return with the state; and
• You must have the same filing status as last year, i.e., Single, Married-Joint, etc.
  

For more information about NebFile and other eligibility requirements, see the Department’s website at www.revenue.ne.gov and click on “File Your Return Electronically!”

3. FED / STATE E-FILE.

This is a convenient, fee based way to file both your federal and state income tax returns in one transmission to the IRS. For more information on this filing option, go to www.revenue.ne.gov/electron/jelf.htm.

PIN NUMBERS. You need a PIN number to use the NebFile system to e-file your individual income tax return. Postcards with PIN numbers were mailed out using the following criteria:

• If you e-filed last year, you received a postcard;
• If you used TeleFile last year, you received a postcard saying this program has been ended. It also included a PIN number to use for NebFile;
• If your tax practitioner e-filed for you or mailed in forms created with tax software, you received a postcard; or
• If you filed paper tax forms last year, you received a 2007 Nebraska Individual Income Tax booklet of paper forms, including a postcard with a PIN number to use with NebFile if you would like to use it this year.
  

If you lose your PIN number, you can use the NebFile system to look it up using a valid Nebraska driver’s license.

TAX BOOKLETS/FORMS. The Department mails out fewer tax booklets each year. Last year, approximately 115,000 booklets were mailed versus 388,000 in 2002. If you need paper forms:

• Go to Revenue’s website (www.revenue.ne.gov) to download them;
• Call 800-742-7474 (toll free in Nebraska and Iowa) or 402-471-5729; or
• Pick them up at most libraries, state regional offices, some grocery stores, and some U.S. Post Offices.
  

NEBRASKA INCOME TAX CHANGES. Governor Heinemann’s tax reduction initiative, LB 367, eliminated the “Marriage Penalty” provisions of state law by incorporating higher standard deductions for married couples and heads of household, mirroring the indexed federalamounts for 2007. In addition to increasing the standard deduction for Married Filing Joint couples to $10,700 (twice that of Single filers), the Married Filing Joint tax brackets were also changed to be twice that of Singles, allowing more income to be taxed at lower marginal tax rates.

The state’s Earned Income Credit was also increased to 10% (from 8%) of the federal Earned Income Credit.

FEDERAL ALTERNATIVE MINIMUM TAX (AMT) LEGISLATION. Congress passed an “AMT patch” in late December, 2007 which prevented significantly more taxpayers from being subject to this tax. Nebraska piggybacks the federal AMT as a percentage of the federal tax. Five federal tax forms which use the new AMT values need to be redesigned by the IRS and are not to be filed until February 11, 2008. These include:

• Federal Form 8863, Education Credits;
• Federal Form 5695, Residential Energy Credits;
• Federal Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers;
• Federal Form 8396, Mortgage Interest Credit; and
• Federal Form 8859, District of Columbia First-Time Homebuyer Credit.
  

State returns for taxpayers using these forms should not be filed until they can be filed with the IRS on or after February 11. Nebraska taxpayers with child and dependent care expenses may still file Federal Form 1040 along with Federal Form 2441 if they desire to file prior to the February 11th IRS date.

CHANGES TO EMPLOYER/PAYOR REPORTING. The Department has implemented a new web-based electronic reporting system for employers to transmit Form W-2 and 1099 data. Web based electronic reporting is offered as an option to electronic media or paper reporting of this data. Employers may elect to transmit both W-2 and 1099 files during each file transfer. The electronic files being sent must follow the Social Security Administration, IRS, and Nebraska data file formats. Data files which do not follow these formats will not be accepted (PDF and CSV are not acceptable file formats). Electronic reporting will be mandatory beginning in 2009 for employers submitting 250 or more Forms W-2 or 1099.

Form W-3N (Nebraska Reconciliation of Income Tax Withheld) and electronic or paper Forms W-2 and 1099 are due March 15, 2008. Form W-3N must still be filed using the paper form.

You may access this new system through Revenue’s website at www.revenue.ne.gov and click on “Employers, File Your Nebraska Forms W-2 and 1099 ONLINE”.

• The system is available for all licensed withholding accounts.
• Login using your company’s Nebraska State Identification Number as your User ID.
• Each withholding account was provided with a PIN number printed on the Form W-3N. Use this as the password for logging on to the secured website.
• Successful submissions will display a confirmation notification. Be sure to print this notification for future reference.
  

Additional information on transmitting data electronically may be found at the Department’s website: www.revenue.ne.gov.

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APPROVED:
Douglas A. Ewald
Tax Commissioner