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2022 Long Term Capital Gain Rates

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Tax is applicable on Long Term Capital Gains (LTCG) if your income (NOT INCLUDING LTCG NOR DIVIDENDS) exceeds
                                  Single                                $41,675
                                  Head of Household           $55,800
                                  Married Filing Joint            $83,350
So, amounts below those have no long term capital gains.
The LTCG rates are 0%, 15%, or 20%.  And then another 3.8% might apply depending on income.(It is called Net Investment Income).
Also, it is somewhat deceiving. 
Adjusted Gross Income includes LTCG and could cause a portion of social security to be taxed.  Also, some states tax LTCG as ordinary.

RECOVERY REBATE CREDIT & Social Sec Card Wording

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You are not eligible for the Recovery Rebate Credit claimed on a 2020 tax return if any of the following applies:

  • You may be claimed as a dependent on another taxpayer's 2020 return (for example, a child or student who may be claimed on a parent's return or a dependent parent who may be claimed on an adult child's return).
  • You do not have a Social Security number that is valid for employment issued before the due date of your 2020 tax return (including extensions). Some exceptions apply for those who file married filing jointly where only one spouse must have a valid Social Security number to claim the credit.
  • You are a nonresident alien.                 
  • You are an estate or trust.

Including Extensions

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In reading code (if you ever try to read it you will know why it is called CODE) and regulations (U.S. Treasury Dept interpretation of the Code--this is what we think it means) you will find the term INCLUDING EXTENSIONS.



Earned Income Credit & Valid Social Security Number

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Earned Income Credit & Valid Social Security Number

To qualify for the EITC (Earned Income Tax Credit), everyone you claim on your taxes must have a valid Social Security number (SSN). To be valid, the SSN must be:

  • Valid for employment
  • Issued before the due date of the tax return you plan to claim (including extensions*)

For the EITC, IRS will accept a Social Security number on a Social Security card that has the words, "Valid for work with DHS authorization," on it.

For the EITC, IRS will NOT accept:

  • Individual taxpayer identification numbers (ITIN)
  • Adoption taxpayer identification numbers (ATIN)
  • Social Security numbers on Social Security cards that have the words, "Not Valid for Employment," on them

For more information about the Social Security number rules for the EITC, see Rule 2 in Publication 596, Earned Income Credit.


Rule 2—You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA) by the due date of your return (including extensions*). Your qualifying child must have a valid SSN issued on or before the due date of your return (including extensions*) for you to claim a higher EIC credit amount based on that child.

Note *Including extensions” means a timely filed extension.


When is 28% bracket not 28%?

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This is real from a 2014 tax question
I had a 401K that I cashed in back in November. I paid 20% taxes on it when I did that. I received my 1099-R and while doing my taxes I entered that in and am now being charged another 30% in taxes. I have double checked that I entered everything correct and so has my father. It just seems to be taxed a total of 50% all together is a lot of money. Any suggestions?
Our answer
First thing is…. When the 401K distribution occurred, the broker had no idea what your personal tax rate is.
They withheld 20%..
But you could be in a 28% bracket….. (or even higher up to 39.6% plus more on investment income).
Now, on top of that, if you are under age 59 ½ you are charged an additional 10% penalty…
So, in my example, the total tax is 38%, not 20%. Again, your broker handling the distribution would not know your individual tax circumstance.
Then, that additional income effects some itemized deductions, effects some child credit issues….. etc. so, while your tax rate may be 28%, you lose some itemized deductions (or lose some credits) effectively making the tax rate even higher… but Congress doesn’t want you to know that….
It is not the answer you want, but it is the answer!