Filing US Taxes on H-1B

A practical guide to U.S. tax filing obligations and opportunities for H-1B visa holders.

Overview

H-1B workers are considered temporary workers for immigration purposes but often quickly become Resident Aliens for tax purposes after passing the Substantial Presence Test. This means worldwide income — including income from India — is subject to U.S. taxation.

For Indians Moving From India

If you arrive mid-year on an H-1B, you may be a Dual-Status Alien for your first tax year — an NRA for the part of the year before you arrived and an RA for the part after. This is one of the most complex individual tax scenarios and generally warrants professional help.

For Indians Already in the US

Once you are a full-year Resident Alien, you file Form 1040. You must declare global income including Indian rental properties, bank interest, mutual fund gains, and any income earned before your U.S. employment began that same year.

Key Information

FICA taxes (Social Security and Medicare) are fully withheld for H-1B workers — unlike F-1 OPT students. You must report foreign mutual funds as Passive Foreign Investment Companies (PFICs), which carry extremely complex reporting and potentially punitive tax treatment.

Requirements

Form W-2 from your employer, 1099 forms for U.S. bank interest or investments, and statements from Indian financial institutions if you have foreign income to declare.

Common Mistakes

Failing to report Indian mutual funds held after becoming a Resident Alien. The PFIC rules are punitive and complex. Also, failing to declare Indian bank account interest because it seems trivial — all foreign income must be reported.

Practical Tips

Simplify your Indian investments before becoming a U.S. Resident Alien to avoid the PFIC trap. Work with a CPA experienced in cross-border U.S.-India tax matters each year.