If you hold a visa from the United States of America, you may be subject to US tax reporting. Non-compliance with theses obligations could result in jeopardizing the visa you worked so hard to obtain. In this article, your obligations as a US visa holder as well as the elections you can make to obtain favorable tax treatment.
The Visa Waiver Program (VWP): Staying in the US without a visa
The VWP was adopted in 1986 and allows nationals of certain countries to stay in the US for up to 90 days. To obtain a VWP, you must apply for an authorization before your departure (Electronic System for Travel Authorization - ESTA ). Under this program, you are NOT entitled to work. If you receive US income during these 90 days (for example investment income or rental income) you will have to report your income to the US tax authorities (IRS).
For more information on VWP: https://travel.state.gov/content/travel/en/us-visas/tourism-visit/visa-waiver-program.html
Types of US visas
There are 2 types of US visas. The first one, the non-immigrant visa, is a temporary stay visa and is issued to individuals who will be present in the US for a limited time for a specific purpose – such as for tourism, business, or study. Non-immigrant visas include the B, E, F, J, M, Q visas discussed below. For more information on non-immigrant visas: https://travel.state.gov/content/travel/en/us-visas/visa-information-resources/all-visa-categories.html
The second category, the immigrant visa is a permanent stay visa and is issued to individuals who wish to reside in the US permanently. These includes for example the green card. For more information on the green card: https://www.kbfinancials.biz/la-carte-verte-am-ricaine--us-green-card-.html
Visas B1 / B2
With this type of visa, you can remain in the US temporarily for a maximum of 6 months. Under this visa, you are NOT entitled to work. In addition, under this visa you will have to file a US tax return if you exceed the 183 days in the US over 3 years (Substantial presence test rule). For more information on the 183 days test: https://www.kbfinancials.biz/s-jours-aux-etats-unis---la-r-gle-des-183-jours.html
In some situations, you may be able to request an exemption of having to file a tax return (closer connection election). For more information on the closer connection request: https://www.irs.gov/pub/irs-pdf/f8840.pdf
Investor visas E1 / E2
E visas are issued to nationals of a country with which the US has a trade treaty. The E1 visa is granted to individuals from a US subsidiary of a foreign company. The E2 visa is granted to individuals who make a substantial investment in the US (setting up a business). If you hold a E1 / E2 visa , you will be considered a U.S. tax resident and you will be required to file a US tax return reporting your worldwide income (Form 1040 and Schedules ) as well as a your foreign bank accounts (Form fincen114).
For more information on foreign accounts: https://www.kbfinancials.biz/report-your-foreign-assets.html
Investor visa EB5
The EB5 visa allows investors to acquire a conditional permanent residence ( Green card) if they creates US jobs and invest a significant amount ($ 1 million) in a company located in a disadvantaged region of US ( Regional Centers ). Once you obtain your conditional green card, you will be considered a U.S. tax resident and you will be required to file a US tax return reporting your worldwide income (Form 1040 and Schedules ) as well as a your foreign bank accounts (Form fincen114).
For more information on the EB5 visa - https://www.uscis.gov/eb-5
Student visas F, J, M, Q
Student visas are of several categories and include: F1 (foreign academic student), M1 (foreign vocational student), J1 (international exchange visitors), and Q (cultural exchange student). These visas are issued for the period necessary for the completion of the studies and offer many advantages:
1/ you CAN work in the US under limited conditions and after obtaining the permit from the administration (USCIS)
2/ You are exempt from the 183 days test (SPT) for a period of 5 years
3/ your income is exempt from social security contributions (FICA)
4/ you are considered a US Non-resident for the first 5 calendar years in the US
To benefit from all these advantages, you must make timely filings (forms 1040NR / form 8843 / form 8833 as applicable) each year– regardless of whether you earned income.
For more information on student visas: https://www.ice.gov/sevis
For assistance in identifying the US tax reporting that applies to your type of visa, contact Karine Bauer, EA. As always, the views contained in this article are not tax or legal advice and are not a substitute for consulting with a tax professional. Karine Bauer, EA is an IRS Enrolled Agent licensed by the Treasury Department with unlimited rights to represent taxpayers before the Internal Revenue Service. Karine is also a Quickbooks Pro-Advisor and a member of the Association of Chartered and Certified Accountants (ACCA). She is an experienced tax professional with more than 20 years of international experience.
Bear in mind the date of this article as tax laws change over time
Updated on October 16th, 2021