Anyone who earns income in the state of Nebraska, who is not a full time resident of the state, is required to file a Form 1040N alone with a Nebraska Schedule III – Computation of Nebraska Tax for Nonresidents and Partial-year Residents Only.

This form requires nonresidents to report the total amount of adjusted gross income from all sources, but only those obtained in Nebraska are eligible for state income taxation, and is calculated via Schedule III. This income is inclusive of all gains, losses, and deductions related to Nebraska sources.

Residents who live within the state during some part of the tax year are considered partial-year residents. Partial-year residents are required to file a 1040N and a Nebraska Schedule III. These part time residents are subject to state income tax on any earnings that were sourced in Nebraska and are included in the taxpayers federal AGI .

Partial year residency in Nebraska is related to the period of time where a taxpayer is relocating to or from a Nebraska home. These residents are allowed to make adjustments on Nebraska sourced income by completing line 65 on Form 1040N Nebraska Schedule III.