@shikhiss13 I will try answer your questions one by one ( as articulated / ordered in your post -- some may be duplicated ) -- in Italics.
1. Can non residents claim any tax deductions at all? eg. 401k, IRA,Health Savings Account, Insurance expenses, movement expenses etc.
Here it is "yes" and "no" depending on the exact deduction/credit you are talking about. Many credits are limited by having SSN and sometime the amount of credit is limited for ITIN.
2. I see a standard deduction for married filing jointly. What the benefit of dependents (kids)? I hear this cant be applied for Non residents either
Non-Residents generally must use itemized deductions ilo standard. You also file your return on form 1040-NR ( not supported by TurboTax --- use a tax professional or SprinTax type of services ).
3. Any non-tax implications of Residence vs Non residence? (eg. i read somewhere Non-residence dont get Stimulus but residence do)
There are no stimulus packages available now. But if one comes into play, the rules of eligibility will be per that law/stimulus package.
4. Whats the US-India Treaty rate of tax on Salary?
US-India tax treaty covers many items but if you are working in the USA then for US purposes , there is ONLY US person ( citizen/GreenCard/Resident for Tax Purposes ) being taxed on world income and Non-Resident Alien, being taxed ONLY on US sourced income. Depending on the exact facts and circumstances, treaty benefits can be asserted by NRA but generally not by a US person. Of course there are ands/ifs and buts to this.
5. Resident Alien pays tax on entire Calendar year worldwide income? Eg. For salary earned until April, I have paid tax in India already. Will that also be considered for US taxation slabs.
That first sentence is not correct. A US person pays tax on world income for the calendar year-- yes. However, in a situation where an NRA passes the SPT / GreenCard test during the year, the start of the residency is the first day the person was "present" in the USA legally. Thus , if you entered the US on Jul1st of 2025, you will pass SPT and be a tax resident for the year 2025 but your start of residency is Jul1st. of 2025 and therefore your world income from Jul. 1st till Dec. 31st is taxable income to USA; you must use itemized deduction for the year ( because you did not meet the full calendar year presence); your prior world income i.e. before entering the USA, is not taxable income to USA, whether taxed by another country or not.
6. I also see a first year choice option - can I avail that if I come in August? In this case I guess I can postpone this decision for later.
First year choice is not going to do much for you. assuming that you entered the country in the middle of the calendar year --- you still will have to use itemized deduction.
7. Do Non residents pay FICA or State taxes or just federal?
All wage earners ( US person or NRA ) are subject FICA taxes ( there are exceptions for trainees and students etc. ).
May I suggest that you discuss the tax situation with your employer tax consultant or a Tax professional familiar with international taxation ( assuming you will have lingering tax situation with your home country). If one had choice of start date in the USA , I would enter the USA on 12/30/XXXX , because that will allow me have my residency start the first of the year and thus full standard deduction.
You are welcome to PM me with more detailed questions if you wish.
Namaste ji
pk
