U.S. immigration backlogs don’t just delay green cards and work plans. They can also lock people into expensive, long-running tax problems that few see coming when they first arrive. The core issue is simple: immigration rules can keep someone “temporary” for years, while tax rules can treat the same person as a long-term resident for tax purposes. That gap can turn what should be a short stay into decades of complex reporting, higher taxes, and hard-to-fix mistakes.
This is showing up across the system as immigration backlogs stretch visa processing, adjustment of status, and employment-based green card queues. The source material ties many of these delays to annual visa caps, per-country limits, slow agency decisions, and multi-step case paths that keep people in “in-between” status far longer than lawmakers planned.
The backlog-to-tax problem people don’t plan for
Most people hear about backlogs in terms of time: extra months for a work permit, extra years for permanent residence, missed job moves, and family delays. The tax effects often land later, when someone has already built a life in the United States — a home, investments, retirement accounts, and family plans.
Backlogs can create tax inefficiency in three common ways described in the source material:
- People become U.S. tax residents while still holding a “temporary” visa.
- Treaty benefits can fade or end as time passes in the U.S.
- Reporting duties (like foreign account disclosures) last far longer than expected, raising the risk of costly errors.
The source also notes an employer side: companies can face long-running payroll and equity-compensation issues because workers who might otherwise rotate abroad remain in the U.S. and under U.S. tax rules for longer.
Why “temporary visa” and “tax residency” don’t match
Immigration status does not decide tax residency. The Internal Revenue Service uses its own rules, separate from immigration timelines. Two tests drive the result:
- Green card test
- Substantial presence test
The substantial presence test is based on physical presence and is commonly summarized as 183 days over three years. Once a person meets the IRS rules, they can become a U.S. tax resident even if they still hold a nonimmigrant visa and are still waiting in a long line for a green card.
For readers who want the official IRS rules and examples, the government’s explanation is here: IRS Substantial Presence Test.
This is the start of the mismatch: a person can be “temporary” in immigration law, but treated like a resident taxpayer under tax law. The longer backlogs run, the more years that mismatch continues.
Employment-based backlogs: long waits, long worldwide taxation
The source material highlights employment-based applicants who stay in H-1B or similar status for 10–20 years, especially people from high-demand countries. In practical terms, that can mean a decade or two of filing as a U.S. tax resident before the person gets the stable immigration outcome that was supposed to come much earlier.
Tax consequences listed include:
- Full U.S. tax on worldwide income for extended periods
- Loss of treaty benefits over time
- Ongoing U.S. tax on foreign investments and pensions
- Continuing foreign account reporting duties, including FBAR and FATCA-related compliance
Many workers arrive with retirement savings abroad, family property, or long-term investments in their home country. If they expected a short U.S. assignment, they may not have set up the recordkeeping needed for years of U.S. reporting. Backlogs can turn that “short assignment” tax setup into something closer to a permanent lifestyle of compliance.
According to analysis by VisaVerge.com, this mismatch between long green card waits and early tax residency is one of the least talked-about costs of today’s employment-based immigration system, because it hits quietly through payroll withholding, annual filings, and penalties rather than through a single visible government decision.
Student pathways stretched by delay: F-1, OPT, STEM, then H-1B waits
The source material points to international students whose timeline often runs:
- Years in F-1 status
- Additional years on OPT and STEM extensions
- More years waiting for H-1B selection and then employment-based green card steps
Tax residency can change before immigration security arrives. Once students cross tax residency thresholds, they may face:
- Worldwide income taxation
- Loss of nonresident tax exemptions
- State tax exposure even when federal treaties apply
Timing hurts because a student may become a tax resident at a stage where income is just starting to rise, savings are small, and life plans are uncertain. Yet tax residency brings rules that assume long-term settlement: worldwide income reporting, foreign financial account disclosures, and higher compliance costs.
State taxes can make the federal problem worse
Even when a federal tax treaty offers relief, states are not bound by federal tax treaties. That means a worker might get treaty treatment on a federal return but still pay state tax in full.
The source gives examples of high-tax hubs, noting state rates can reach up to 13.3% in places such as California or New York. For tech and research workers who cluster in these areas, backlogs can add years of state taxation that would not have mattered if the person had moved, rotated abroad, or become a permanent resident sooner with better planning options.
