H1, L1 Visa Holder Special Tax Situation

Does H1, L1 Tax Situation require Special Treatment? Can H1, L1 visa worker tax situation be treated like ordinary Tax Payers filing 1040 Tax Return or does it require any special treatment? Most of the popular tax software and tax consultants may treat H1, L1 tax returns no different than ordinary US citizen Tax Returns. However, IRS regulation allows for special treatment in case of temporary workers in the US. There are specific guidelines in the IRS code to determine the tax status as well as calculate deductions based on special conditions due to temporary work status. Since H1, L1 tax payers account for less than 1% of all Tax Payers, most popular tax software and tax consultants may not pay specific attention to the regulations that govern US temporary worker taxes. Perhaps it is not cost effective for the big tax software companies to invest in programming code that covers H1, L1 special tax situation.

Often H1, L1 tax payers are surprised when they find out the benefits offered in the tax code, especially during the initial year of their assignments in the US. Unfortunately, most of them miss out on these benefits without the help of a qualified tax professional that focuses on H1, L1 related tax issues.

H1, L1 Visa Workers may be considered US Resident for Tax Purposes

Most H1, L1 consultants may be waiting for years for their US resident card (Green Card), but IRS may already consider them as US Resident for tax purposes. The first tax distinction IRS makes is between a Non Resident Alien and a Resident Alien from a tax code perspective.

IRS has specific guidelines to determine Resident Status for tax purposes through the ‘Substantial Presence Test'. Once it is established that you are a US Resident (for tax purposes only, your immigration status may still be H1, L1 or other temporary work visa), you are subject to US taxes on your global income, including income in your home country. Incomes from different sources such as passive investment income as opposed to active income through a job are also treated differently.


Krutika is the founder of K&M Accounting and Tax Services L.L.C. She comes from a family of accountants and is a fourth generation Accountant. Krutika provides direct leadership and consultation to Small Business clients. Prior to starting KM Accountant, Krutika worked in multiple positions for 12 years in the US and India with public accounting, tax consulting, retail and educ...

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Have a question for Krutika?

7th June 2014 2:46pm
I relocated to USA on 1st March 2014 on L1B visa and since then i am on pay roll of my USA office.
My doubts -
1. Do i need to declare the salary earned in March 2013 in my India ITR given that already tax is deducted by US employer on it ?
2. While filling the income tax report in the end of year 2014. Do i need to report the indian salary earned in Jan & Feb 2013?

Please clarify these. Thanks in advance.

Paul Davidson
4th December 2014 5:52pm
Great article. Thanks for the info, you made it easy to understand. BTW, if anyone needs to fill out a IRS form 1040, I found a blank form in this link http ://goo.gl/z4f46Q. This site PDFfiller also has some tutorials how to fill it out and a few related tax forms that you might find useful.

19th March 2015 7:40pm
I'm a canadian citizen and resident with a US L1B visa. I work part time in Canada and part time in the US and currently make my home in Canada. I file both canadian and US taxes but have always been under 183 days in the US annually and am still a tax resident of Canada. However, I'm considering moving to the US for the cheaper cost of living. Is there any benefit/downside to living in one country over the other for tax purposes?

25th March 2015 12:22am
I am in US on L1 visa since Jun 22, 2014. I am paid by my US employer. Do I need to show my India income from 1st Jan to 22 Jun in the US tax filing?

22nd June 2015 7:39pm
Hi G'day
I am planning to relocate to USA from Australia on L1A/L1B . Since Australia and USA have a tax agreement on double taxation. Pls advise the tax implications on my real estate investment in Australia and transferring my savings to USA.


Nimesh Goswami
28th January 2016 11:08am

I moved in USA in Feb-2015 with my wife. My son is with my parents in India. Every month I have to send some money to India for my family. Is it possible to consider my son as a my dependent?
How can get the best refund for IRS?
What is the best way to file tax?

29th April 2016 12:36pm

Can I know how much you charge for tax consultation? Also do you have office in New jersey.

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