Resident Alien vs Nonresident Alien: The Key Distinction
Your US tax obligation depends on whether you are classified as a resident alien or nonresident alien for tax purposes. This classification is separate from your immigration status.
| Classification | Tax Treatment | Who Qualifies |
|---|---|---|
| Resident Alien | Taxed like a US citizen on worldwide income | Green card holders; those meeting Substantial Presence Test |
| Nonresident Alien | Taxed only on US-source income | Those not meeting SPT; exempt individuals (F-1, J-1 students in exempt period) |
| Dual-Status | Part-year resident, part nonresident | Year of arrival or departure |
The Substantial Presence Test (SPT)
You meet the SPT — and are taxed as a resident alien — if you were present in the US for:
- At least 31 days in the current year, AND
- At least 183 days using the weighted formula: all days in current year + ⅓ of days in prior year + ⅙ of days two years ago
Most H-1B, L-1, TN, and O-1 visa holders working full-time in NYC easily meet the SPT and are taxed as resident aliens — paying federal, NY state, and NYC local tax at the same rates as US citizens. The take-home pay estimates on this site apply to you.
Exempt Individuals: F-1 and J-1 students are "exempt individuals" and their days of presence don't count toward the SPT for a limited period (typically 5 years for F-1, 2 years for J-1). After the exempt period ends, days count normally and they transition to resident alien status.
NY State and NYC Tax for International Workers
Once classified as a resident alien, international workers in NYC owe exactly the same taxes as US citizens:
- Federal income tax: 10%–37% on worldwide income
- NY state income tax: 4%–10.9% on worldwide income
- NYC local income tax: 3.078%–3.876% on worldwide income
- FICA taxes: Social Security 6.2% (up to $176,100) + Medicare 1.45%
At $100,000 salary, an H-1B worker in NYC takes home approximately $70,343 — the same as a US citizen at that income level. At $150,000, take-home is approximately $100,022.
Tax Treaties: Limited But Important
The US has tax treaties with many countries that can reduce withholding on certain types of income (dividends, royalties, pensions) or provide other benefits. However, tax treaties generally do not reduce employment income taxation for H-1B workers — the treaties primarily apply to specific categories of income like scholarships, pensions, or passive income. To claim treaty benefits, file Form 8833 (treaty-based return position disclosure).
F-1 and J-1 students may have treaty benefits that exempt scholarship or fellowship income from US tax. Check the specific treaty for your home country.
FBAR: Foreign Bank Account Reporting
If you are a US resident (including resident aliens) and have a financial interest in or signature authority over foreign bank accounts with an aggregate value exceeding $10,000 at any point during the calendar year, you must file FinCEN Form 114 (FBAR).
- Deadline: April 15, with automatic extension to October 15
- Filing method: Electronic only through BSA E-Filing System (separate from your tax return)
- Penalty for non-willful failure: Up to $10,000 per violation per year
- Penalty for willful failure: Greater of $100,000 or 50% of account balance per violation
FATCA: Form 8938
In addition to FBAR, US residents (including resident aliens) with foreign financial assets exceeding $50,000 (single, residing in US) or $100,000 (MFJ) at year-end — or $75,000/$150,000 at any point during the year — must file Form 8938 with their tax return. FATCA thresholds are higher than FBAR thresholds; some accounts require both forms.
Foreign Income Exclusion: Usually Not Available
The Foreign Earned Income Exclusion (FEIE) — up to $126,500 in 2026 — allows US citizens and resident aliens working abroad to exclude foreign-earned income from US tax. However, this exclusion is only available if you are a bona fide foreign resident or pass the physical presence test (330 days outside the US). H-1B workers living and working in NYC do not qualify — they are US residents earning US-source income.
Social Security Totalization Agreements
The US has totalization agreements with approximately 30 countries to prevent double Social Security taxation. H-1B workers typically pay US Social Security tax. Workers temporarily transferred from certain countries (Canada, UK, Germany, France, Japan, South Korea, and others) under an L-1 visa may be exempt from US Social Security tax if they remain covered by their home country's system. Obtain a Certificate of Coverage from your home country to document the exemption.
ITIN: If you cannot get a Social Security Number (e.g., you are not authorized to work, or are a dependent), you need an Individual Taxpayer Identification Number (ITIN) to file a US tax return. Apply using Form W-7 with your return or in advance at an IRS Taxpayer Assistance Center.
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