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Moving out of the United States doesn’t close the file with the IRS. If you’re a US citizen, a Green Card holder, on an H-1B or L-1 visa, meet the Substantial Presence Test, or are simply a US citizen who now lives in India, there’s a good chance you still need to file a US tax return every year and disclose your foreign accounts and investments while you’re at it.
That last part is where most people get caught out. Income earned in India, NRE and NRO accounts, Indian mutual funds, RSUs and ESOPs from a US employer, rental property back home, capital gains, retirement accounts, even an interest in a family trust or an overseas company all of it can carry US reporting consequences, quite separate from whatever you’re already doing on the Indian side.
Beyond Form 1040 or 1040NR, this often means FBAR (FinCEN Form 114), FATCA (Form 8938), PFIC reporting (Form 8621), foreign trust reporting (Forms 3520 and 3520-A), foreign corporation reporting (Form 5471), foreign partnership reporting (Form 8865), and a handful of other IRS disclosures depending on what you hold.
And here’s the part that surprises people: the penalties for missing these filings can be severe even when you didn’t owe a rupee or a dollar of additional tax.
At Dinesh Aarjav & Associates, our Chartered Accountants, US CPAs, Enrolled Agents, and international tax specialists handle this end to end for NRIs, Green Card holders, US citizens, founders, executives, investors, and families with feet in both countries annual return preparation, foreign asset disclosure, cross-border planning, US-India DTAA advisory, foreign tax credit work, Streamlined Filing for people who’ve fallen behind, and IRS notice support.
Whether you’ve just relocated to India, you’re still working in the US with Indian investments on the side, or you’re weighing a permanent move back, we help you stay compliant on both sides without paying tax twice on the same income
Most countries tax you on where you live and where the income arises. The United States doesn’t work that way it taxes citizenship, not just residence. So a US citizen who has lived in India for twenty years, earns nothing in America, and has never set foot there in a decade, may still owe an annual US return and asset disclosures purely by virtue of the passport.
That single fact is why US compliance rarely stops at Form 1040. Depending on what you own, you could be reporting foreign bank accounts, Indian mutual funds, a pension, a rental flat, shares in a private company, a partnership interest, a trust, crypto, or an inheritance from a relative abroad.
The good news is that the US-India tax treaty and the foreign tax credit rules exist precisely to stop the same income being taxed twice but using them correctly takes someone who actually understands both systems, not just one.
The assumption that leaving the US ends your filing obligation is the single most common and most expensive mistake we see. What actually determines it is citizenship, immigration status, the residency tests, income thresholds, and what foreign assets you hold. Here’s how that plays out across the people we work with most often.
US citizens including dual citizens, long-term expats, returning NRIs who picked up citizenship along the way, and even children born with it generally stay on the hook regardless of where they live. That usually means Form 1040, FBAR, FATCA, and a look at whether the Foreign Tax Credit or the Foreign Earned Income Exclusion works better for their situation.
Green Card holders stay in the system until the Green Card is formally surrendered or terminated under the applicable rules simply moving away doesn’t end it. We handle the annual 1040, worldwide income reporting, FBAR and FATCA, DTAA planning, and exit tax considerations where relevant.
H-1B and L-1 professionals often cross into US tax residency once they satisfy the Substantial Presence Test, at which point foreign income, FBAR, FATCA, and treaty analysis all come into play something we also advise on for professionals moving back and forth between the two countries.
F-1 and J-1 students have their own set of rules Form 8843, 1040NR, treaty benefits, how scholarships get taxed, and the eventual shift into resident status once they move to H-1B.
US citizens settled in India typically face the fullest version of this Form 1040, Form 1116 for the Foreign Tax Credit, Form 2555 for the Foreign Earned Income Exclusion, DTAA analysis, FBAR, FATCA, PFIC reporting on Indian funds, and ongoing coordination between the two returns.
NRIs returning to India are often surprised that the US side doesn’t simply stop we help coordinate the US and Indian returns together, work through RNOR planning, Foreign Tax Credits, and what happens to 401(k) and IRA accounts left behind.
If any of that sounds like you are a US citizen in India, Green Card holder, H-1B professional, someone heading back to India, or simply someone whose investments have gotten more complicated than a single W-2 the earlier you plan, the less exposure you carry. Our team works across Form 1040, FBAR, FATCA, PFIC reporting, Foreign Tax Credits, the Foreign Earned Income Exclusion, DTAA advisory, Streamlined Filing, and IRS notices, with both your US and Indian obligations handled by people who understand how the two actually interact not just one side of the border.
On the individual side, this covers US citizens living in India, Green Card holders, H-1B and L-1 professionals, F-1 and J-1 students, NRIs still working in the US, OCI holders with lingering US obligations, high-net-worth families, and anyone with meaningful assets split across both countries.
