H1b Tax Filing

Filing US Taxes as an Indian H1B Visa Holder

Residing in the United States on a work visa has its difficulties, and negotiating the legal system can be challenging, mainly when filing taxes. Visa holders have to pay tax for all money earned in the US. However, when it comes to claiming tax deductions, things turn out to be more complicated. Experienced service providers like Techfetch H1B will be able to provide a detailed idea about the H1B tax filing procedures. Keep reading to know more about it in the article below.

Category of People Subjected to US Taxes

You fit the definition of "alien" if you are a highly trained professional with a background in STEM. If you have an H1B visa and are sponsored by a company, you must pay taxes just like every resident in the US.

However, it is not that easy. The IRS uses an additional standard of being physically present in the nation to decide whether a working migrant must file taxes to be designated a US resident for tax purposes. The SPT is used to assess eligibility.

In order to qualify for the exam, a person must have resided in the United States for a minimum of:

One hundred eighty-three days in total throughout two years prior to the present year or thirty-one days of the present year.

To be more precise, this calculation must consider all the days of the present year, with 1/3rd of the total number of days of the previous year and 1/6th of the total number of days of the two years before the present year.

Let's use the fictional case of an engineer who immigrated to the United States in 2019 as a demonstration.

The engineer must count 180 days to the present year, sixty days to 2020 (13), and thirty days to 2019 (16) since he was physically present in the United States for 180 days during 2019- 2021. The engineer has been physically present in the United States for 270 days, which is greater than the number needed to be considered a resident.

Some rules specify what constitutes an attendance day. The IRS website has more information on this.

An Explanation of the Types of Taxes

Depending on their income levels and correct deductions, H1B filers will lose 20% to 40% of income in local, federal, and state taxes. These taxes consist of:

Federal Income Taxes

Being an H1B holder, your taxes are determined by specific brackets that change based on your income. H1B non-residents are not eligible for the same tax deductions as US residents and citizens, even though the tax values are the same for both groups.

Social Security and Medicare (FICA)

About 8% of the salary will go to Social Security (6.2%) and Medicare (1.45%), with each contribution matched by the employer. Furthermore, employers are responsible for paying the same denomination to the IRS, which provides pension funds.

Federal taxes

The tax can range between zero to ten per cent of your income, depending on the state in which you reside. A few states require companies to withhold about seven per cent of employee wages to pay taxes, while states like Washington, Texas and Nevada do not impose additional fees.

Internal Income Tax

Towns and localities can impose additional taxes, just like state income tax, and employers can deduct approximately four per cent of the income.

All About Tax Advantages & H1B Tax Filing

H1B holders are not entitled to the same credits, advantages, and exemptions as citizens and permanent residents.

Depending on your marital status and particular laws, you will be entitled to various itemized deductions and exemptions.

Creating the necessary documentation to file H1B tax requires the following materials:

  • A photo ID.

  • The number assigned as personal identification.

  • Valid wage records and income statements (Form 1099-R, W-2, 1099-Misc, W-2G).

  • Bills for necessary deductions.

  • Documents for married persons that relate to dependency, relocation and name changes.

Steps to File Tax for H1B Visa Holders

  1. First, determine eligibility. Take SPT and confirm that you have spent the required days in the US.

  2. It usually takes a long time to gather and organize the documents. So, to avoid the last-minute frenzy and ensure a smooth tax filing procedure, ensure everything is prepared. Naturally, this requires meeting deadlines and being ready months in advance.

Taxes can be unnerving at best and intimidating at worst. Technical knowledge of competent specialists is necessary to obtain the best possible results.

The Takeaway

If you know everything about how to file taxes being an Indian H1B visa holder, life will be easy for you in the United States. However, if you have further doubts regarding the H1B tax filing procedures, get support from Techfetch H1B.


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