H-1B visa dependents
Spouses and unmarried children under 21 can get an H-4 visa to enter the US with an H-1B visa holder. The H-4 visa holder can stay in the US as long as the H-1B is in effect. An individual with an H-4 visa can attend school, get a driver’s license, and open a bank account. As of May 26, 2015, certain H-4 visa holders can become “lawful permanent residents” (LPR) and become eligible to work.
In August 2020, the Trump administration passed an executive order that revoked H-4 visa opportunities, stripping away work authorization from spouses of H-1B visa holders. The move left families, who were often living in high cost of living areas such as Silicon Valley, dependent on a single income. However, President Biden overturned the order on his first day in office, allowing dependents of H-1B visa holders to continue working in the US. Biden’s proposed immigration reform also included measures to ensure that those already holding H-1B visas will gain permanent work authorization for dependents and that their children will not be aged out of the system. With Trump back in office, he has not moved to strip away H-4 visa opportunities, but immigration experts warn it could be on the horizon.
H-1B visa holder taxation
H-1B visa holders have to obtain an Individual Taxpayer Identification Number and pay US taxes, Social Security, and Medicare. However, the rules can get very complicated depending on whether the H-1B visa holder is categorized as a resident alien or a non-resident alien. At a summary level, the IRS uses the “substantial presence test” to classify each H-1B holder.
Substantial presence is a function of the number of days an individual has spent in the US during the current tax year along with the prior three tax years. Individuals who fall above the threshold are deemed resident aliens and are taxed on all income, including non-US income. Individuals who fall below the threshold are considered non-resident aliens and are only taxed on US income. There are many rules and exemptions, so it’s recommended that H-1B visa holders consult a tax specialist.
