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RECOVERY REBATE CREDIT ELIGIBILITY
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.
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.
This means INCLUDING A TIMELY FILED EXTENSION.
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.
They withheld 20%..
But you could be in a 28% bracket….. (or even higher up to 39.6% plus more on investment income).
So, in my example, the total tax is 38%, not 20%. Again, your broker handling the distribution would not know your individual tax circumstance.