Dear Australian customers,
Deal with the stock broker and/or whomever is doing the withholding. IRS has no power on the matter directly.
It is not all bad to have more withholding than less if you plan to do the same business year after year. Then, if you have a history on how you report income and how you always have significant refund, you may be able to get the withholding down.
There are companies who claim they can get withholding down. But they usually deal with certain type of income and not the investment, brokerage income.
Each brokerage firm has their own policy and they need to save their own skin and not to get in trouble with the IRS. I have known a client who wants to not to get withholding on his/her interest income. S/he could not do it after years. The withholding is like only less than $10.
What you may be able to do, if that is what you can do, is to investigate to change to a different brokerage firm. Then, ask that new brokerage firm to make sure how they withhold. Usually, brokerage firms do withhold at all. In order to get them to withhold, you need extra effort. Also try firms that has international presence or who relies much of their businesses on line. However, larger firms has stronger policies.
Hopefully, this answers your questions.
Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP