As a foreign national working in the United States, navigating the US tax system can be a daunting task. This is particularly true for those holding H1 or L1 visas, who must adhere to unique tax requirements. In this article, we will outline some essential information to help H1 or L1 visa holders understand their tax obligations.
The Internal Revenue Service (IRS) uses a set of rules to determine an individual’s tax residency status, which can be classified as residents for tax purposes, non-residents, or dual-status aliens. H1 or L1 visa holders’ tax status depends on the number of days they have been in the United States and the nature of their employment.
Under the Substantial Presence Test, an individual will be considered a tax resident if they were physically present in the US for at least 31 days in the current tax year and a total of 183 days over the current year and two preceding years. If an individual meets this criteria, they will need to pay taxes on their worldwide income, including income earned in other countries.
H1 or L1 visa holders are subject to the following income tax obligations:
They must pay US income tax on all income they earn in the United States, regardless of their residency status.
The income tax rate that they pay is the same as that paid by US citizens.
Federal income tax payments are required to be paid on a regular basis throughout the year.
H1 or L1 visa holders are required to pay Social Security and Medicare taxes on their income if they meet certain criteria, which include being physically present in the US for at least 183 days and being paid wages by a US employer. Non-residents who have been working in the US for a prolonged period may also be subject to these taxes under certain conditions.
They are required to file their federal tax returns by April 15th of the following year.
Tax returns can be filed electronically or by mail.
Failing to file tax returns or pay taxes on time can result in penalties and interest charges.
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