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H-1B Guide 14 min read

H-1B tax residency and FBAR: the rules for H-1B workers and green card holders

As of October 21, 2026, an H-1B worker is a US tax resident once they meet the IRS substantial presence test, and a green card holder is a resident under the green card test. Residents are taxed on worldwide income and, if their foreign accounts total more than $10,000 at any point in the year, must file an FBAR with FinCEN.

Mahaprasad Nanda Mahaprasad Nanda Published October 21, 2026
US tax forms with a calculator and pen on a desk, representing tax residency and FBAR rules for H-1B workers and green card holders

As of October 21, 2026, H-1B tax residency is decided by the IRS substantial presence test, which counts days, not visa type: an H-1B worker generally becomes a US tax resident once they have been in the country long enough in a calendar year (IRS, Taxation of H-1B aliens). A green card holder is a resident under a separate green card test (IRS, Green card test). Residents are taxed on worldwide income, the same as US citizens (IRS, Taxation of resident aliens), and a resident whose foreign accounts total more than $10,000 at any time in the year must file an FBAR (FinCEN, Report Foreign Bank and Financial Accounts).

This guide covers the residency tests, the arrival and green card years, and foreign account reporting. It is general information, not tax advice: confirm your position with a qualified tax professional before you file.

Key facts
  • You meet the substantial presence test with 31 days in the US this year and 183 weighted days over three years: this year's days, plus one third of last year's, plus one sixth of the year before.
  • H-1B days cannot be excluded as exempt-individual days, so every day in the US counts; F-1 and J-1 student days generally do not.
  • A green card holder is a US tax resident from the first day in the US as a permanent resident until the status is surrendered in writing or terminated.
  • The year you arrive or leave is often a dual-status year, with separate rules for the resident and nonresident parts of the year.
  • A US person whose foreign accounts total more than $10,000 at any time in the year must file FinCEN Form 114 (FBAR), due April 15 with an automatic extension to October 15.
  • Form 8938 is separate from the FBAR: for unmarried residents living in the US, it applies above $50,000 at year end or $75,000 at any time.
  • Since January 1, 2026, a 1% federal excise tax applies to cash-funded remittance transfers; transfers from a bank account or a US-issued debit or credit card are excluded.

How is H-1B tax residency decided?

You meet the test for a calendar year if you are physically present in the US on at least 31 days that year and 183 days over three years, counting all of this year's days, one third of last year's and one sixth of the year before (IRS, Substantial presence test). Any part of a day in the US counts as a day (IRS, Taxation of H-1B aliens).

Unlike students, H-1B workers cannot exclude any days:

"However, the rules allowing an “exempt individual” to exclude U.S. days of presence do not apply to H-1B aliens." IRS, Taxation of alien individuals by immigration status: H-1B (updated September 15, 2026)

In the IRS's example, an H-1B worker who arrives by July 2 and stays through December 31 meets the test in the first year; one who arrives on July 3 has 182 days and does not (IRS, Taxation of H-1B aliens).

Former students start the count later. Students on F, J, M or Q visas who substantially comply with their visa are exempt individuals whose days do not count, and they must file Form 8843 to exclude them (IRS, Substantial presence test). That exemption generally ends once a student has been exempt for any part of more than five calendar years (IRS, Exempt individual who is a student). A student moving from OPT to H-1B therefore often starts counting days on the H-1B start date; our guide to the H-1B cap-gap extension covers that transition. The F-1 exemption from Social Security and Medicare taxes also stops applying once a student changes to a status that is not exempt or becomes a resident alien (IRS, Social Security taxes for aliens). An H-1B worker paid for services performed in the US is liable for Social Security and Medicare taxes on those wages (IRS, Taxation of H-1B aliens).

What happens in the year you arrive?

The arrival year is often a dual-status year, with different rules for the nonresident and resident parts (IRS, Taxation of dual-status individuals). For the resident part you are taxed on income from all sources; for the nonresident part, generally only on US-source income. A dual-status filer cannot take the standard deduction or file jointly, unless they make one of the two marriage-based elections below (IRS, Taxation of dual-status individuals).

Three choices can change the picture:

  • First-year choice. If you miss the test this year but meet it next year, you can choose to be a resident from the start of a period of at least 31 consecutive days in the US, provided you were present on at least 75% of the days from then to December 31 (IRS, Residency starting and ending dates). You cannot file the return making this choice until you have met the test for the following year, and Publication 519 explains how to extend the filing date while you wait (IRS Publication 519).
  • Full-year resident election for married couples. A dual-status person who is married at year end to a US citizen or resident, and was a nonresident at the start of the year, can choose with their spouse to be treated as a resident for the whole year and file jointly. Single people cannot make this choice, and each person can make it only once (IRS Publication 519).
  • Nonresident spouse treated as resident. Where one spouse is a resident and the other is not, the couple can elect to treat the nonresident spouse as a resident. Both must then report worldwide income every year until the choice is ended or suspended (IRS, Nonresident spouse), and once it is ended, neither spouse can make it again in any later year (IRS Publication 519).

Can you still claim a closer connection to your home country?

