US visas & their tax obligations

If you hold a visa from the United States of America, you may be subject to US tax reporting. Non-compliance with US tax may result in jeopardizing the visa you worked so hard to obtain. In this article, you will find tips on minimizing your US tax liability / filing as well as the comparison table of the US visas.

Main categories of US visas

1/ The US Green card= is a permanent stay visa and is issued to individuals who wish to reside in the US permanently. For more information on the green card:

2/ The B1 / B2 visa = is issued to individuals who wish to remain in the US temporarily for a maximum of 6 months. The B1 visa is issued for business purpose -such as negotiating a contract or attending business meetings in the US.  The B2 visa is issued for personal needs  – such as visiting family or receiving medical treatment.

3/ E2 visa = is granted to individuals who engage in substantial trade and develop and direct the operations of an enterprise in which they have invested a substantial amount of capital (such as in the hospitality or tourism industry).

4/ EB-5 visa = allows investors to acquire a conditional permanent residence (Green card) if they create US jobs and invest a significant amount ($1 million) in a company located in a disadvantaged region of US (Regional Centers).  

5/ F1 visa = is a student visa issued for the period necessary the complete the studies. To benefit from the tax exemption (see comparison table below), the visa holder must be studying at an academic institution or vocational school. If the student earns wages, the work performed must be allowed by the U.S. Citizenship and Immigration Services (USCIS).

6/ J visa = is a nonimmigrant visa for individuals approved to participate in exchange visitor programs – such as alien physicians, au pairs, short-term scholars, and summer camp workers.

7/ L visa = is a temporary worker visa for individuals who wish to work at a US branch, parent, or subsidiary of their current overseas employer.  The visa holder must have been employed by the same employer overseas for 1 year within the 3 preceding years.

8/ O1 visa = is issued to individuals with extraordinary ability in the sciences, arts, education, business, or athletics, or who haves a demonstrated extraordinary achievements in the motion picture or television industry and have been recognized nationally or internationally for those achievements.

US tax obligations of US visa holders

(1) FICA taxes

In the US, federal payroll taxes from the Federal Insurance Contributions Act (FICA) are deducted from the employee’s paycheck. They represent 6.2% of wages (Social Security tax) and 1.45% of wages (Medicare tax). If you hold a US visa you may be subject to FICA taxes (see below comparison table).

(2)  Filing a US tax return

If you hold a US visa you may be subject to US tax filings (see below comparison table). To obtain a favorable tax treatment, you may invoke a tax treaty provision by filing additional schedules with your US tax return.
To know more about tax treaties: CLICK HERE

(3) Substantial Presence Test (SPT)

IF you hold a US visa, you may be subject to US taxes if you exceed 183 days in the US over 3 years (see comparison table below).  In some situations, to reduce any potential tax liability or US filing requirements, you may be able to request an exemption to the SPT rule (closer connection election).  

Comparison : US visas & their tax obligations

Visas   Category    US Income TaxUS FICA tax (1)US tax filings (2)
Green cardPermanent residentYesYesYes
B1/B2Touristn/an/aYes if SPT (3)
E2Treaty tradeYesYesYes if SPT (3)
F-1StudentExempt up to 5 years if meets conditionExempt if meets conditionYes
JExchange visitorExempt up to 2 years if meets conditionNoYes
LIntra-company transferYesYesYes if SPT(3)
O-1Extraordinary talentYesYesYes if SPT (3)

Bear in mind the date of this article as tax laws change over time

For assistance with your international tax needs, please contact Karine Bauer, EA, JD – HERE.

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Updated on October 21st, 2022