As an H1B visa holder, you’re likely among the highest earners in America’s immigrant workforce. With a median salary exceeding $100,000, optimizing how you send money home can save you thousands annually. This comprehensive guide covers everything from tax implications to choosing the right accounts, specifically tailored for tech workers on H1B visas.
Understanding Your Tax Residency Status
Your tax obligations depend on residency status, not visa type. Most H1B holders become US tax residents after meeting the Substantial Presence Test (183 days in the US over three years). As a US tax resident, your worldwide income is taxable, but money you send to India is generally NOT taxed since you’re sending already-taxed income. There’s no limit on how much you can send as long as it’s from legitimate, taxed income.
Gift Tax Considerations
The IRS gift tax exclusion allows you to give up to $18,000 per person per year (2024) without filing a gift tax return. For most H1B workers supporting parents, this is rarely an issue. If you send more, you file Form 709 but typically won’t owe tax unless you exceed your lifetime exemption ($13.61 million in 2024). Money sent for your own purposes (investments, property) isn’t a gift at all.
NRE vs NRO Accounts: Which Do You Need?
As an H1B holder, you qualify for NRI accounts in India. NRE (Non-Resident External) accounts receive foreign income, are fully repatriable, and interest is tax-free in India. NRO (Non-Resident Ordinary) accounts are for India-sourced income like rent from property or dividends, with repatriation limits and taxable interest. For remittances from your US salary, always use an NRE account. This keeps funds separated and fully accessible.
Transfer Limits: What You Need to Know
From the US side, there’s no official limit on outbound remittances. However, transfers over $10,000 are reported to FinCEN under the Bank Secrecy Act. This isn’t a problem if funds are legitimate, but be prepared to explain the source if asked. On the India side, there’s no limit on receiving money into NRE accounts. The $250,000 annual limit under LRS (Liberalised Remittance Scheme) applies only to money going OUT of India.
Optimizing Your Transfer Strategy
Set up automatic monthly transfers to build discipline and benefit from dollar-cost averaging. Keep 3-6 months of expenses in the US before sending excess funds. Consider timing larger transfers around favorable rates or when you need funds in India. Use a dedicated remittance service like Crobo rather than bank wires to save on fees.
Common Mistakes H1B Workers Make
First mistake: Using bank wires habitually loses $200+ per transfer in hidden costs. Second: Mixing NRE and NRO funds creates tax complications. Third: Not maintaining records of transfers makes tax filing difficult. Fourth: Sending money via cash apps like Venmo or Zelle, which don’t support international transfers and can freeze your account. Fifth: Not informing recipients which can cause delays in fund access.
Documentation to Maintain
Keep records of all international transfers for at least seven years. This includes transfer receipts showing amount, date, exchange rate, and fees, source of funds (pay stubs linking to transfer amounts), and purpose of transfer if questioned. Crobo provides detailed transaction history that can be exported for tax records.
Planning for Green Card and Beyond
Your remittance strategy may evolve as your immigration status changes. On H1B, focus on maximizing NRE deposits while rates are favorable. Once you get a Green Card, consider whether to maintain NRE status (you have a grace period). If you become a US citizen, NRE accounts convert to NRO with different tax treatment. Plan ahead with a financial advisor who understands both US and India tax law.