Do H2B Workers Pay Taxes in the United States?

Individuals working in the United States under the H-2B visa program are required to pay U.S. taxes on their earnings. The extent of an H-2B worker’s tax liability depends on their tax residency status. This status, determined by the Internal Revenue Service (IRS), is the primary factor that dictates which taxes apply and how they are filed.

Determining U.S. Tax Residency Status

An H-2B worker’s tax obligations are shaped by their classification as either a “nonresident alien” or a “resident alien.” This status is not based on immigration but on the IRS Substantial Presence Test, which calculates the number of days a person is physically present in the United States over a three-year period.

The test adds the total number of days present in the current year, one-third of the days from the first preceding year, and one-sixth of the days from the second preceding year. If the total is 183 days or more, the individual is considered a U.S. resident alien for tax purposes that year. All days an H-2B worker is present in the U.S. count toward this calculation.

Most H-2B workers do not meet the 183-day threshold in their first year, making them nonresident aliens. However, individuals who return for multiple seasons may accumulate enough days to pass the test in a subsequent year, changing their tax status. This classification dictates which income is taxed and the specific tax forms that must be filed.

Federal Tax Obligations for H-2B Workers

All compensation an H-2B worker earns from U.S. sources is subject to federal income tax. Employers are responsible for withholding this tax from the worker’s pay throughout the year. The amount withheld is determined by the information the worker provides on Form W-4, Employee’s Withholding Certificate.

H-2B workers are subject to Social Security and Medicare taxes, collectively known as FICA taxes. These taxes, which fund social insurance programs, are withheld from employee wages at a combined rate of 7.65%. The employer also pays a matching amount on behalf of the worker.

There are very limited exceptions to this rule. Unless a worker falls under such a narrow exception, they should expect to see FICA deductions on their pay stubs. If a worker believes FICA was withheld in error, they should first discuss it with their employer.

Another component of the federal tax system is the Federal Unemployment Tax Act (FUTA). This tax provides funding for unemployment benefits. FUTA tax is paid exclusively by the employer and is not deducted from an H-2B worker’s wages. The employer calculates this tax based on the worker’s wages.

State and Local Tax Responsibilities

Beyond federal requirements, H-2B workers are also subject to state and, in some cases, local tax laws, as each state has its own tax system. Most states impose an income tax on wages earned within their borders, meaning an H-2B worker will likely need to pay state income tax in the state of their employment.

The process for state income tax is similar to the federal system, with employers withholding the tax from the worker’s pay based on state-specific forms. A small number of states do not have a personal income tax.

States also have their own unemployment tax systems, often called State Unemployment Tax Act (SUTA). Like FUTA, SUTA is an employer-paid tax. The funds support state-administered unemployment insurance programs and the tax is not deducted from a worker’s wages.

Filing a U.S. Tax Return

At the end of the tax year, H-2B workers must file a tax return to reconcile their tax liability with the amount withheld. The most important document is Form W-2, Wage and Tax Statement, which they receive from their employer by January 31. This form details total earnings and the amount of federal and state taxes withheld. Workers also need their passport, visa information, and a U.S. taxpayer identification number.

Some workers may have a Social Security Number (SSN), while others who are not eligible must apply for an Individual Taxpayer Identification Number (ITIN) from the IRS. The choice of the main tax form depends on the residency status. Nonresident aliens must file Form 1040-NR, U.S. Nonresident Alien Income Tax Return, while resident aliens file the standard Form 1040, U.S. Individual Income Tax Return.

The deadline for filing a tax return is April 15 of the following year. Workers can submit returns by mail or use an IRS-authorized e-file provider. Filing the correct form is important, as using Form 1040 instead of Form 1040-NR can lead to complications.

The United States maintains tax treaties with many foreign countries to prevent double taxation. These treaties can offer reduced tax rates on certain types of income. H-2B workers should check if a treaty exists between the U.S. and their home country to claim benefits when filing their tax return.