Exclusively applied to nonagricultural temporary jobs, the H-2B program involves a multi-agency effort to ensure adequate working conditions and fair wages for foreign workers. Are H-2B visa workers required to pay US taxes? Keep reading to find out.
Do H-2B Visa Workers Pay Taxes? – The Verdict
Like any nonimmigrant or immigrant workers admitted to the United States, H-2B visa holders must pay US taxes. The worker’s income is subject to a federal income tax, and it may be subject to state taxes depending on the state where he or she lives.
Currently, nine states do not have any tax-filing requirements for H-2B workers. These states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Please note that New Hampshire and Tennessee have taxes applied to investment income, not earned income.
Must H-2B Workers File Tax Returns If They Are Not US Residents?
When filing the required tax returns, H-2B workers must identify their residence status for tax purposes and file the correct forms with IRS.
A common tax error incurred by many nonresident H-2B workers is to file as US residents on their tax documents. When a foreign worker has permanent resident status in the United States, he or she must file Form 1040 (US Individual Income Tax Return).
Under the H-2B nonimmigrant classification, workers have no permanent residence in the United States. In such cases, they are required to file Form 1040NR (US Nonresident Alien Income Tax Return).
Many H-2B nonresidents accidentally file Form 1040, which may result in future complications involving an adjustment of status or a green card application.
If a temporary worker files Form 1040, it is possible to fix the situation by filing an amended tax return. Foreign nationals who ignore the mistake may be subject to IRS fines and penalties.
Are There Legal Consequences for H-2B Temporary Workers Who Fail to File Tax Returns?
The best approach is to consult with an experienced attorney to handle one’s tax affairs and have them in order before the IRS tax deadline. If an H-2B worker decides not to file any tax returns, it may result in penalties and fines from the IRS.
The late filing penalty applied by the IRS is generally 5% of the unpaid taxes for each month that is late (not exceeding 25% of the worker’s unpaid taxes). IRS applies the penalty for the entire period counting from the day after the tax filing due date.
If the H-2B worker files the tax return more than 60 days after the due date or extended due date, the minimum penalty may increase exponentially. In severe cases, it may go up to $210 or 100% of the unpaid taxes (whichever is less).
Is it Possible to Apply for Tax Exemptions as an H-2B Temporary Worker?
The United States has tax treaties with more than 65 countries worldwide. If an H-2B is a national of one of these countries, it is possible to apply for a partial or complete exemption from US taxes. These arrangements also help H-2B workers to minimize double taxation.