Foreign workers in the U.S. must adhere to tax regulations depending on their residency status regarding taxes, which is established through the substantial presence test or visa type. The IRS categorizes each person as either resident aliens or as nonresident aliens, where this particular classification has an effect in regard to how they are taxed. Aliens considered residents, usually those satisfying the presence test by staying 183 days minimum in the U.S. across three years using a weighted calculation, are taxed on all global income as are U.S. citizens. This means they must report each of the earnings, including income from respective foreign sources, as well as may qualify for particular tax deductions, credits, and respective treaty benefits.

Nonresident aliens, on the other hand, are generally taxed only on U.S.-sourced income, including wages from U.S. employment and business earnings. They are typically subject to a 30% withholding tax that is placed on certain types of income, such as interest, dividends, along with rental payments, unless a tax treaty reduces or exempts the rate. The wages actually earned by nonresident aliens are usually subject to U.S. income tax, but then may be exempt from Social Security and Medicare taxes, depending on the visa category. Certain visa holders, such as both F-1, J-1, and even M-1 students and scholars, may qualify for exemptions under very specific conditions.

Foreign workers must file the necessary tax return, using Form 1040 for resident aliens or Form 1040-NR for nonresident aliens, and comply with all IRS reporting requirements. Those with dual status, meaning they transition between nonresident and resident status in the same tax year, may need to file both of the forms. Tax treaties in between the U.S. and other countries can influence tax liability, potentially allowing for exemptions for or reduced tax rates. Employers are required to withhold respective income taxes and, in most cases, Social Security and Medicare taxes, unless an exemption applies. For more information about this, reference the IRS page.