NE 22-90-3 Individual Income Tax 1991-01-03

Do I owe Nebraska income tax on unemployment or sickness benefits I got from the Railroad Retirement Board?

Short answer: No — they're subtracted out. Under Revenue Ruling 22-90-3, unemployment or sickness insurance benefits paid by the Railroad Retirement Board are proper Nebraska adjustments decreasing federal adjusted gross income, to the extent those payments are included in your federal income. The Railroad Unemployment Insurance Act makes these benefits exempt from state income tax, and the Department treats them like railroad Tier I and Tier II benefits — exempt from Nebraska income tax and therefore appropriate subtractions from federal AGI on the Nebraska return. The adjustment applies only to the amounts actually included in federal adjusted gross income.

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This page answers the general question as of 1991. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

If you're a railroad worker who received unemployment or sickness benefits from the Railroad Retirement Board (RRB), this ruling is good news for your Nebraska return: those benefits are not taxed by Nebraska.

Here's the mechanics. Nebraska's individual income tax starts from your federal adjusted gross income (AGI). If some of your RRB unemployment or sickness benefits ended up included in your federal AGI, you may subtract that amount back out when computing Nebraska tax. The ruling states that these benefits are proper Nebraska adjustments decreasing federal adjusted gross income, to the extent the payments are included in federal income.

Why: the Railroad Unemployment Insurance Act provides that benefits paid under it are exempt from state income tax. The Department treats RRB unemployment and sickness benefits the same way it treats railroad Tier I and Tier II retirement benefits for Nebraska purposes — exempt from state income tax, and therefore an appropriate subtraction from federal AGI on the Nebraska return.

The limit: the subtraction applies only to the benefit amounts that were actually included in your federal adjusted gross income. You can't subtract benefits that weren't in federal AGI in the first place.

Approved by the State Tax Commissioner in January 1991.

What this means for you

Railroad employees who received RRB unemployment or sickness benefits

Any of these benefits that landed in your federal AGI can be subtracted on your Nebraska return, so Nebraska doesn't tax them. Check how much of the benefit flowed into your federal AGI — that's the amount you adjust out.

Tax preparers with railroad-worker clients

Treat RRB unemployment and sickness benefits like Tier I/Tier II railroad benefits: a Nebraska decreasing adjustment to federal AGI, capped at the amount included federally, grounded in the Railroad Unemployment Insurance Act's exemption from state income tax.

Common questions

Q: Does Nebraska tax Railroad Retirement Board unemployment or sickness benefits?
A: No. They are exempt from state income tax and are subtracted from federal AGI on the Nebraska return, to the extent they were included in federal income.

Q: How much can I subtract?
A: Only the benefit amount that was actually included in your federal adjusted gross income.

Q: Why are these benefits exempt?
A: The Railroad Unemployment Insurance Act provides that benefits paid under it are exempt from state income tax; Nebraska treats them like railroad Tier I and Tier II benefits.

Citations and references

Railroad Unemployment Insurance Act — provides that benefits paid under it are exempt from state income tax; the basis for the Nebraska adjustment.
No Nebraska statute section is cited within the text of this ruling.

Source

Original ruling text

Revenue Ruling 22-90-3

rndividual rncome Tax - unemplofrment and sickness insurance
benefits paid by the Rail-road Retirement Board. IN CÀLCULÀTING
THE NEBR¡,SKA INCOME TAX, UNEMPLOYT,IENT OR SICKNESS BENEFITS PAID
BY THE RÀII,ROÀD RETIREMENT BOÀRD ÀRE PROPER NEBRÀSKÀ ÀDJUSTMENTS
DECREASING FEDER.A,L ADJUSTED GROSS INCOI{E, TO THE EXTENT SUCH
PÀYT4ENTS ÀRE INCLUDED IN FEDERÀL INCOME A}IOUNTS.
Àdvice has been requested regarding whether unemployment
and sickness insurance benefits received from the Railroad
Retirement Board are subject to Nebraska individual income tax.
The Railroad Unemplolment Insurance Act provi-des that
benefits paid pursuant to that Àct are exempt from state income
tax.
Unémployment or sickness insurance benefits paid bV t!9
Railroad ReLirèment Board are comparable to Tier I and Tier If
benefits for Nebraska individual Íncome tax purposes. That is,
the benefit payments are exempt from state income tax and,
therefore, aie- appropriate adjustments decreasÍng federal
adjusted gross income on the Nebraska income tax return.
Hoúever, tñis state income adjustment applies only to those
payment amounts included in federal adjusted gross income.
APPROVED:

January 14 , 1991

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