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How To File US Taxes for H1B Visa Holders and H4 Visa Family Members

7 MIN READ

Filing out your United States tax return forms is not the most natural thing in the world to do. They are quite in-depth, and if you get any of it wrong, you may end up in trouble with the Internal Revenue Service (IRS), the government body which processes all the tax returns. 

Your tax return problems are more complicated when you are concerned with getting it right for your spouse, children, and any other dependents you may have. However, get the forms correctly and hand them into the IRA appropriately, then you may be entitled to some extra benefits and some peace of mind. 

Related Article | The Finance Dictionary: Learn the jargon your Finance friends speak!

What are H1B Taxes?

H1B taxes are a form of taxation levied on immigrants. The H1B Visa allows migrants into the US in order to work in a professional job. This job will have been specially arranged between the employer and the migrant before they arrive in the country and they are generally in a specialty occupation, which means that they require specific knowledge. Basically, they are covering a skills shortage. 

H1B taxes are slightly different from the normal state and federal taxes, because by holding an H1B Visa it may mean you are not entitled to the same tax deductions that a permanent citizen may be able to claim. It also means that you may have to pay up to 30% - 35% of your income on tax. The US tax code will advise the amount of tax you have to pay.

What Taxes do H1B Visa Holders Pay?

There are various different taxes that, like the rest of the population the H1B Visa holders have to pay including:

  • Social Security - this is generally 6.2% of your total income.

  • Medicare - this is 1.45% of you salary.

  • Federal Income Tax - you will need to pay non-resident income tax and file Form 1040NR-EZ. It works out to anything between 10% - 39.5% of your salary.

  • State Income Tax - this generally works out to 6.5% - 10% of your total income.

Related Article | How Much Will I Pay In Income Tax While Working On An H1B In The US?

What is an H4 Visa?

The H4 Visas are for dependent family members of H1B visa holders. An H4 Visa holder is generally someone who wants to be with the H1B Visa holder while they conduct their employment within the United States. Hence, in the majority of cases, they are family members.  

An H4 Visa holder may go to school and study while they live within the United States, but they are not permitted to undertake any form of paid employment at all. This would be illegal. If they decided that they did, in fact, want to enter into the US workforce, then they would have to change their Visa and residential status.

What About a Social Security Number?

An H4 Visa holder is not provided with a social security number. However, they do need to be registered in the country, so they will be issued a tax ID called an Individual Taxpayer Identification Number or ITIN. You will need an ITIN number when it comes to filing your tax returns legally, and to request any deductions, exemptions, or refunds on the H1B tax return. To request an ITIN for your spouse or dependent, you need to complete Form W7.

Related Article | 5 Essential Things Non-Citizens Need To Know About Social Security

What Tax Benefits Can an H1B Visa Holder Claim?

As a general rule of thumb, an H1B Visa holder can claim for any kind of normal benefit or tax credit that a permanent resident can. However, that by no way means that they will receive them. Here is some extra information about potential benefits.

  • Certain tax exemptions apply - an H1B Visa holder is only allowed to request exemptions on a personal and spousal level if married Filing separately. They cannot request exemptions on dependants, unlike a typical US citizen.

  • There are tax deductions to think about to - H1B citizens will need to complete Schedule-A of Form 1040 in order to request the same itemized deductions as any other citizen. Deductions included are some state and local taxations, certain medical and dental expenses, real estate taxes, any interest or loss through theft you incurred on your mortgage, for example, there are plenty more which you can apply for on the form. Please be aware that you have got to itemize the deductions, otherwise, you run the risk of not being entitled to them when the time comes. Read the small print.

  • There are certain tax credits that you may be entitled to as well. These include child tax credit, education credits, elderly tax credits, disabled people tax credits, earned income credit, foreign tax credits, etc. The sum you receive will be set against your tax liability.  

Related Article | Can I Invest In And Start A Company On An H1B Visa?

What if an H1B Visa Holder's Family Members are Completely Reliant Upon Them? Are there Any Extra Benefits?

There are some more potential benefits for those of you H1B Visa holders who are looking after all your family members and are the only source of income in the household. Single people have significantly fewer obligations, so it makes sense for the US government to make tax filing as a person with dependents more economically viable in terms of benefits, reliefs and tax liabilities. 

  • Tax exemptions - If you already have a personal tax exemption from the government, which reduces your tax liability, you could be entitled to an extra exemption for your spouse, child, or other dependent.

  • Tax deductions - these deductions are calculated in reference to your Filing status. If your spouse is an H4 Visa holder living with you as a dependent and you file as married filing jointly, then you will be entitled to a greater amount of deductions then filing separately or individually.

  • Tax brackets - For every filing status, the tax bracket will change. Look here for more information about how that affects you based on income.

  • Tax benefits for children - You can receive a child tax credit per qualifying child. You may also be eligible for child and dependent care credit and adoption care credit too. The amount of the credit varies per tax year.

Related Article | 8 Ways To Get Extra Income While On An H1B Visa

How to File H1B US Tax Returns for H4 Family Members

It may be extremely advisable to get some help from an accountant in filling out these forms. However, if you wish to do them yourself, you can download the relevant form from the IRS website. Once you have completed the forms you will need to send them back to the IRS for processing. 

Extra Support

The whole process can seem a little overwhelming, so don't be discouraged if you don't understand how to file taxes on an H1B visa at first. It can be especially difficult when you need to file taxes for H4 visa family members as well.

There are many resources available online at the IRS website where you can start your research. You also may be able to find resources at your local public library or through volunteer organizations that could help. If you really want to make sure that your taxes are filed properly and you receive every credit and deduction possible, don't hesitate to reach out to an accountant that can help. Whichever avenue you choose, just make sure to understand what you are doing before filing your tax return this tax season.

Related Article | Top 10 Tax Mistakes Immigrants Make

MYRA provides personal finances for international and multicultural families in the United States. Our services include financial planning, investment management, and tax preparation. 

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