Nebraska Microenterprise Tax Credit

The Nebraska Advantage Microenterprise Tax Credit Act offers individuals actively involved in microbusinesses a refundable individual income tax credit based on demonstrated growth of the business over two tax years. The Department of Revenue is allowed to authorize $2 million in credits each calendar year, plus any unclaimed credits carried forward from the prior year. Individuals can earn a credit equal to 20 percent of the increase in new investment or employment at the microbusiness in the year of application, or a total of $10,000 in the lifetime of the business.

Nebraska Microenterprise Tax Credit Eligibility

To qualify for the Nebraska microenterprise tax credit, you must complete an application, including a personal financial statement. You must also provide proof of registration with E-Verify, a federal electronic verification program. The E-Verify system ensures that all new Nebraska employees are legally able to work in the country. Any compensation paid to an employee who cannot be verified as eligible for work in the United States must be excluded from the credit calculation.

If you are applying for the tax credit with two equal partners, make sure that both of your applications include the same amount for each category. For example, if you anticipate investing $10,000 in advertising in Year 1, each partner should enter $5,000 in Column A of the application.

Nebraska Microenterprise Tax Credit Application

A Nebraska Microenterprise Tax Credit claim must be made on Nebraska Form 3800N and Worksheet M, which is required to be attached to the individual income tax return for the year of application and the year following it. A copy of the document requested in Worksheet M must also be submitted. Omission of required documentation may result in a balance due notice for the taxpayer.

In addition to demonstrating that the growth will occur in their microbusiness, applicants must also provide a narrative response to Item 8. This statement should include a detailed explanation of the estimated figures in Table 13. If a related person has applied for this credit, the base year figures and estimated growth must be split accordingly.

All applications are required to use E-Verify, a federal electronic verification program, to ensure that all employees hired in Nebraska after the application date are legally able to work here. Applicants may choose to skip Item 3.