Someone who meets the test with fewer than 183 days in the year can sometimes be treated as a nonresident by showing a closer connection to a foreign country where they keep a tax home, using Form 8840 (IRS, Closer connection exception). For green card applicants, this door closes early. The IRS says you cannot claim it if you took steps toward permanent residence during the year or had an adjustment application pending, and it lists Form I-140, Form I-130, Form I-485 and labor certification filings as indications of that intent (IRS, Closer connection exception).

Tax treaties are a separate route. An H-1B worker who claims home-country residence under a treaty tie-breaker files Form 8833 and is treated as a nonresident for computing income tax, but still as a resident for other purposes, including certain information reporting (IRS, Taxation of H-1B aliens).

Does getting a green card change your tax status?

It makes you a resident under a test that does not depend on days:

"You are a resident, for U.S. federal tax purposes, if you are a lawful permanent resident of the United States at any time during the calendar year." IRS, Alien residency: green card test (updated February 7, 2026)

For an H-1B worker already resident under the substantial presence test, approval changes little: if you were a resident for any part of the previous year, you are treated as a resident from January 1 (IRS, Residency starting and ending dates). The green card year matters more if you were a nonresident before. Your residency starting date under the green card test is your first day in the US as a permanent resident; if you receive the green card abroad, it is your first day in the US after receiving it (IRS, Residency starting and ending dates). Our guides to adjustment of status and the H-1B to green card timeline cover when approval tends to arrive.

Residency then continues until you voluntarily surrender the status in writing to USCIS or it is administratively or judicially terminated (IRS, Green card test). Publication 519 adds that you remain a resident alien for tax purposes until you have proof USCIS received your abandonment letter (IRS Publication 519).

The tax and immigration rules also run the other way:

"Under U.S. immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status." IRS Publication 519 (for 2025 returns)

USCIS lists declaring yourself a "nonimmigrant" on your US tax returns as one way of abandoning permanent residence (USCIS, Maintaining permanent residence). In naturalization, claiming nonresident status for a tax exemption can raise a rebuttable presumption of abandonment (USCIS Policy Manual, Vol. 12, Part D, Ch. 3), and failing to file required returns may prevent an applicant from showing good moral character (USCIS Policy Manual, Vol. 12, Part F, Ch. 5). See our posts on naturalization after an employment green card and reentry permits for long trips.

Who has to file an FBAR, and how is it different from Form 8938?

For FBAR purposes, a "United States person" includes a resident alien as defined in the tax code's residency rules (31 CFR 1010.350(b)). FinCEN states the rule this way:

"A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year." FinCEN, Report Foreign Bank and Financial Accounts

The test is the combined balance across accounts, so two accounts holding $6,000 each at the same time ($12,000 combined) are both reportable (IRS, Comparison of Form 8938 and FBAR requirements). Each joint owner reports the entire value of a jointly held account (FinCEN, Reporting jointly held accounts), which matters for an account held with a parent. Maximum values are converted at the Treasury rate for the last day of the calendar year (FinCEN, Reporting maximum account value). Whether an account earned taxable income makes no difference, and records must generally be kept for five years (IRS, FBAR).

Form 8938 is a separate requirement, and some people must file both (IRS, Comparison of Form 8938 and FBAR requirements). It covers anyone who is a resident alien for any part of the tax year (IRS, Do I need to file Form 8938?).

FBAR (FinCEN Form 114)Form 8938
Threshold, unmarried and living in the USMore than $10,000 combined at any timeMore than $50,000 at year end or $75,000 at any time
Married filing jointly, living in the USSame $10,000 testMore than $100,000 at year end or $150,000 at any time
Where it goesFinCEN's BSA E-Filing SystemAttached to your income tax return
DueApril 15, automatic extension to October 15With your return, including extensions

Sources: IRS, Comparison of Form 8938 and FBAR requirements; IRS, FBAR.

Civil FBAR penalty maximums are adjusted each year for inflation, and criminal penalties can also apply (IRS, FBAR).

How are NRE and NRO accounts treated?

The Reserve Bank of India describes the NRE account as a repatriable rupee account for NRIs and persons of Indian origin, credited mainly with remittances from abroad, and the NRO account as one for putting through bona fide rupee transactions, with balances repatriable only up to USD 1 million per financial year (RBI, Accounts in India by Non-residents). The same RBI FAQ says income in an NRE account is exempt from Indian income tax, while NRO income is taxable.

The Indian exemption does not carry over to the US. A resident alien must report interest earned inside or outside the US (IRS, Taxation of resident aliens). Where India does tax the income, as with NRO interest, a credit for foreign income taxes may be available on Form 1116 (IRS, Foreign tax credit). Both kinds of account are held at banks outside the US, so they count toward the FBAR total (IRS, FBAR).

Investments in India need a closer look. The IRS lists foreign mutual funds as reportable on both the FBAR and Form 8938 (IRS, Comparison of Form 8938 and FBAR requirements). A foreign corporation is a passive foreign investment company (PFIC) if 75% or more of its income is passive or at least 50% of its assets produce passive income, and a US shareholder of a PFIC generally must file Form 8621, a separate one for each PFIC (IRS, Instructions for Form 8621). Whether a particular fund is a PFIC, and what that costs you, is a question for your tax professional.

