H1B tax filing starts with whether you are a resident alien or a nonresident alien for the tax year. Your visa does not settle that. A day count called the substantial presence test does. The result decides which form you file, which income the US taxes, and whether you must report your Indian bank accounts.
Resident alien vs nonresident alien: what the labels mean
These are tax terms, and they have nothing to do with immigration status. A resident alien is taxed like a US citizen, on income from anywhere in the world. A nonresident alien is taxed by the US only on US income, such as an H-1B salary.
You become a resident alien by holding a green card or by meeting the substantial presence test. For H-1B holders, the test is the one that matters.
How the substantial presence test works
You meet the substantial presence test for a calendar year if both of these are true:
- You were physically present in the US for at least 31 days in that year.
- A weighted count of your days over three years comes to at least 183.
The weighted count adds all of your days in the current year, one third of your days in the year before, and one sixth of your days in the year before that. A part of a day in the US counts as a full day in most cases.
Days on an H-1B count from the first day. Days as an F-1 student usually do not count. Students are "exempt individuals" for their first five calendar years in the US.
A worked day-count example
Take two engineers who moved from India on H-1B visas in 2026. Each had also spent 30 days in the US in 2025 on a business visa, and no days in 2024.
| Asha, arrived June 20, 2026 | Rohan, arrived October 1, 2026 | |
|---|---|---|
| Days in 2026 (counted in full) | 195 | 92 |
| Days in 2025 (30, counted at one third) | 10 | 10 |
| Days in 2024 (counted at one sixth) | 0 | 0 |
| Weighted total | 205 | 102 |
| Meets the 183-day test for 2026 | Yes | No |
Asha is a resident alien for part of 2026. Her residency generally starts on the first day she was present in the US in 2026, which is June 20. Before that date she is a nonresident alien, so 2026 is a "dual-status" year for her.
Rohan does not meet the test for 2026. Unless he makes one of the choices described below, he is a nonresident alien for all of 2026. If he stays in the US through 2027, he becomes a resident alien from January 1, 2027.
Which form each status files
| Your status for the year | Form | What the US taxes |
|---|---|---|
| Nonresident alien all year | Form 1040-NR | US income only |
| Resident alien all year | Form 1040 | Worldwide income |
| Dual-status, resident at year end | Form 1040 marked "Dual-Status Return", with a Form 1040-NR attached as a statement for the nonresident part | US income before the residency start date, worldwide income after it |
The nonresident and dual-status returns come with limits that many filers do not expect. In general, you cannot take the standard deduction and you cannot file a joint return with your spouse.
For employees, returns for the 2026 tax year are due April 15, 2027.
The first year: dual-status return and two elections
Two optional elections can change your first-year status.
The first-year choice
This choice helps someone like Rohan, who arrived too late in the year to meet the 183-day test. If he qualifies, he can choose to be treated as a resident from his arrival date. That makes 2026 a dual-status year for him. To qualify, he must:
- not have been a US resident in 2025,
- be present in the US for at least 31 days in a row in 2026,
- be present for at least 75% of the days from the start of that 31-day period to December 31, 2026, and
- meet the substantial presence test for 2027.
The last condition creates a timing problem. Rohan cannot make the choice until he has met the test for 2027, which happens in late May 2027 on his numbers. He would need to file Form 4868 by April 15, 2027 to extend his filing deadline, and pay any tax he expects to owe by that date. He then makes the choice in a statement attached to his Form 1040.
On its own, the first-year choice often achieves little. A dual-status return still has no standard deduction and no joint filing. Married couples mainly use it as a step toward the next election.
The election to file jointly as full-year residents
Suppose you are married and at least one of you is a resident alien on December 31. The two of you can choose to be treated as US residents for the whole year and file a joint Form 1040. Both spouses sign a statement and attach it to the return. A spouse on an H-4 visa with no Social Security number applies for an ITIN (a tax ID number, requested on Form W-7) with that return.
The benefit is the joint tax brackets and the standard deduction, which is $32,200 for a married couple filing jointly for 2026. The cost is that the US then taxes the worldwide income of both spouses for the entire year. That includes Indian salary earned from January until the move.
You can usually claim a foreign tax credit for Indian income tax paid on that salary. The credit has its own limits and paperwork.
A couple with a high Indian salary early in the year can come out behind. The rules also restrict how often a couple can use these elections. Confirm the details with a preparer before you sign.
What changes once you are a resident alien
From your residency start date, the US taxes your income from every country. For most Indians on H-1B, that means reporting:
- interest on NRO and NRE accounts and fixed deposits (NRE interest is tax-free in India but taxable in the US),
- rent from a flat or house in India,
- dividends and capital gains from Indian shares, and
- Indian mutual funds, which fall under the harsh PFIC rules.
If India taxes the same income, the foreign tax credit (Form 1116) usually removes most of the double tax.
Foreign account reporting also begins. You file an FBAR (FinCEN Form 114) if the combined balance of your accounts outside the US went above $10,000 at any point in the calendar year. A second form, Form 8938, goes with your tax return if your foreign financial assets cross higher limits.
Our guide to the FBAR threshold and Form 8938 covers both forms. The FBAR calculator adds up your highest balances. The FBAR deadline post explains the automatic extension to October 15.
Social Security and Medicare tax on H-1B wages
H-1B wages are subject to Social Security and Medicare tax from your first paycheck, whether you are a resident or a nonresident alien for income tax. The exemption that F-1 students have does not carry over. If you changed from F-1 to H-1B, the tax starts on the date the H-1B status began.
Your share is 6.2% for Social Security on wages up to $184,500 for 2026, and 1.45% for Medicare on all wages. Your employer withholds an extra 0.9% Medicare tax on wages above $200,000 in a year. Your employer pays a matching 6.2% and 1.45%.
You cannot claim these taxes back when you leave the US. India and the US have no social security agreement in force that would exempt you. One has been under discussion for years, and as of November 2026 none has been signed.
Common first-year mistakes
- Filing a regular Form 1040 with the standard deduction in a year when you were a nonresident or dual-status alien.
- Leaving Indian interest and rent off the return after the residency start date because India already taxed it.
- Making the joint election without counting the Indian salary it pulls into the US return.
- Assuming your state follows the federal rules. States set their own residency tests.
Common questions
I was on F-1 and OPT before my H-1B. Am I a resident alien?
It depends on how long you were a student. F-1 days are left out of the count for your first five calendar years in the US. After that, your F-1 days count like any others, and you may have been a resident alien before the H-1B began.
Do I report my Indian accounts in a nonresident year?
A nonresident alien generally does not report Indian income to the US, and the FBAR applies to US residents. Dual-status years and joint elections are less clear-cut. Have a preparer confirm your FBAR position for the first year.
Can I fix a first-year return filed on the wrong form?
You can file an amended return on Form 1040-X with the correct form attached. Correcting it yourself is better than waiting for an IRS notice.
Playbook Move: Pull your travel history from the I-94 website and count your US days for this year and the two before it. Work out your status for each year. Then list the Indian accounts and income you had from your residency start date. If your first year involves a dual-status return or a joint election, have someone prepare your US tax return who files these regularly, and ask to see the tax both ways.
For informational purposes only; not financial, tax, or legal advice. For decisions about your specific situation, consult a qualified cross-border tax professional.