H-2A workers are non-immigrants, but they may well be U.S. residents for income tax purposes. The tax law applied to foreign workers is very complex. The file HO-1 is an IRS Pub with an overview of tax law as applied to H-2A workers. A Spanish language version of this pub is also attached. Most other attachments deal with one specific aspect of the law. HO-3 explains how the law determines that your workers will be taxed as residents. Two other brochures are in Spanish-the ITIN pamphlet is an overview of the requirements for obtaining tax identification numbers for spouses. H2A Visas Workers, Spanish is the brochure we developed to explain the basics of tax law to H-2A workers. Workers may claim exemptions for dependents living in Mexico/Canada on their tax returns for tax years 2017 and earlier. Relatives living in other countries may not be claimed as dependents.

A brief overview of the process of required to determine what tax form H-2A workers should use when filing, and the benefits they can claim follows:

  1. For income tax filing purposes, step one is to determine if the clients are residents, non-residents or dual status residents (non-resident part of the year, resident part of the year) for tax purposes. As H-2A workers, they are non-immigrants, but their residency under the tax code is determined by how long they are in the U.S., not the type of visa they have. (See file called HO-3 Substantial Presence Test and HO-10, Residency Starting and Ending Dates.) Their residency status helps determine their entitlement to claim a standard deduction when filing.
  2. Next, we ask about marital status. A married worker who is a resident under the substantial presence test may elect with his spouse to file a joint return. This makes his spouse’s income, if any, reportable on the tax return, but it will almost be exempt from tax. In making the election, both taxpayer and spouse are deemed to be U.S. income tax residents for the entire year. The election is available to workers from all countries. It is almost always a beneficial election. Workers should have their spouses give them IRS powers-of-attorney, so they can sign the tax returns for the spouse. The spouse should apply for an ITIN to obtain maximum benefit from the elections and to avoid return processing problems. Filing a joint return without an ITIN is problematic. Frequently the IRS will not process the return without strong, knowledgeable advocacy on their behalf. Some states also refuse to process joint returns it the spouse does not have an ITIN.
  3. If the workers are from Mexico and have qualifying children and/or are providing more than ½ the financial support for other qualifying relatives, they may also claim dependent exemptions on tax returns for years prior to 2018. Child dependents living in Mexico do not make the taxpayer eligible to claim the Child Tax Credit.
  4. To claim an exemption for a spouse and/or dependent, those persons they will have to apply to the IRS for tax ID numbers called ITINs. Only workers who have dependents in Mexico, Canada or the U.S. can claim dependent exemptions, but the MFJ option on a resident return is available no matter where the spouse lives. The ITIN application can only be submitted with a tax return. Applying for a spouse’s ITIN is highly recommended. Applying for ITINs is tricky-those not experienced in the application process are likely to make mistakes in completing the Form W-7 or providing supporting documents that meet IRS criteria. The last slides in the Western Range Association presentation provide guidance on IRS criteria for supporting documents for children. Upon request, complete ITIN application guidance will be provided in a separate email.
  5. The Tax Cuts and Jobs Act eliminated the personal and dependent exemptions for tax years 2018 through 2025 and increased the standard deduction to $12,000 for single taxpayers, $24,000 for married taxpayers filing joint returns and $18,000 for Head of Household filers. A taxpayer domiciled in Mexico who is not married, but whose has child(ren) reside with him in his main home in Mexico should request ITINs for his children in order use the Head of Household filing status.