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Frequently asked questions

2,096 answers to the financial planning questions we hear most often, in plain English. Filter by topic below, or use the search in the top menu to jump to one.

2,096 questions13 topics

Showing 1,033–1,056 of 2,096

  1. Do I keep the same tax status all year, or can I be nonresident and resident in the same year?

    You can be both in one year, which the IRS calls a dual-status alien. This commonly happens in your arrival year on H-1B or after getting a green card: you're a nonresident up to your residency starti…
  2. Does time I spent in the U.S. as an F-1 student count toward the H-1B substantial presence test later?

    Days you spent as an F-1 exempt individual don't count toward the substantial presence test during your exemption years, but that exemption is capped at five calendar years. If you've already used up…
  3. When does a green-card holder start being taxed on worldwide income?

    Under the IRS green-card test, you're a resident alien for tax purposes from the first day you're present in the U.S. as a lawful permanent resident, and from that day the U.S. taxes your worldwide in…
  4. As a nonresident alien in my first months, am I taxed only on my U.S. income?

    Generally yes. While you're a nonresident alien, the U.S. taxes you only on U.S.-source income and income effectively connected with a U.S. trade or business, filing on Form 1040-NR. Wages for work pe…
  5. How do I set up direct deposit for my first U.S. paycheck as a newcomer?

    Once you have a U.S. checking account, give your employer a completed direct-deposit form with your bank's routing number and your account number, both found on a check or in your bank's app under acc…
  6. What is the closer connection exception and can it keep me a nonresident despite many U.S. days?

    Even if you pass the substantial presence test, the IRS closer connection exception can keep you a nonresident for the year if you were in the U.S. fewer than 183 days that year, maintain a tax home i…
  7. Do H-1B and L-1 workers who pay into Social Security ever get benefits from it?

    Yes, if they earn enough credits. Working on H-1B or L-1 means you pay Social Security and Medicare taxes, and those payments earn you the same work credits as any U.S. worker, generally needing 40 cr…
  8. Should I get a U.S. driver's license or state ID to help open financial accounts as a newcomer?

    It helps a lot. Many banks and credit-card applications ask for a government-issued photo ID with a U.S. address, and a state driver's license or non-driver ID satisfies that cleanly, smoothing accoun…
  9. How is my state tax residency decided in my first year, and can it differ from my federal status?

    Yes, they're separate. Federal residency runs on the substantial presence and green-card tests, but each state sets its own rules, usually based on where you're domiciled and how many days you spend t…
  10. Why does the first year on an H-1B often create a more complicated tax return than later years?

    Your first H-1B year is frequently a dual-status year, because you usually pass the substantial presence test partway through, so you're nonresident before your residency start date and resident after…
  11. Do dependents and a spouse each need their own ITIN or SSN to be listed on my return?

    To claim a spouse or dependent on your return or to file jointly, each person generally needs a taxpayer ID number. Anyone eligible to work, like a spouse on an H-4 with an EAD, should get an SSN. Tho…
  12. Does my H-1B or L-1 employer keep withholding FICA even after I plan to leave the U.S.?

    Yes. As long as you're working on H-1B or L-1 as a resident alien or a nonresident who isn't an exempt individual, your employer must withhold Social Security and Medicare on your wages, regardless of…
  13. Is my credit score tied to my Social Security number or to me as a person?

    It's tied to your identity file at the credit bureaus, which is keyed largely by your SSN along with your name, birth date, and addresses. That's why your foreign history doesn't follow you and why yo…
  14. Can I get a car loan or auto financing as a newcomer with no U.S. credit history?

    Often yes, though at higher rates. Some lenders, captive finance arms of automakers, and credit unions run newcomer or 'no U.S. credit' programs that underwrite off your visa, income, and sometimes an…
  15. What is Form 8843 and do I have to file it as an F-1 student with no income?

    Form 8843 is the IRS statement that F, J, M, and Q visa holders file to document that they're exempt individuals whose U.S. days don't count toward the substantial presence test. You must file it ever…
  16. As a newcomer, should I freeze my credit right after I get my SSN?

    It's a smart, free protective step. A security freeze at Equifax, Experian, and TransUnion blocks new lenders from pulling your file, which stops someone from opening fraudulent accounts in your brand…
  17. How soon after passing the substantial presence test do I owe U.S. tax on my home-country income?

    Your worldwide income becomes taxable starting on your residency starting date, which in the year you pass the substantial presence test is generally your first U.S. day that year. Income you earned a…
  18. Can my H-4 spouse open bank and credit accounts, and does an EAD change anything?

    An H-4 spouse can open a U.S. bank account with a passport, visa, and proof of address, and can be added as an authorized user on your credit card to start building history right away. To get their ow…
  19. What's the difference between the green-card test and the substantial presence test for deciding tax residency?

    The IRS uses two independent tests, and meeting either makes you a resident alien. The green-card test is simple status: if you're a lawful permanent resident at any point in the year, you're a reside…
  20. How low should I keep my credit card balance while building a brand-new U.S. score?

    Aim to keep your reported credit utilization well below 30% of your limit, and ideally under 10%, because utilization is one of the biggest scoring factors and matters a lot when your file is thin. On…
  21. Do I file both the FBAR and Form 8938, or does one replace the other?

    Neither replaces the other; they are separate filings with different rulebooks. The FBAR (FinCEN Form 114) goes to the Treasury's Financial Crimes Enforcement Network and reports foreign financial acc…
  22. How do I calculate the maximum account value to report on the FBAR?

    For each foreign account, you report the highest balance the account reached at any single point during the calendar year, not the year-end balance or an average. Review your monthly or quarterly stat…
  23. What is the Delinquent FBAR Submission Procedure and when can I use it?

    If you missed filing FBARs but reported and paid tax on all the related income, the IRS offers the Delinquent FBAR Submission Procedures. You e-file the late FBARs through the FinCEN BSA system and at…
  24. Are the FBAR filing thresholds different for married couples versus single filers?

    The $10,000 FBAR threshold is not doubled for married couples; it applies to the aggregate of all foreign accounts a given person owns or controls. A married couple can file a single combined FBAR onl…

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