Tax Help for H-1B and Other Work Visa Holders

If you work in the United States on an H-1B, L-1, O-1, TN or similar visa, your tax status depends on how many days you are here, not on the name of your visa. Most H-1B workers become U.S. residents for tax purposes quickly, which means the IRS taxes their income from everywhere in the world and expects reports on accounts and assets abroad. This page explains how that works for H-1B holders and their families in Naperville, Aurora and across the country, with special attention to India-linked income.

Are you a resident for tax purposes?

The substantial presence test counts days. You meet it if you were in the U.S. at least 31 days this year and the total of this year's days, one-third of last year's days and one-sixth of the year before's days is at least 183. The IRS example: 120 days in each of three years totals 180, so that person is not a resident. H-1B days count from the day you arrive because H-1B is not an "exempt individual" category; the exempt list covers certain students, teachers, trainees and government-related visas.

Residency usually starts on the first day you are present in the U.S. that calendar year. If you arrive mid-year, your first year is often a dual-status year. A dual-status return is filed on Form 1040 or 1040-NR with a statement for the other period, and it has limits: no standard deduction, no head of household status, and no joint return unless you elect one. Some people can instead choose first-year resident treatment. Keep a travel log with entry and exit dates and your I-94 records, because days decide everything. See our residency rules guide.

If you were an F-1 student first, your student days are exempt for a limited time, and you may need Form 8843 for the year you changed status. See international students and OPT.

What you must report once you are a resident

The FBAR is filed electronically with FinCEN, not with your tax return; Form 8938 is attached to your return. You may owe both. Signature authority over a relative's account can count even if the money is not yours. Details are in our guides on FBAR for Indian bank accounts, Form 8938 and India assets and PFIC rules for Indian mutual funds.

Interest on NRE or NRO accounts is often reported differently in India than in the U.S., and the NRE, NRO and FCNR guide explains why. Where India also taxes income, a foreign tax credit may avoid double tax; see the foreign tax credit guide and the US-India treaty.

Spouses, children and ITINs

An H-4 spouse or child who cannot get a Social Security number needs an ITIN to appear on a return. Form W-7 is filed with a tax return, along with identity documents. Spouses and dependents generally qualify when they are claimed for an allowable tax benefit. A passport is the only stand-alone document; applications can go through a certifying acceptance agent, who verifies documents in person. The IRS says to allow about seven weeks, longer in peak season. An ITIN unused on a return for three years expires. See ITINs for spouses and dependents.

The Child Tax Credit needs a Social Security number for the parent and the child. A child with only an ITIN may qualify for the smaller $500 credit for other dependents.

Payroll tax, state returns and money sent home

Wages of H-1B workers are subject to Social Security and Medicare tax. The student exemption that applied on F-1 ends when your status changes. Illinois taxes income at 4.95 percent for 2025. If you moved in or out of Illinois, or work remotely for an employer in another state, you may need Schedule NR and a credit for tax paid to another state on Schedule CR.

Since January 1, 2026, a 1 percent federal excise tax applies to remittances funded with cash, money orders, cashier's checks or similar physical instruments. Check how your provider funds the transfer. Family gifts from India are not income, but amounts over the Form 3520 threshold still need to be reported.

Mistakes to avoid

• Skipping the FBAR because the account earns little interest.
• Assuming an Indian mutual fund is reported like a U.S. fund.
• Filing as nonresident when the days show you are a resident.
• Leaving a spouse off a return or waiting too long for an ITIN.

How we can help

We prepare resident and dual-status returns, FBAR and Form 8938 filings, and ITIN applications, and coordinate Indian and U.S. reporting. See international tax and individual tax preparation. This page is general information; your situation may differ.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.