All posts in Tax Guides

  • Filing Taxes On H1B Visa – The Ultimate Guide

    About H1B visa

    The H1B visa enables skilled workers with specialized expertise to live in the US for three years (later it can be extended for another three years), and work for a sponsoring employer.

    In order to apply, you need specialized knowledge and a bachelor’s degree or equivalent work experience in areas such as medicine, science, mathematics, information technology, architecture, finance, and accounting.

    You can find more about H1B visa eligibility, application process, and visa duration here.

    H1B Visa Income Tax Obligations

    What is the tax rate for H1B visa holders?

    The answer to this question depends on your income level.

    If you work in the US as an H1B worker, you can expect to pay between 20-40% of your wages in federal, state and local taxes.

    These taxes will include:

    • Federal income tax
    • Local income tax (depending on where you live)
    • State income tax (depending on where you live)
    • Federal Social security and Medicare tax- (FICA)

    While living in the US, you may also pay property tax, sales tax, capital gains tax, transfer tax, inheritance or estate tax, hotel or lodging tax, gas tax and more.

    Federal Social security and Medicare (FICA)

    These taxes are pension and healthcare provisions for retirement.

    6.2% of your gross salary will be deducted for social security and 1.45% for Medicare and your employer contributes the same amount.

    Depending on the tax treaty the US has with your home country, in some cases, you can receive Social Security after you leave.

    Learn more about FICA tax exemption for nonresidents here.

    Federal Income Tax on an H1B

    If you are a nonresident and working in the US on a H1B visa, you will be taxed on money that you make in the US, at the same rate as US citizens. You are obliged to file a US tax return (form 1040NR), but you can not claim the same deductions as US citizens.

    If you become a US resident you will have access to those deductions, but you will also be charged on your worldwide income.

    Your income level determines the tax rate, which ranges from 10% to 39.6%. The US has progressive “marginal brackets”. Most H1B visa holders pay between 20-35% of their income.

    2020 Federal income tax brackets

    Tax rate Single Married, filing jointly Married, filing separately Head of household
    10% $0 to $9,875 $0 to $19,750 $0 to $9,875 $0 to $14,100
    12% $9,876 to $40,125 $19,751 to $80,250 $9,876 to $40,125 $14,101 to $53,700
    22% $40,126 to $85,525 $80,251 to $171,050 $40,126 to $85,525 $53,701 to $85,500
    24% $85,526 to $163,300 $171,051 to $326,600 $85,526 to $163,300 $85,501 to $163,300
    32% $163,301 to $207,350 $326,601 to $414,700 $163,301 to $207,350 $163,301 to $207,350
    35% $207,351 to $518,400 $414,701 to $622,050 $207,351 to $311,025 $207,351 to $518,400
    37% $518,401 or more $622,051 or more $311,026 or more $518,401 or more

    Local income tax

    Some cities have a local income tax, which varies between 1-4% of your gross income. This tax will be withheld by your employer and it’s very important that your address on your W4 is correct, otherwise, you may end up paying incorrect local tax.

    During the tax season, you may need to file a local income tax return (where applicable), and Sprintax can assist you!

    If you have any tax-related questions you can always get in touch with our 24/7 Live Chat support.

    State income tax

    How much you will pay depends entirely on the state that you work in. The tax will be withheld by your employer. This tax usually ranges from 0 to 10% of your gross income. The same applies to both citizens and non-citizens. Some states do not have a personal income tax, these are- Wyoming, Washington, Alaska, Florida, South Dakota, Texas and Nevada. What’s more Tennessee and New Hampshire only tax interests and dividends at the state level.

    From January to April (during the tax season) you will need to file a state income tax return. You can also file an extension and change the due date to October instead.

    I live in one state and work in another. How does this affect my taxes?

    In such a situation, you may need to file tax returns in both states and you will usually pay the higher of the two states taxes.

