There are thousands of agricultural workers in the United States, who come every year during the agricultural season, on the H-2A visa. This visa program allows U.S. employers meeting specific regulatory requirements to bring foreign nationals to the United States to fill temporary agricultural jobs. The H-2A program being seasonal, complicates the tax filing, and makes the process of tax-filing unique for every H-2A employee. So let’s explore this further..
H-2A workers are exempt from FICA (Medicare & Social Security) taxes & Federal Tax Withholding
- Under current tax laws, workers on H-2A visas are exempt from U.S. Social Security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. This holds true for both a resident or nonresident alien.
- Also, wages paid to H-2A workers are not subject to mandatory federal withholding on their paychecks, unless they fall under Backup Withholding.
Backup Withholding
- On H2-A it is usually customary to obtain a SSN (Social Security Number). If somehow, it cannot be obtained, the worker should have atleast an ITIN (Individual Tax Identification Number) to pay and file tax returns in the United States. If he is unable to procure either of these two, he would be subject to mandatory withholding of approximately 28% on the remuneration earned, provided wages or payments are more than $600 annually.
- The employer will report the compensation subject to backup withholding and the tax withheld on Form 1099-MISC and Form 945, Annual Return of Withheld Federal Income Tax, instead of on Form Form W-2 and Form 943, Agricultural Employer Annual Return. If the Employer fails to comply with this requirement, he would be liable for amount of withholding.
As an H-2A worker, do i still need to file Income Tax Returns in the US?
Yes. Although as discussed previously, an H-2A worker is not subject to backup withholding of FICA an federal income taxes, you still may have to pay income tax and file tax returns at year-end, as a non-resident or a resident, which depends on the following:
If you are a Non-resident
Please refer to our non-resident page, to understand who is a non-resident means for tax purposes. As a non-resident you will not filing federal income tax returns if all of the following apply:
- Your total annual compensation is less than the personal exemption amount (this depends if you have dependents and if your filing status) and;
- If you don’t have any other U.S. trade or business income other than the H2-A income, and
- You have no other need to file a return (e.g., no need to satisfy tax liability on other U.S. source income)
However, if any one of these does not apply, you would have to file 1040NR or 1040NR-EZ. Please note that even if you might be exempt on part of your income under a tax treaty, you still may owe some income tax, and hence must file a federal US income tax return. Please note that as a non-resident you are also not subject to any self-employment tax, if paid as a contractor instead of an employee.
If you are a Resident
- Under a substantial presence test, you might be considered a US Resident for tax filing purposes. If you are a resident of US as well as your home country, you might elect to be a non-resident or a resident, on a year-by-year basis.
- However, if considered a US resident, you would have to file either Form 1040A, Form 1040EZ or Form 1040 depending on the filing requirement amounts under tax law. Further, as a contractor, you would be subject to self-employment tax, however, you could still be exempt under the terms of an applicable bilateral Social Security agreement to which the United States is a party (Totalization Agreement). Totalization Agreement, basically provides that you would still be covered under your home country’s Social Security. You would have to obtain a certificate of coverage from your home country to claim this exemption.
