L-1 Visa Holders Filing Form 1040NR Face U.S. Tax Rules as Nonresident Aliens

(UNITED STATES) — L-1 visa holders who worked in the United States during tax year 2026 usually must file a U.S. tax return in 2027, and the first step is to determine whether they are a nonresident alien or a resident alien for tax purposes.

For intracompany transferees, that status controls almost everything. It decides which return to file, what income to report, whether foreign income is included, and which extra international forms may apply.

This guide covers tax year 2026 returns filed in 2027. It is current as of April 1, 2026. The main IRS authority is Publication 519, U.S. Tax Guide for Aliens, plus the instructions for Form 1040, Form 1040-NR, Form 8938, Form 8833, and related international forms.

L-1 visa tax obligations: the basic rule

An L-1 visa does not by itself decide your U.S. tax residency. Immigration status and tax status are separate.

Most L-1 workers pay:

• Federal income tax
• State income tax, if their state imposes one
• Social Security tax
• Medicare tax

For payroll taxes, L-1 workers are generally subject to FICA withholding. In some cases, a totalization agreement between the U.S. and your home country may prevent double Social Security coverage. That is different from an income tax treaty.

For income tax, the key question is whether you are a:

• Nonresident alien
• Resident alien
• Dual-status alien, if your status changed during the year

IRS Publication 519 explains the Green Card Test and Substantial Presence Test. Most L-1 holders become resident aliens once they meet the substantial presence rules, but not always.

📅 Deadline Alert: For tax year 2026, individual federal returns are generally due April 15, 2027. An extension to October 15, 2027 gives more time to file, not more time to pay.

Quick eligibility checklist: which return should you file?

Use this table as a first pass.

Signs you may be a nonresident alien for 2026

• You arrived late in 2026.
• You did not meet the substantial presence test.
• You had U.S.-source wages but were not a resident for tax purposes.

Signs you may be a resident alien for 2026

• You spent enough days in the U.S. to meet the substantial presence test.
• You were present in the U.S. for 183 days or more in 2026, or met the weighted three-year formula.
• You do not qualify for an exception or treaty tie-breaker.

For more background, IRS Publication 519 and the IRS international portal at IRS international taxpayers are the starting points. Readers comparing forms can also review our tax guides.

Nonresident alien vs. resident alien: what changes

The difference is not minor. It changes your filing form, tax rates, and deductions.

A note on forms: Form 1040NR-EZ is no longer used. For tax year 2026, a nonresident alien generally files Form 1040-NR.

What income is taxable for L-1 holders

L-1 workers usually have two main income categories.

1) Business and employment income

This includes:

• Wages for services performed in the United States
• Bonuses
• Allowances and reimbursements, if taxable
• Other income effectively connected with a U.S. trade or business

If you worked in the U.S., your salary for those services is generally taxable in the U.S.

2) Investment and passive income

This can include:

• Dividends
• Certain interest
• Royalties
• Rental income
• Other fixed or determinable annual or periodic income

For a nonresident alien, some passive income is taxed at a flat 30% rate unless a treaty lowers it. For a resident alien, those items are usually taxed under normal rates.

If your employer paid relocation benefits as part of an intracompany transfer, review each item carefully. Some payments are taxable wages. Some moving reimbursements may no longer be excluded under current federal rules. Keep all relocation records.

Documents you’ll need

Before you start, gather these records:

• Passport and immigration documents
• L-1 approval notice
• Social Security number or ITIN
• Form W-2
• Form 1099 series, if issued
• Last year’s U.S. tax return, if any
• Dates of U.S. entry and exit for 2024, 2025, and 2026
• Foreign bank and investment account records
• Foreign income statements
• Treaty documents, if claiming treaty benefits
• Mortgage interest, tuition, or other deduction records
• Records of estimated tax payments
• Details of any foreign gifts, trusts, or corporation ownership

Step-by-step: how L-1 holders file for tax year 2026

Step 1: Determine your tax residency

Review your days in the U.S. under the Substantial Presence Test in IRS Publication 519.