    The good news is that Sprintax can help you with your multi-state tax returns. If you have questions, you can always get in touch with our 24/7 Live Chat support.

    Filing taxes on H1B

    Determine your residency status with the substantial presence test

    There are two types of aliens for tax purposes- resident and nonresident aliens. In order to file your taxes, you must determine your residency status with the substantial presence test and Sprintax can do this for you. The test is applied on a calendar year-by-calendar year basis.

    Resident aliens are taxed in the same way as US citizens on their worldwide income, while nonresident aliens are taxed only on income from US sources.

    Gather your tax documentation

    You will need your Social Security Card and all tax forms like W-2, forms 1099 series, investment income statement and other income information.

    If you are a resident of Canada, Mexico, South Korea or student or business apprentice from India, you may be entitled to claim some additional credits due to US residents only like child credits. If you want to claim any of the residents’ tax deductions you must back up your claims with receipts for child care, educational cost and other applicable receipts.

    How to file your taxes

    When you are ready with all the required documents you can proceed with filing your tax return.

    If you are a temporary visitor to the US on an H1B working visa you can file your taxes directly yourself. Alternatively, if you’d like some help with all that tricky paperwork, Sprintax can prepare your income tax return for you!

    Prepare your US Nonresident Tax Return with Sprintax!

     

    Can I file jointly with my spouse?

    If you were married during the tax year, you do not have the option to file a return jointly with your spouse if you both are nonresident aliens, and married nonresident alien status is also treated as a single.

    This means that your spouse has the same filing obligations that you’ll have.

    Can I claim dependents on my tax return?

    Nonresidents are not allowed to claim dependents on their tax return. However, residents of Canada, Mexico, South Korea and some business apprentices or students from India may claim child tax credits for their family members if certain conditions are met.

    If you want to claim a dependent, you must file using Form 1040 NR, because the exemption cannot be taken on Form 1040NR-EZ.

    For additional information on tax exemptions & deductions for family members, please take a look here.

    Who can help me with my H1B tax preparation?

    If you are a nonresident alien on an H1B visa in the US, Sprintax can help you with the preparation of your tax return.

    Simply, create your account and in a few minutes, you will be ready to print your tax returns!

    With Sprintax you can:

    • easily prepare your tax return, because Sprintax is the only online software for nonresidents
    • chat with qualified agents 24/7
    • get the maximum tax refund and avail of every tax entitlement

    Taxes can be fun!

    Prepare your 1040-NR with Sprintax!

  • Tax guide for summer camp counselors on J-1 visa

    Tax return from summer camp on J-1 visa

    The camp counselor program allows you to share your culture and ideas while working in a camp setting in the US.

    To take part in the camp counselor program, you need a J-1 cultural exchange visa. This visa allows non-immigrant aliens to temporarily live in the US to participate in the summer camp.

    Generally, J-1 camp counselors are considered nonresidents for tax purposes. You must fill out important tax documents when you arrive at the camp, and your camp director can help you with this. Continue reading “Tax guide for summer camp counselors on J-1 visa” »

  • Which tax form should I use: Form 1040, 1040NR or 1040NR-EZ?

    Coming to the US from a foreign country presents both thrills and challenges to every nonresident.

    One of the more common difficulties nonresidents face is filing their tax return.

    In this blog we’ll be discussing Forms 1040, 1040NR, 1040NR-EZ, and how they apply to each person’s situation.

    Form 1040 (NR & NR-EZ) figures out the total taxable income of the taxpayer and determines how much of a refund the person may be due.

    So, without further ado, let’s examine how to find out which form applies to you! Continue reading “Which tax form should I use: Form 1040, 1040NR or 1040NR-EZ?” »

  • FICA Tax Explained for Nonresident Aliens

    FICA tax exemption

    What is FICA tax?

    The Federal Insurance Contributions Act (FICA) is the means by which social security and medicare are funded in the US.

    FICA also provides benefits to children who have lost their working parents, widows and widowers, and disabled workers who qualify for benefits.