On the business side, we advise startup founders, SaaS and tech companies, consultants and freelancers, e-commerce operators, Delaware C-Corps, Wyoming LLCs (single- and multi-member), S-Corp shareholders, partnerships, Indian companies with US subsidiaries, US companies with Indian operations, and VC-backed startups whether the complexity is a single K-1 or a full cross-border structure.
| Form 1040 | April 15 |
| Automatic extension for taxpayers living abroad | June 15 |
| Extended return (with extension filed) | October 15 |
| FBAR (FinCEN Form 114) | April 15, with an automatic extension generally available to October 15 |
| Estimated tax payments | Quarterly, where applicable |
| FATCA (Form 8938) | Filed together with Form 1040 |
*Dates can shift slightly depending on weekends, holidays, or IRS announcements for a given year always confirm the current-year deadline before relying on this.
Filing on time matters more than it might seem, particularly if you’re claiming a foreign tax credit, treaty benefit, or the Foreign Earned Income Exclusion miss the deadline and some of those elections can be affected.
Form 1040 is just the starting point. Depending on your income, residency, and what you own, several other forms usually come into the picture here’s what each one covers and why it matters for someone with an India connection.
Form 1040 (US Individual Income Tax Return) is the main return for citizens and resident aliens, capturing worldwide income salary, self-employment, rental, interest, dividends, capital gains, retirement income, the lot with room for the Foreign Tax Credit (Form 1116) or the Foreign Earned Income Exclusion (Form 2555) where applicable.
Form 1040NR applies to nonresident aliens with US-source income employment, business, investment income, scholarships, certain capital gains. Whether you land on 1040 or 1040NR comes down to the Substantial Presence Test and any treaty provisions in play.
FBAR (FinCEN Form 114) kicks in once the combined value of your foreign accounts crosses the reporting threshold at any point in the year. For someone with Indian ties, that usually means NRE and NRO accounts, resident savings accounts, fixed deposits, brokerage and demat accounts, and similar holdings. The penalties for skipping this one are steep enough that it’s worth getting right the first time.
FATCA (Form 8938) is filed with your 1040 and is a separate exercise from FBAR, even though the two get confused constantly. It covers foreign bank and investment accounts, shares in foreign companies, partnership interests, pensions, and certain insurance products. Many people end up needing both FBAR and 8938 they’re not substitutes for each other.
Form 1116 (Foreign Tax Credit) lets you offset tax already paid in India against your US liability, which is often the single biggest lever for avoiding double taxation on salary, rental income, dividends, capital gains, or business income earned in India.
Form 2555 (Foreign Earned Income Exclusion) lets qualifying taxpayers exclude a chunk of foreign earned income from US tax, provided they meet the Physical Presence or Bona Fide Residence Test. Deciding between this and the Foreign Tax Credit isn’t automatic it depends on your income mix and usually needs a side-by-side comparison.
Form 8621 (PFIC reporting) is where things get genuinely painful. Indian mutual funds, SIPs, ELSS funds, many ETFs, and ULIPs typically get classified as Passive Foreign Investment Companies under US law a category with punitive default tax treatment. Getting the Excess Distribution, QEF, or Mark-to-Market election right (or choosing not to elect at all) makes a real difference to the outcome.
Forms 3520 and 3520-A cover foreign trusts and large foreign gifts or inheritances relevant for families with overseas estate structures or anyone who’s received a substantial gift from a relative outside the US. Penalties here apply even when no tax is actually owed.
Form 5471 applies if you’re an officer, director, or shareholder of a foreign corporation most commonly, an Indian Private Limited Company or an overseas holding entity. The disclosure requirements are extensive: financials, ownership structure, related-party transactions, the works.
Form 8858 covers foreign disregarded entities and branches relevant for consultants and entrepreneurs running income through an overseas entity that’s treated as disregarded for US purposes.
Form 8865 applies to US persons with a stake in a foreign partnership, including Indian LLPs, and can require detailed reporting on capital accounts and partner transactions depending on your ownership share.
Form 8833 discloses a treaty-based return position for instance, when you’re claiming relief under the US-India DTAA that departs from the default US tax treatment. It needs a proper read of the specific treaty article before you claim it.
Beyond individual filings, we also handle the business side for founders and multinational structures operating between India and the US.
We prepare Form 1120 for C-Corporations startups, tech companies, consulting firms, investment vehicles, and foreign-owned US corporations covering the federal return, shareholder considerations, deductions, depreciation, and estimated tax planning.
For eligible S-Corporations, we handle Form 1120-S, including K-1 preparation, shareholder allocations, reasonable compensation questions, and distributions.
