Hiring US Employees from Abroad: Payroll, Work Authorization and Visa Basics

A company headquartered in Pune, Mumbai or Toronto often wants its first US hire long before it has a US office. Hiring US employees from abroad is possible, but it creates an employer relationship with the IRS, the state and the immigration system at the same time. This guide explains who should be the employer, how payroll works for US-based staff and for people sent from home, what changes for nonresident aliens, and a plain-language overview of the main work visas. It is general information, not legal or immigration advice, and it reflects 2026 payroll rules.

Who should be the employer?

Our Indian company and Canadian company guides compare entity choices in more depth.

Hiring US employees from abroad: first-hire steps

1. Choose the employing entity from the table and form or register it.
2. Get an EIN. The process for founders without an SSN is in our EIN and bank account guide.
3. Register with the state. In Illinois, income tax withholding is registered with the Department of Revenue and unemployment insurance with the Department of Employment Security; see Illinois employer registrations.
4. Confirm the right to work. Every employer must complete Form I-9 for each person hired, and keep it for three years after hire or one year after employment ends, whichever is later. Do not file it with USCIS.
5. Collect Form W-4 and state forms, then report the new hire to the state registry.
6. Run payroll and deposit taxes following the schedule in Pub. 15; see the US employer compliance checklist.
7. File Form 941 quarterly, Form 940 annually, and issue Forms W-2.
8. Keep records for at least 4 years for employment taxes.

What changes for nonresident alien employees?

• Social Security and Medicare: wages paid to nonresident alien employees are generally subject to these taxes as for citizens, with exceptions listed in Pub. 515, such as H-2A agricultural workers.
• Income tax withholding: nonresident aliens use special Form W-4 rules under Notice 1392, cannot claim exemption from withholding on Form W-4, and employers add a specified amount to wages only to compute withholding. The IRS notes that this addition does not apply to students and business apprentices from India.
• Treaty exemption: a nonresident alien may claim a treaty exemption on Form 8233. If the employer accepts it, the wages are reported on Form 1042-S, not in box 1 of Form W-2.
• Work done outside the US: compensation paid to a nonresident alien for services performed outside the United States is not wages and is not subject to withholding. The foreign country's payroll rules apply instead.
• Social security agreements: the US has totalization agreements with many countries that eliminate dual coverage; an employee temporarily sent to the US usually stays covered in the home country and the employer or employee requests a certificate of coverage. See totalization for foreign workers.

A visa overview

USCIS and the State Department change fees and procedures often, and the $100,000 H-1B requirement was the subject of a June 2026 court order and appeal, so confirm every point with an immigration lawyer before you commit. Our relocation and immigration tax planning service covers the tax side only.

Documents and information you need

• Employer: EIN notice, state registration numbers, workers' compensation and other insurance proofs
• Employee: identity and work authorization documents for Form I-9, Form W-4, bank details
• For visa-based hires: the petition receipt or approval notice and the visa category
• A written offer letter with title, duties and pay, consistent with the visa petition
• For foreign-paid staff: a plan for who pays and which country's payroll applies

A worked example

A Bengaluru software company forms a Delaware subsidiary, qualifies it in Illinois, and hires a salesperson in Naperville at US$90,000. Social Security is 6.2% x $90,000 = $5,580, and Medicare is 1.45% x $90,000 = $1,305; the employer pays $6,885 and the employee has the same amounts withheld. FUTA at the net 0.6% on the first $7,000 is $42, if the state credit applies in full. The company also transfers its chief technology officer on L-1A status for a new US office; the payroll taxes are the same, but the start dates, visa filing and Form I-9 follow the immigration approval. A separate developer in Pune stays on Indian payroll, and the US company pays nothing in US payroll tax on that pay. All figures are hypothetical.

Mistakes to avoid

• Letting a foreign company hire a US-based employee directly without an EIN or state registration.
• Treating a US-based employee as a contractor to avoid payroll.
• Starting work before the visa or work authorization is approved.
• Paying a visa employee outside payroll or from an overseas account without reporting.
• Forgetting that a US employee of a foreign parent may create a permanent establishment.

How we can help

We set up the employer registrations, payroll and quarterly and annual filings for US subsidiaries and foreign employers, and we advise on the tax side of staff moves between the US, India and Canada with your Chartered Accountant or Canadian CPA. Immigration filings are handled by your immigration attorney. We are based in the Aurora, Illinois area. See payroll and employer compliance, business formation and registrations and cross-border tax. For people working remotely across the border, read cross-border remote work between the US and Canada.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.