The H-1B visa: Facts, requirements, processes

The H-1B visa allows US employers to hire foreign professionals to work in the US when qualified Americans cannot be found. Here are the requirements, processes, and latest changes to this program.

1 2 Page 2
Page 2 of 2

That stands to change in the near future if the Biden administration passes it’s sweeping immigration reform plan, which includes plans to eliminate per-country caps on employment-based green cards and to clear out the decades-long waitlist that has built up. The Biden administration also hopes to improve the path to residency for foreign workers, especially those who have earned STEM degrees in the US.

H-1B visa revocation

The USCIS can revoke an H-1B visa. While it is not common, it does happen if the sponsoring employer is going out of business or cancels their original request. After the H-1B visa has been granted, employers can terminate employees but must comply with the terms of any employment agreement and follow federal, state, and local employment law.

Visas similar to H-1B

A number of visas similar to H-1B exist. The H-1B1 visa and the E-3 visa, for example, allow individuals from Chile and Singapore and from Australia, respectively, to work in the US under essentially the same requirements as the H-1B visa. Each year, 1,400 workers from Chile and 5,400 workers from Singapore may obtain H-1B1 visas. The E-3 visa allows 10,500 Australians to work in the US.

The Temporary Business visa allows holders to remain in the US for six months to cut a business deal, attend a conference or complete training. The F-1 visa is for international students studying at US colleges and universities, and the Optional Practical Training (OPT) program allows F-1 visa holder students to remain in the US for 12 months after graduating. Those with STEM degrees from Student and Exchange Visitor Program (SEVP)-certified and accredited U.S. colleges and universities are eligible for an additional 24-month OPT extension. To read more about STEM-OPT, see “Hiring STEM-OPT Employees: What businesses need to know.”

H-1B visa dependents

Spouses and unmarried children under 21 can get an H-4 visa to enter the US with an H-1B visa holder. The H-4 visa holder can stay in the US as long as the H-1B is in effect. An individual with an H-4 visa can attend school, get a driver’s license, and open a bank account. As of May 26, 2015, certain H-4 visa holders can become “lawful permanent residents” (LPR) and become eligible to work.

In August 2020, the Trump administration passed an executive order that revoked H-4 visa opportunities, stripping away work authorization from spouses of H-1B visa holders. The move left families, who were often living in high cost of living areas such as Silicon Valley, dependent on a single income. However, President Biden overturned the order on his first day in office, allowing dependents of H-1B visa holders to continue working in the US. Biden’s proposed immigration reform also includes measures to ensure that those already holding H-1B visas will gain permanent work authorization for dependents and that their children will not be aged out of the system.

Biden’s immigration reform also includes changes and improvements to the H-1B visa process.  His plan is to increase availability of employment-based green cards without increasing the annual H-1B quota. If passed, Biden’s proposal would end per-country caps on employment-based green cards, which would clear the decades-long backlog of people on the waiting list to receive one. Overseas students who earn advanced STEM degrees in the US will also have a faster path to permanent residency and the new laws would also include permanent work authorization for H-1B dependents and prevent children from aging out of the system.

With the backlog cleared, it would open up the H-1B visa process to new applicants, without extending the H-1B quota, which is a move that concerns labor unions who feel tech companies abuse the H-1B visa system by overlooking US talent in favor of hiring foreign talent at a lower salary. Tech companies say this isn’t the case, however, and argue that it is difficult to find the right skillsets and talent for engineering and IT personnel roles. Either way, the move comes as a way to meet in the middle with labor unions while still improving the H-1B visa process and giving more foreign workers a path to an employment-based green card. 

H-1B visa holder taxation

H-1B visa holders have to obtain an Individual Taxpayer Identification Number and pay US taxes, Social Security, and Medicare. However, the rules can get very complicated depending on whether the H-1B visa holder is categorized as a resident alien or a non-resident alien. At a summary level, the IRS uses the “substantial presence test“ to classify each H-1B holder.

Substantial presence is a function of the number of days an individual has spent in the US during the current tax year along with the prior three tax years. Individuals who fall above the threshold are deemed resident aliens and are taxed on all income, including non-US income. Individuals who fall below the threshold are considered non-resident aliens and are only taxed on US income. There are a large number of rules and exemptions, so it’s recommended that H-1B visa holders consult a tax specialist.

Copyright © 2021 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
Download CIO's Roadmap Report: Data and analytics at scale