Couldn't those incentives be handled through direct spending programs instead of tax code complexity tho? Why mix revenue collection with social policy?

That's a valid point in theory. Direct spending programs could replace tax incentives, but there are practical challenges. Our political system has historically found it easier to create tax incentives than to approve new spending programs. Tax benefits are less visible and often face less opposition. The other issue is implementation. The IRS already has mechanisms to verify income, process claims, and issue refunds. Creating new agencies or programs to handle what the tax code currently does would require significant infrastructure. Just look at how complicated some benefit programs are to administer compared to tax credits.

This is such an important point that gets overlooked! A true flat tax would need to treat all income the same regardless of source. Otherwise it's just shifting more burden to wage earners.

Thank you! I'm here on an H1B, not a student visa. I did look up the treaty and confirmed it's Article 10 that applies to my situation with the 25% rate. Do you know if I need to attach any specific form to my 1040NR to document this treaty claim? Or do I just report the income with the 25% rate applied?

Since you're on an H1B and this is a standard treaty provision for the reduced dividend withholding rate, you typically don't need to attach Form 8833. You'll report the dividend income on your 1040NR and apply the treaty rate directly. In Sprintax, when you enter your dividend income, there should be an option to indicate that it's subject to a treaty rate. Make sure you select "India" as your country of residence for treaty purposes and the system should apply the correct 25% rate. For the period where no withholding was done, you'll need to calculate and pay the 25% tax on those dividends.

Not necessarily. If OP was mistakenly treated as a US person for part of the year, Fidelity might have issued a 1099-DIV instead of a 1042-S for those months with no withholding. They should check both documents.

Can you walk me through exactly where in FreeTaxUSA I should be entering this? I keep getting stuck at the part where it asks if I want to file Schedule C. Should I be saying no to that?

You should definitely say NO to filing Schedule C since you're not claiming to be self-employed. In FreeTaxUSA, go to the Income section, then select "Wages paid by an employer who did not withhold Social Security and Medicare taxes" (not the 1099-NEC section). When you get to the screen asking for details, enter your income amount from the 1099-NEC, select reason code G, and enter the employer information exactly as it appears on your 1099. The software will calculate only the employee portion of FICA taxes rather than self-employment tax.

H&R block was terrible when I tried to file with Form 8919 last year. They kept adding the income back as self employment even after I removed it. Ended up having to paper file.

I tried using the IRS estimator but kept getting errors every time I entered my capital gains info. Has anyone else had this problem?

The IRS estimator can definitely be finicky with capital gains. Make sure you're entering them as "other income" rather than earned income. Also, try using a different browser if you're getting technical errors - sometimes it works better in Chrome than Firefox or vice versa. If you're still having trouble, you might want to try a different calculator or just focus on your W2 income for the W4 calculations. Since your LTCG are in the 0% bracket anyway, they won't affect your withholding needs as much.

Yes that's exactly what line 4(c) is for! I did this last year. Just divide the total additional amount you need withheld by your remaining paychecks and put that number on line 4(c). Super easy way to fine-tune your withholding.

Perfect, that's exactly what I needed to know. Thanks for confirming! I'm going to do the math and adjust my withholding tomorrow.

That's absolutely wrong information. The IRS has been massively increasing their enforcement staff and technology. They're specifically targeting incorrect filing status claims because they're easy to detect with automated systems. The "they only audit poor people" thing is outdated - they're now using AI to flag suspicious returns across all income levels.

maybe ur right but all i know is my cousin has been filing hoh for years with no dependents and hasnt been caught. but yeah i guess the risk isnt worth it for most people. just saying the system is already rigged against regular people. i did hear they got a bunch more funding recently so maybe they will start catching more people. still think its stupid that we have such a complicated system in the first place.

Thanks for this insight! That makes more sense than them all incorrectly filing as HoH. I'll ask them about their W-4 withholding. I've always just chosen the standard withholding, but maybe they're having additional amounts taken out. That would explain the bigger refunds without them actually doing anything wrong!