Over time, this can compound:
- Double taxation problems
- Cash-flow strain (paying tax now while waiting to sort credits later)
- Bigger compliance bills and more filing risk
Employer costs: payroll, equity, and stalled mobility plans
Backlogs are not just a worker problem. Employers sponsoring H-1B, L-1, or O-1 talent can face extended costs and complexity, including:
- Longer payroll tax obligations tied to U.S. work presence
- Harder equity compensation taxation (resident-style taxation of stock compensation while the worker remains in visa limbo)
- Global mobility problems, because employees who might otherwise be assigned abroad remain stuck in U.S. tax residency and U.S. job location
This raises total compensation costs and reduces flexibility. When a company can’t move a person where business needs them, it may pay more for alternatives: contractors, duplicate staffing, or retention packages to keep someone in place during years of waiting.
For official USCIS information on these visa categories, see the agency’s pages for H-1B, L-1, and O-1: H-1B, L-1, O-1.
Digital nomads and “accidental” long-term U.S. tax residency
The source material flags globally mobile workers who shift between visa types, spend extended time waiting for decisions, and become “accidental” long-term U.S. tax residents.
This is a modern competitiveness issue. Remote work makes it easier for talent to choose where to live. If the U.S. immigration timeline turns a planned short stay into long tax residency—with worldwide taxation and ongoing reporting—some workers may decide the cost and stress aren’t worth it, especially when other countries offer clearer paths and simpler tax exposure.
Backlogs don’t always raise revenue for the government
A common assumption is that if more people become U.S. tax residents, the government collects more money. The source material pushes back and argues that backlogs can produce:
- More compliance errors
- Costly enforcement actions
- Litigation over residency and reporting penalties
- Deterrence of future skilled immigration
The source also cites more than 3 million immigration court cases as part of the broader backlog environment that can keep people in long-running uncertainty.
It points to a 2025 memo that “exploits IRS data” for 6,000 SSN revocations, tying immigration enforcement to tax-related information and creating disputes. It also describes a policy shift in 2025 tied to the “One Big Beautiful Bill Act,” which the source says was signed July 4, 2025 and allocates $150 billion for enforcement, caps judges at 800, raises fees, and cuts USCIS staff—changes the source says would reduce adjudications and add delay.
For context on Social Security Number issuance and policies (including administrative actions), see the Social Security Administration guidance: 6,000 SSN revocations.
For the referenced legislative action, see the official summary for the One Big Beautiful Bill Act: One Big Beautiful Bill Act.
Two named voices appear in the source material: Kelli Stump of AILA and Ben Johnson, who the source says described the approach as one that
“funnels resources into deportation at healthcare’s expense,” while harming economic contributors.
Long-term life effects for immigrants: planning gets distorted
Long waits can push people into choices that protect them from risk but cost them over time. The source material lists common behavioral and financial effects:
- Conservative investing
- Delayed asset diversification
- Retirement planning distortions
- Excessive tax compliance costs
A human detail: many immigrants overpay taxes simply to avoid audit or immigration risk, creating “hidden economic leakage.”
The provided source material does not name an individual applicant affected by these issues, so a first-person case story cannot be included without adding facts not supplied.
Practical ways people try to reduce harm while waiting
The source material is clear that individuals cannot fix the backlog problem on their own, but it lists steps that can limit damage when “temporary” becomes a decade-long reality:
- Plan early for tax residency transitions.
- Re-check treaty limits as the years pass.
- Budget for state tax exposure separately from federal rules.
- Try to align immigration milestones with tax strategy, because timing can change filing status and reporting duties.
Employers often review assignment length, equity grant timing, and internal transfer plans so a worker’s immigration timeline does not create unexpected tax residency results that spill into payroll and reporting systems.
Key takeaways and warnings
- Warning: physical presence can trigger tax residency long before immigration status stabilizes.
- Warning: state tax exposure may apply even when federal treaty relief exists.
- Warning: long backlogs can increase compliance risk, penalties, and unexpected costs for both individuals and employers.
If you or your organization are affected, consider early coordination between immigration counsel, tax advisers, and mobility or payroll teams to reduce surprises and manage costs while waiting.
This article explores how record-breaking U.S. immigration backlogs create a costly disconnect between visa status and tax obligations. Because the IRS determines residency based on time spent in the country rather than visa type, many ‘temporary’ workers face years of worldwide taxation and complex financial reporting. The report highlights impacts on students, H-1B holders, and employers, emphasizing the need for proactive tax planning during long waits.
