Visa holders · O-1 visa
Contract fees split O-1 visa taxes: residents pay self-employment tax on them, and nonresidents usually pay none.
An O-1 employee’s wages bear 7.65% Social Security and Medicare, as a US citizen’s do, unless a Social Security agreement applies. The tax on your contract fees turns on your residency, which the 183-day substantial presence test sets each calendar year.
Updated · Sources
O-1 contract fees in 2026
- 15.3%
- is the usual self-employment tax on a resident alien’s fees, on 92.35% of profit up to the wage base.
- $0
- is the self-employment tax on a nonresident’s fees, unless a Social Security agreement applies.
- 30%
- of each fee for US work is withheld for a nonresident, unless a treaty or an IRS agreement allows less.
How many days on an O-1 make you a US resident for tax?
No visa type makes you a resident or a nonresident for tax by itself. O-1 holders here for short engagements are often nonresident aliens. If you stay most of the year, you are usually a resident.
Three years of days, weighted
The substantial presence test counts every day here this year. It adds one day in three from last year and one in six from the year before. If the total reaches 183 days, and at least 31 of them fall this year, you are usually a resident alien. With 90 days here last year and 60 the year before, a touring year of 150 days counts as 190.
Fewer than 183 days, with ties abroad
A year spent partly on tour abroad can leave you under 183 US days. The closer connection exception can then keep you a nonresident. Your tax home must stay abroad all year, and your ties there must outweigh your ties here. You claim it on Form 8840 by your Form 1040-NR deadline.
A green card application this year
A pending green card application, or any step toward one that year, rules out the closer connection exception. That includes a Form I-140 petition, filed by you or by an employer. As a permanent resident, you are a resident alien under the green card test, however few days you spend here.
Days competing in a charity event
If you are a professional athlete at a qualifying charitable sports event, your days competing can stay out of the count. You claim those days on Form 8843, and a late form puts them back in.
Exempt F-1 or J-1 days before your O-1
Days you spent here as an exempt F-1 student or J-1 visitor never enter the day count, this year or later. Your O-1 days start counting on the day your status changes.
A resident pays $16,955 of self-employment tax on $120,000 of O-1 fees, and a nonresident usually pays nothing.
Employee, resident alien
$9,180
Social Security at 6.2% and Medicare at 1.45% come out of your pay. Your employer pays the same again.
Employee, nonresident alien
$9,180
A nonresident owes the same, because O-1 wages have no exemption from either tax.
Contractor, resident alien
$16,955
With no employer to pay a share, you owe both halves of the tax yourself.
Contractor, nonresident alien
$0
The law leaves a nonresident alien’s fees out of self-employment income.
Self-employment tax is 12.4% plus 2.9%, or 15.3%. It applies to 92.35% of profit, which is 100% less 7.65%, half the combined rate. For the resident contractor, 92.35% of $120,000 is $110,820, and 15.3% of that is $16,955. No case reaches the Social Security wage base, or the $200,000 of wages where the 0.9% Additional Medicare Tax begins. An O-1 employee avoids US Social Security and Medicare mainly with a certificate of coverage under a Social Security agreement. It usually goes to workers an employer abroad posts here. Income tax is not shown.
How does residency change the tax on your O-1 fees?
These rows cover fees you earn as an independent contractor in 2026.
| As a nonresident | As a resident | |
|---|---|---|
| Tax withheld from each fee | 30% Lower with a treaty claim, or a central withholding agreement for artists and athletes | None Generally, unless backup withholding applies |
| Income tax | Graduated rates on Form 1040-NR After business expenses, with no standard deduction | Graduated rates on Form 1040 After business expenses and a $16,100 standard deduction if single |
| Fees for work abroad | Generally not taxed | Taxed With the rest of your worldwide income |
| 2026 return due | June 15, 2027 If you had no wages with tax withheld | April 15, 2027 |
In the year your residency starts, you file one dual-status return. Fees for work before the start date are taxed as a nonresident’s. No part of that year gets the standard deduction, unless you and a citizen or resident spouse elect to file jointly.
What costs O-1 holders money at tax time?
Leaving the tax on your fees until you file
Payers generally withhold nothing from a resident contractor’s fees. You cover the income tax and self-employment tax on them with estimated payments during the year. Wait for your return, and the whole year’s tax falls due at once, often with an underpayment penalty.
Counting on a treaty for performance fees
Tax treaties cap the relief for entertainers and athletes. A Canadian performer loses the relief once US gross receipts, including reimbursed expenses, pass $15,000 in a year. For a Mexican performer, the limit is $3,000. Other treaties set limits of their own.