What if you missed FBARs or foreign income in past years?

If the IRS has not contacted you and you are not under investigation, the IRS says to file late FBARs as soon as possible, with an explanation of the reason for filing late (IRS, FBAR). Where foreign income also went unreported through non-willful conduct, the streamlined domestic offshore procedures involve amending the last three years of returns, filing the last six years of FBARs and paying a penalty of 5% of the highest aggregate balance of the assets covered (IRS, Streamlined domestic offshore procedures). Choosing a route is work for a tax professional; if an immigration filing is pending, tell your attorney too.

Is there a new tax on money you send home?

Yes, for some transfers. Since January 1, 2026, a 1% federal excise tax has applied to certain remittance transfers sent abroad, paid by the sender and collected by the provider (Treasury and IRS, Excise Tax on Remittance Transfers, 91 FR 18797). The statute excludes transfers funded from an account at a covered financial institution or with a US-issued debit or credit card, so it mainly reaches transfers paid in cash, by money order or by cashier's check (91 FR 18797). The implementing regulations published on April 13, 2026 are still proposed, not final (91 FR 18797).

What about the year you leave?

Leaving can create a second dual-status year. Residency under the substantial presence test generally runs to December 31 of the year you leave unless you qualify for an earlier date (IRS, Residency starting and ending dates). Before departing, aliens generally must obtain a certificate of compliance, known as a sailing permit, by filing Form 1040-C or Form 2063; H-1B workers are not among the exempt categories Publication 519 lists (IRS Publication 519). A green card holder of at least 8 of the last 15 years who gives up the status may face expatriation tax rules (IRS, Residency starting and ending dates).

What this means for you

For most H-1B workers in the US for a full year, you are a resident, you file Form 1040, and what you own abroad is part of your US tax picture. Mistakes tend to happen in transition years and with accounts back home.

Your checklist
  • Count your US days for each calendar year, especially the year you arrive or switch from F-1.
  • If you were a student, keep copies of every Form 8843 you filed.
  • In a dual-status year, ask your tax professional about the first-year choice and the married-couple elections.
  • List every foreign account you own, co-own or can sign on, including NRE, NRO and fixed deposits.
  • File the FBAR through FinCEN's BSA E-Filing System if the combined maximum passes $10,000, and check Form 8938 separately.
  • Once you have a green card, do not file as a nonresident without speaking to your attorney first.
  • Remember that cash-funded transfers abroad carry the 1% remittance tax; transfers from a bank account or a US-issued card are excluded.

Where to start

If you are on an H-1B and planning a green card, start with the free evaluation to see how your record compares with the EB-1A, EB-2 NIW and O-1 criteria. Frank, our AI assistant, then finds real opportunities for the criteria you are missing. Tax questions belong with a qualified tax professional; when you are ready to file a petition, it is reviewed and filed by our partner law firm, Lai & Turner.

Sources

All checked October 21, 2026.

Frequently asked questions

Am I a resident or nonresident for tax purposes on an H-1B?

It depends on your days in the US, not your visa. You are a resident alien for a calendar year if you meet the substantial presence test: at least 31 days that year and 183 days over three years, weighting last year's days by one third and the year before by one sixth. The IRS says H-1B workers must count every day of physical presence. Most H-1B workers in the US for a full year are residents.

Does getting a green card change my taxes?

Often not much. If you were already a resident under the substantial presence test on an H-1B, you stay a resident, now under the green card test as well. The change is bigger if you were a nonresident, for example an F-1 student or someone arriving on an immigrant visa: your residency usually starts on your first day in the US as a permanent resident, which can make that year a dual-status year.

Do I need to report my NRE and NRO accounts to the IRS?

Usually, yes, once you are a US tax resident. NRE and NRO accounts are accounts at banks in India, so they count toward the FBAR's $10,000 aggregate test and may also count for Form 8938. The interest is part of your worldwide income on your US return even though India exempts NRE interest from Indian income tax. Ask a tax professional how to report it.

What is the FBAR deadline, and where do I file it?

The FBAR, FinCEN Form 114, is due April 15 following the calendar year being reported, with an automatic extension to October 15 that you do not need to request. It is filed electronically through FinCEN's BSA E-Filing System, not with your tax return. For accounts held during 2026, that means April 15, 2027, or October 15, 2027 with the automatic extension.

Can filing as a nonresident hurt my green card or citizenship case?

It can. IRS Publication 519 warns that a permanent resident who is required to file as a resident and fails to do so may be regarded as having abandoned that status. USCIS lists declaring yourself a nonimmigrant on your tax returns as a way to abandon a green card, and the USCIS Policy Manual says it can raise a presumption of abandonment in naturalization. Raise any such filing with your attorney.

Green Card Guide AI is not a law firm and this article is not legal advice. It describes evidence-building strategy in general terms; your attorney determines what belongs in your petition and how it's argued.

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