If you changed status during the year, you may be dual-status. That often requires a more careful return.

Step 2: Choose the correct return

• Nonresident alien: file Form 1040-NR
• Resident alien: file Form 1040
• Dual-status: file a dual-status return using the IRS instructions in Publication 519

Step 3: Report the right income

• Nonresident alien: report U.S.-source income and effectively connected income
• Resident alien: report worldwide income, including foreign wages, dividends, and interest

Step 4: Claim deductions, credits, and treaty benefits

Resident aliens may claim the standard deduction if eligible.

A nonresident alien usually cannot claim the standard deduction, though treaty rules and limited exceptions may apply.

If you are taking a treaty-based position, you may need Form 8833, Treaty-Based Return Position Disclosure. IRS Publication 901, U.S. Tax Treaties is the main reference.

Step 5: Add international reporting forms, if required

This is where many transferred employees make mistakes.

Step 6: File and pay by the deadline

If you owe tax, pay by April 15, 2027, even if you request an extension.

If you need more time to file:

• File Form 4868 for an extension to October 15, 2027
• If you are abroad, you may get an automatic two-month filing extension to June 15, 2027, but interest still runs on unpaid tax after April 15

Foreign asset reporting: common L-1 trouble spot

Transferred executives and managers often keep foreign accounts, stock plans, or company interests. That can trigger extra forms.

Form 8938 thresholds

Higher thresholds can apply for taxpayers living abroad.

FBAR thresholds

⚠️ Warning: Missing an international information return can be expensive. Form 8938 penalties can start at $10,000. Form 3520 penalties can reach 35% of the reportable amount.

A $10,000 or 35% penalty structure is not the standard rule for Form 8938. In practice, Form 8938 penalties generally start at $10,000, with added penalties for continued failure after IRS notice. The 35% figure is more commonly associated with certain Form 3520 and foreign trust penalties. Check the current IRS form instructions before filing.

Tax treaty benefits and residency issues

Your L-1 visa does not automatically give treaty benefits. You must qualify under the treaty and disclose the claim when required.

Treaty benefits may reduce tax on:

• Wages
• Royalties
• Dividends
• Certain pension or scholarship items

If you claim a treaty-based return position, you may need Form 8833. This is especially important if you are a resident under U.S. domestic law but claim treaty relief.

For treaty articles, use IRS Publication 901 and the treaty text for your country. For related filing issues, our filing help page covers common records to keep.

Estimated tax payments and employer withholding

L-1 employees are often paid through U.S. payroll, but withholding is not always enough. That is common with:

• Bonuses
• Equity compensation
• Housing allowances
• Spousal income
• Investment income
• Foreign-source income reported on a resident return

If your withholding is too low, you may need quarterly estimated tax payments using Form 1040-ES.

For 2027 estimated taxes, the general due dates are:

💡 Tax Tip: If you moved to the U.S. on an intracompany transfer late in 2026, check whether you are dual-status before filing. That changes both reporting and deductions.

Employers should also flag cross-border tax issues early. A transfer package often creates U.S. tax issues well before filing season.

IRS resources and when to get professional help

Start with these IRS materials:

• Publication 519, U.S. Tax Guide for Aliens
• Publication 901, U.S. Tax Treaties
• Publication 17, Your Federal Income Tax
• IRS forms and publications
• IRS international taxpayers

Professional help is usually worth the cost if you have any of these facts:

• You were a nonresident alien for part of 2026
• You became a resident during the year
• You want to claim treaty benefits
• You have foreign accounts, stock, or trusts
• You received a foreign gift over $100,000
• You own part of a foreign corporation
• Your employer provided relocation or tax equalization payments

Before you file, confirm your residency status, match your W-2 to payroll records, review foreign reporting forms, and pay any expected balance by April 15, 2027. If you changed from nonresident to resident during 2026, review the dual-status rules in Publication 519 before choosing Form 1040 or Form 1040-NR.

⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.