Treating fees paid from abroad as foreign income
Fees for US work are generally US income, even when a company abroad pays them into a foreign account. They go on your US return in resident and nonresident years alike.
Carrying an F-1 or J-1 exemption into O-1 pay
On OPT or allowed J-1 work, a nonresident owes neither Social Security nor Medicare. Once you change to an O-1, your wages bear both taxes from that day, unless a certificate of coverage applies.
Forming an S corporation while a nonresident
No nonresident alien may hold S corporation stock, so an S election made while you are one fails. A nonresident shareholder also ends an election already in place. The option opens once you are a resident alien.
Have a CPA work out the tax on your O-1 fees before you file.
Valim’s CPAs prepare the US tax returns of O-1 visa holders paid in wages, contract fees or both, as residents or nonresidents.
- We set your status for each year from your US days, then report your fees to match it. As a resident, that means Schedule C and self-employment tax. As a nonresident, it means Form 1040-NR and a refund claim for any withholding above your tax.
- We work out estimated payments for the tax on your fees.
- We show what a longer US stay, or wages in place of fees, would do to your tax.
- If another country taxes fees for work you did there, we claim the foreign tax credit on Form 1116. Foreign tax on fees for US work generally earns no US credit. For those fees, we share the US figures with any accountant you have there.
- If a notice arrives from the IRS or a state about a return we prepared, we reply at no extra charge. That holds even when it questions your residency or your self-employment tax.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
What do O-1 contractors and employees ask about their US taxes?
What are the downsides of an O-1 visa?
For tax, the main downside is that O-1 wages get no exemption from Social Security and Medicare. Both taxes apply from the first paycheck, unless you hold a certificate of coverage. Nonresident F-1 students and J-1 visitors skip both on allowed work. O-1 contractors pay differently. A nonresident has 30% withheld from fees for US work, and a resident owes self-employment tax. The visa’s other drawbacks are immigration questions, best put to an immigration lawyer.
How much do F-1 students get taxed?
On a nonresident F-1, pay is taxed at graduated rates, from 10% on the first $12,400 of 2026 taxable income. Allowed work is also free of Social Security and Medicare. Both change the day you switch to an O-1: the FICA exemption ends, and your O-1 days start counting toward the substantial presence test. The Form 1040-NR page covers the student years.
When do O-1 contractors pay self-employment tax?
O-1 contractors usually pay self-employment tax only in years they are resident aliens. A Social Security agreement can change that in either direction. The tax is 15.3% of 92.35% of profit. It is due once net earnings reach $400 in a year. The 12.4% Social Security part stops at $184,500 of net earnings in 2026, less any wages. O-1 employees pay Social Security and Medicare through payroll instead.
Can I get back the 30% withheld from my O-1 fees?
A nonresident O-1 contractor can often get back part of the 30% withheld by filing Form 1040-NR after the year ends. The return taxes your fees at graduated rates, after the business expenses tied to them. Those expenses count only if you file within 16 months of the due date. The 30% withheld counts as a payment toward the tax, and any excess is refunded. Say $15,000 was withheld from $50,000 of 2026 fees. After $10,000 of expenses, and with no standard deduction, $40,000 is taxable. At 2026 single-filer rates, that is $4,552 of tax, so $10,448 is refunded.
Sources
- IRS, Taxation of aliens by visa type and immigration status
- USCIS, O-1 Visa: Individuals with Extraordinary Ability or Achievement
- 26 U.S.C. § 7701, Definitions
- 26 U.S.C. § 1401, Rate of tax on self-employment income
- 26 U.S.C. § 1402, Definitions (self-employment income)
- 26 U.S.C. § 1441, Withholding of tax on nonresident aliens
- 26 U.S.C. § 3101, Rate of tax (Social Security and Medicare)
- 26 U.S.C. § 1361, S corporation defined
- 26 U.S.C. § 6017, Self-employment tax returns
- Treas. Reg. § 301.7701(b)-2, Closer connection exception
- Treas. Reg. § 301.7701(b)-3, Exempt individuals
- 8 U.S.C. § 1101, Definitions (O nonimmigrants)
- IRS, Aliens employed in the U.S.: Social Security taxes
- IRS, Overview of the Central Withholding Agreement program
- IRS, Publication 519 (2025), U.S. Tax Guide for Aliens
- IRS, Publication 901 (Rev. September 2024), U.S. Tax Treaties
- IRS, Publication 15 (2026), Employer’s Tax Guide
- IRS, Rev. Proc. 2025-32 (2026 inflation adjustments)
Reviewed and updated September 2026. General information, not advice for your situation.