If I Work in the US With an H1B Visa, Do I Have to Pay US Taxes?

One of the more confusing parts of working in the US with an H1B visa is the issue of taxes.  The US tax code is fairly stringent for anyone that earns an income inside the country (and even more so for US citizens who have to pay tax on income worldwide).  Certain types of withholding and tax payments are required for most H1B visa specialty occupation positions, and this should be taken into consideration when negotiating a salary.

Note: The following information is general in nature, and should not be relied to make your tax decisions.  It is a good idea if you secure an H1B position to find a tax advisor who is experienced in the nuance of alien taxation.

Social Security and Medicare

In general, all foreign nationals employed by a US company will have to pay the employee portion of both social security and Medicare contributions.  These are basically pension and healthcare provisions for retirement that everyone that works in the US must pay.

Your portion of Social Security is 6.2% and Medicare is 1.45% of gross salary, and the employer contributes the same amounts.  That may seem unfair if you wont be in the US after retirement to receive the benefit of the payments, but many countries have the same scheme in place of withholding on foreign workers.  It is just a reality of working in foreign countries.

In some cases, you can receive Social Security benefits even if you leave the US, but this depends on a number of factors including any tax treaty the US has with your home country.

Federal Income Tax

If you are a non-resident and working under an H1B visa, you will be subject to the non-resident income tax system.  This means that you are only taxed on money that you make inside the US, at the same rate as US citizens.  You will have file a US tax return (Form 1040NR), and do not have access to the same deductions as citizens (such as the standard deduction or ability to itemize deductions).   

If you become a resident (or elect to be taxed like one) you would have access to the full range of deductions, but would also pay US tax on any income earned outside the US.  Your tax advisor can tell you which choice is best for your situation.

The US tax rate for individual ranges from 10% to 39.6% depending on your income level.  Most unmarried H1B workers will pay a rate of 25-28% on taxable income (the amount after exemptions) based on average H1B occupation wage levels.  

State Income Tax

Another tax that is often not anticipated is state tax, and depends on the state where you work.  Only a few states do not have any income tax, and some states such as California (where many H1B IT positions are located) can add as much as an additional tax of 6.5-10 % of taxable income.

Other Payments

Healthcare contributions may be required by your employer if you avail yourself of their group plan.  Under Obamacare, having health insurance is a requirement, but this could be changing soon given the new administration in the US.  In any case, due to the high cost of healthcare in the US, it is prudent to have some type of plan to give you basic coverage.

As you can see, your US tax obligations can reduce your take home pay by as much as 30-35% when you factor in all of the payments.  Still, the US has one of the lowest tax rates of all developed economies, and while living here you do have the use of tax-supported services and infrastructure.

,
  • February 1st, 2017
  • 20

20 thoughts on “If I Work in the US With an H1B Visa, Do I Have to Pay US Taxes?”

  1. Good Morning ll,
    My Advice is Everybody Have to pay US Taxes weather you have an H1B VISA or NOT .
    Note:- Declaration of Taxes is According to The Country Rules and Regulations .Deduction will occurs when money exceeds the Limits of cash Deposits in The Bank Account . Thank you

    your`s sincerely ,
    Thomas wilson
    US Attorney Advisor

  2. My advice would be to not listen to Thomas Wilson and hire a well trained and certified payroll professional to manage your Payroll Dept. Taxes should be withheld only if they’re required so the solution would not be to just withhold to make life simpler for you. Do what’s right for everyone and what’s required by law. Calculate wages based on the earnings type, W-4 elections, and national status.

  3. What happens when I leave the country permanently when my H1B extension is rejected? Can I recoup the paid social security and medicare taxes?

  4. Hello
    I was on F1 and recently changed to H1b.
    I am married and 3 children. For last 3 + years I filed as Single, can I file not Married and claim also my children for the tax deduction purpose

  5. Hey this is kind of of off topic but I was wanting to know if blogs use WYSIWYG editors or if you have to manually code with HTML. I’m starting a blog soon but have no coding knowledge so I wanted to get guidance from someone with experience. Any help would be enormously appreciated!

  6. whoah this blog is magnificent i really like studying your articles. Stay up the good work! You realize, lots of individuals are hunting round for this info, you could aid them greatly.

  7. What’s up, I would like to subscribe for this webpage to take most up-to-date updates, thus where can i do it please assist.

  8. I must thank you for the efforts you have put in penning this website. I really hope to view the same high-grade content by you later on as well. In truth, your creative writing abilities has inspired me to get my own, personal website now 😉

  9. Everything is very open with a precise explanation of the issues. It was truly informative. Your website is very useful. Many thanks for sharing!

  10. Having read this I believed it was very enlightening. I appreciate you taking the time and energy to put this article together. I once again find myself spending a lot of time both reading and leaving comments. But so what, it was still worthwhile!

  11. This is the perfect webpage for everyone who wants to understand this topic. You understand a whole lot its almost tough to argue with you (not that I personally will need to…HaHa). You definitely put a brand new spin on a topic that’s been discussed for ages. Wonderful stuff, just great!

  12. Have you ever thought about creating an e-book or guest authoring on other websites? I have a blog based upon on the same subjects you discuss and would love to have you share some stories/information. I know my visitors would appreciate your work. If you are even remotely interested, feel free to shoot me an e-mail.

  13. That is a good tip particularly to those new to the blogosphere. Simple but very accurate info… Thanks for sharing this one. A must read post!

  14. What’s up mates, how is all, and what you wish for to say on the topic of this piece of writing, in my view its truly awesome for me.

  15. You actually make it appear really easy together with your presentation however I find this topic to be really one thing that I think I’d never understand. It kind of feels too complex and very large for me. I’m looking ahead for your subsequent submit, I will attempt to get the hold of it!

  16. Thanks for finally writing about >If I Work in the US With an H1B Visa, Do I Have to Pay US Taxes? <Liked it!

  17. Hi there, yes this article is genuinely good and I have learned lot of things from it regarding blogging. thanks.

  18. bận muốn xây dựng nhà trọ Mẫu Biệt Thự 2 Tầng 3 Phòng Ngủ 4 Phòng Tắm 2018: Công ty xây dựng Nguyên xin giới thiệu mẫu Biệt thự phong cách ngôi nhà hai tầng , sơn bên ngoài với màu sắc kem……. quy trình xây nhà tiết kiệm chi phí Mẫu Nhà 2 Tầng 3 Phòng Ngủ Phong Cách Nhiệt Đới: Căn nhà 2 tầng theo phong cách nhiệt đới. Kết hợp với hiện đại và đầy màu sắc. Được trang trí đẹp mắt từng chi tiết. Để không lãng phí thời gian, Công ty xây dựng Nguyên xin mời các bạn ……Công ty xây dưng Mẫu Biệt Thự 2 Tầng Hiện Đại 3 Phòng Ngủ 3 Phòng Tắm: Công ty xây dựng Nguyên xin gỡi đến các bạn mẫu Thiết kế của ngôi nhà 2 tầng cho cảm giác nhẹ nhàng và ấm cúng, không giống như các dự án căn nhà điển hình khác. Mẫu Biệt ………. . trên toàn quốc việt nam Mẫu Nhà 2 Tầng 3 Phòng Ngủ 3 Phòng Tắm 2018: Công ty xây dựng Nguyên xin giới thiệu đến các bạn ngôi nhà 2 tầng có hình dáng độc đáo, đó là một ngôi nhà 3 phòng ngủ, 3 phòng tắm với chỗ đỗ xe. Thiết kế nội thất nhấn mạnh …..công ty thi công xây dựng

Leave a Reply

Your email address will not be published. Required fields are marked *