Something nobody's mentioned yet - if you have a lot of dividend income, you might need to file state tax returns too, even as a non-resident alien. Some states like California are aggressive about taxing investment income with any connection to their state. I learned this the hard way when I got a letter from California FTB even though I've never set foot in California. Apparently my brokerage has an office there, which was enough for them to claim nexus. Check if your broker is based in a state with income tax.

I've been filing 1040NR for several years now and can confirm that TaxAct handles dividend reporting correctly. Your dividends should definitely go on Schedule NEC as non-effectively connected income, which is exactly what TaxAct is directing you to do. The key thing to remember is that you'll need to manually enter your tax treaty information to get the reduced withholding rate. Don't expect the software to automatically know your country's treaty provisions - you'll need to look up the specific article that covers dividend income and enter that information yourself when claiming treaty benefits. One tip: keep a copy of your country's tax treaty handy while filing. You'll need the exact article number and language for Form 8833. Also, make sure your 1099-DIV shows the correct amount of tax withheld - sometimes brokerages make errors that you'll need to catch and correct on your return. The dividend reporting process can seem confusing at first, but once you understand that most investment income for non-residents goes on Schedule NEC rather than the regular dividend schedules, it becomes much clearer.

The cycle code can also tell you if you're on a weekly or daily processing schedule. If it ends in 01, you're on daily. If it ends in 05 like yours, you're on weekly. Weekly processing generally updates on Thursdays and refunds come about a week later. You can also check the WMR tool or IRS2Go app, but honestly the transcript gives you more detailed info if you know how to read it.

Keep an eye out for code 846 on your transcript - that's the refund issued code and will have a date next to it. That date tells you exactly when the refund will be sent. The cycle code just tells you when your return was processed, not necessarily when the refund is coming. But typically for cycle 05, it's about a week later.

Everyone focuses on income tax but forgets that payroll taxes (Social Security and Medicare) are hugely regressive. They only apply to earned income up to certain caps and don't touch investment income at all. So someone making $150k from a job pays way more in FICA than someone making millions from investments. Oh and don't forget state taxes. Live in a high tax state like CA or NY? Your effective tax rate as a middle class person is insane compared to a wealthy person living in FL or TX with no state income tax. The whole system is designed by rich people to protect rich people. Change my mind.

The payroll tax point is huge and often gets overlooked in these discussions. I calculated my effective tax rate last year including federal income tax, state tax, Social Security, Medicare, and local taxes - it came out to around 32% of my gross income. Meanwhile, I read about billionaires with effective rates in single digits because most of their "income" comes from unrealized capital gains that aren't taxed until sold. What really gets me is that Social Security is supposed to be insurance for retirement, but the cap means wealthy people stop contributing after their first few months of the year while regular workers pay into it all year long. If we're going to have a progressive tax system, shouldn't Social Security taxes be progressive too? The state tax issue is real too - it's basically a tax on geography. You can make the same amount in California and Texas but pay vastly different amounts in total taxes. And guess where most wealthy people are choosing to establish their "residency" these days?

Anyone know if this affects social security and medicare withholding too? Or is that the same regardless of which state you're in?

This is a frustrating situation but definitely fixable! I went through something similar when my company incorrectly classified me as a California resident while I was actually living in Nevada. A few key things to prioritize: 1. **Document everything** - Save all your pay stubs showing the NY withholding, any emails with payroll, and proof of your Tennessee residency (lease, utility bills, etc.) 2. **Push for W-2c forms** - Don't let payroll just fix it going forward. You need corrected W-2c forms for 2022 and 2023 to properly file amended returns and get your money back. 3. **File non-resident returns** - You'll need to file NY non-resident returns showing $0 NY income to get refunds of the withheld taxes. Since Tennessee has no state income tax on wages, you should get back everything that was withheld. 4. **Check your federal filing status** - The fact that they also changed you from Married to Single could have affected your federal taxes too. Make sure that gets corrected on your W-2c forms. The good news is Tennessee's lack of state income tax makes this cleaner than it could be. You're not dealing with reciprocity agreements or partial credits between states. Just document everything and be persistent with payroll - they created this mess and need to fix it properly.

Has anyone used any particular tax software that handles this 941 deduction well for small business owners? I tried using TurboTax Small Business last year and it was super confusing with my payroll taxes.

Great question! I just went through this exact situation with my LLC last year. Yes, the employer portion of your 941 payroll taxes is definitely deductible on Schedule C. Here's what I learned: You can deduct the employer's share of Social Security (6.2%), Medicare (1.45%), FUTA, and any state unemployment taxes you paid. For your $2,100 in quarterly taxes, a good chunk of that should be deductible - just make sure you're only counting the employer portion, not the employee withholdings. I put mine on Line 23 "Taxes and licenses" on Schedule C. One thing that helped me was creating a simple spreadsheet to track the employer vs employee portions each quarter, since the 941 form shows everything together. Your payroll service should be able to give you a breakdown if you don't already have one. Also, don't forget about any state payroll taxes you paid - those are deductible too if they're the employer portion. Just keep good records of all your payroll tax payments and forms in case the IRS ever asks for documentation.