    For self-employed people, there is an equivalent law called SECA (Self-employed Contributions Act).

    Contributions to FICA are deducted from employee income. Many workers in the US will notice FICA being deducted from their income each time they receive their paycheck. Continue reading “FICA Tax Explained for Nonresident Aliens” »

  • The Ultimate Tax Guide For International Students On OPT

    What is OPT?

    Optional Practical Training (OPT) is an opportunity for international students under an F-1 visa to work in the US for 12 months. After this, STEM students (Science, Technology, Engineering and Mathematics) can extend this period up to 24 months.

    Most students complete OPT after graduating from university. Others participate after they have been pursuing their degree for more than nine months and are entitled to work and gain practical knowledge in the field of their studies. Continue reading “The Ultimate Tax Guide For International Students On OPT” »

  • The ultimate US tax guide for J-1 participants

    Tens of thousands of people flock to the US on J-1 visas each year.

    Every J-1 participant has a tax filing requirement, it’s the law!

    Many J-1 visa holders are confused by the often tricky US tax jargon. However, it’s not as bad as it seems, and knowing even a little about your filing requirements can go a long way!

    With this in mind, we’ve created a blog post that will answer some common queries from J-1 participants in the US! Continue reading “The ultimate US tax guide for J-1 participants” »

  • US tax season survival guide for international students on F-1 visas

    US tax season guide for international students on F-1 visa

    While tax filing might not be the most exciting aspect of international student life in the US, the importance of completing these forms correctly cannot be underestimated.

    In fact, the way you handle your international student tax affairs will have a major impact on future Green Card and visa applications.

    With this in mind, we’ve created this handy tax guide for international students and scholars in the US on an F-1 visa.

    We’ve covered everything you need to know about tax returns, refunds, and how to stay in the taxman’s good books! So, let’s get started!

    To easily navigate this guide, we’ve listed the main covered topics in the table of contents below. Continue reading “US tax season survival guide for international students on F-1 visas” »

  • H1B VISA – All your questions answered!

    Sprintax_H1B_visa

    If you are an international student in the US on an F1 visa, you may wish to stay in the US to find work after you complete your course. You can do this by changing your F1 visa to a H1B visa (and later obtaining a Green Card).
    Continue reading “H1B VISA – All your questions answered!” »

  • Form 8843 – what is it and how do I file it?

    Form 8843_Guide_Sprintax

    There are 3 things that every US international student and J-1 visa holder needs to know about American tax:

      1. Every US international student and J-1 visa holder has a tax filing requirement
      2. It doesn’t matter if you have earned income. You must still file your documents before the deadline
      3. The IRS takes this stuff seriously! In other words, if you don’t comply with your tax obligations, you may encounter complications when applying for US visas in the future

    Regardless of whether you have earned income during your time in the US, you will still need to file what’s known as a Form 8843 “Statement for Exempt Individuals and Individuals With a Medical Condition”.

    This blog post will focus on exactly what you need to do in order to file this form and remain compliant with the IRS.
    Continue reading “Form 8843 – what is it and how do I file it?” »

  • Non-resident taxes explained for International students (Sprintax Tax Workshop)

    International student doing their US tax return

    Preparing your non-resident tax returns can seem like a daunting task!

    Sprintax has helped many international students and scholars through the process and is always striving to make their experience as stress-free as possible.

    Check out our Tax Workshop playlist below – we explain the most important things you need to know about US taxes and using Sprintax. We’ve added a video recap below each video if you prefer to read.

    Here is a list of topics we cover:

    The tax deadline this year was extended to  July 15th, 2020, so don’t delay and create an account!

    Continue reading “Non-resident taxes explained for International students (Sprintax Tax Workshop)” »

  • US Guide for International Students

    US guide for international students

    Heading to the US to study? Find out everything you need to know about being an international student in our free US Guide for International Students.
    Continue reading “US Guide for International Students” »