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The Taxability of Wages for Employees with F-1 and H-1B Visas

If your workforce consists of non-immigrant aliens (foreign nationals) with a F-1 Student Visa-type, those individuals are exempt from Social Security, Medicare, and Federal Unemployment (FUTA) taxes. Non-immigrant aliens with Student Visa’s are defined as being full-time students at an approved U.S. education system that can work in a work study program that furthers their academic program.

If an employee’s Visa changes from a F-1 Student-type to a H-1B Specialty Worker-type, that individual is no longer exempt from SS, Med., and FUTA tax deductions. A Specialty Worker is defined as being college-educated or an experienced professional in a specialty occupation that requires highly specialized knowledge and at least a bachelor’s degree.

As an employer, it is important to stay informed of any changes to your employees’ Visa types. It is equally important to let your Payroll provider know of changes to your employees’ Visa types as payroll adjustments may need to be applied to past payrolls to include taxable wages. Additionally, amendments may need to be applied to quarterly and annual employer taxes to avoid late tax payment penalties. Corrections to the employee’s W-2 form may need to be made as well.

If you are in doubt or are unsure as to the taxability of wages for your employees with a Visa, please feel free to contact the Client Service team at SBS Payroll, Inc. for assistance at 855-591-9864.Contact us to learn about paying foreign nationals and payroll, HR and HCM services

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