For partnerships and multi-member LLCs, we prepare Form 1065, with partner basis tracking, capital account maintenance, K-1s, and cross-border considerations where partners sit outside the US.
We also work with single-member LLCs (including disregarded entities), foreign-owned US LLCs and corporations, US subsidiaries of Indian companies, and Indian startups expanding into the US Delaware C-Corps and Wyoming LLCs included covering federal compliance, withholding, and how the US structure maps back to your Indian tax position.
The core tension is straightforward: the US taxes citizens and residents on worldwide income no matter where they live, while India taxes based on residential status and source. Left unmanaged, the same rupee of income can get taxed twice.
The US-India Double Taxation Avoidance Agreement exists to sort out which country gets first claim on which income, and the Foreign Tax Credit mechanism handles the rest. It comes up most often for salary earned in India, business or professional income, rental income, bank interest, dividends, capital gains, pensions, royalties, technical service fees, and scholarship or research income.
Our work here covers Foreign Tax Credit planning, Form 1116 preparation, Form 8833 treaty disclosures, residency analysis, and specific treaty benefits for students, researchers, and pensioners the goal being a lower combined tax bill while staying compliant with both the IRS and Indian tax authorities.
If you’re paying Indian income tax on salary, rental income, business income, capital gains, or dividends, and you’re also a US taxpayer, that same income risks being taxed a second time in the US without the right planning. Form 1116 is how you claim credit for the Indian tax already paid reducing or wiping out the double hit. We handle the underlying computations, documentation, limitation calculations, and carryback/carryforward analysis where it applies.
A common misconception: people assume only accounts earning taxable income need reporting. FBAR doesn’t work that way it’s a standalone information filing, separate from your income tax return, and it applies once the combined value of all your foreign accounts crosses USD 10,000 at any point during the year. That’s the total across every account, not a per-account threshold.
Accounts that typically get swept in include NRE and NRO accounts, resident savings and current accounts, FCNR and fixed deposits, recurring deposits, demat and brokerage accounts, PMS accounts, certain pension products, and cash-value insurance policies.
Non-willful FBAR violations can run up to USD 10,000 per violation; willful ones go considerably higher. We handle applicability reviews, identifying which accounts count, maximum-balance calculations, currency conversion, the actual FinCEN filing, and delinquent FBAR submissions where someone has fallen behind.
FBAR and FATCA get lumped together constantly, but they’re separate regimes filed to different agencies FBAR goes to FinCEN, Form 8938 goes to the IRS with your 1040. The threshold for Form 8938 depends on filing status and residence: broadly USD 50,000 for a single filer and USD 100,000 for married filing jointly at year-end, with higher thresholds generally applying to taxpayers living outside the US (worth confirming against your specific facts).
Reportable Indian assets typically include NRE, NRO, and resident accounts, fixed and FCNR deposits, demat and brokerage accounts, shares in Indian companies, partnership interests, mutual funds, pensions, certain insurance products, and trust interests. Plenty of people end up needing both FBAR and 8938 they don’t overlap the way you’d expect.
Here’s the trap: investment products that are entirely sensible under Indian tax law mutual funds, SIPs, ELSS funds, debt and hybrid funds, certain ETFs, ULIPs often get treated as Passive Foreign Investment Companies under US tax law, triggering annual Form 8621 filings and a tax treatment considerably worse than ordinary capital gains.
Depending on the specific fund and your history with it, we work through the Excess Distribution method, Mark-to-Market and QEF elections, annual computations, basis adjustments, and distribution analysis. If you’re a US taxpayer thinking about investing in Indian mutual funds, this is genuinely worth a conversation before you invest, not after.
Interest on Indian fixed deposits generally counts as part of worldwide income for US purposes. Dividends from Indian companies are reportable on the US return as well. Business or professional income earned in India needs to be looked at under both Indian law and US law together with the DTAA rarely a straightforward exercise. Pension income depends heavily on the source and the relevant treaty article. And increasingly, cryptocurrency and digital asset transactions in India carry their own US reporting and tax consequences.
The most expensive assumption is simply believing that moving to India ends US filing obligations it usually doesn’t. Beyond that, the recurring patterns are: skipping FBAR on Indian accounts, missing Form 8938 entirely, buying Indian mutual funds without realizing they’re PFICs, getting the Foreign Tax Credit calculation wrong, missing Form 8621, not disclosing ownership in an Indian company, overlooking foreign partnership reporting, misreporting NRE interest, skipping the treaty disclosure on Form 8833, filing international returns late, and probably the most common root cause never coordinating the Indian and US filings in the first place. A yearly compliance review catches most of this before it becomes a penalty notice.
It’s more common than people think: a US citizen or Green Card holder in India discovers years later that they should have been filing US returns and FBARs all along, despite paying tax honestly in India and genuinely believing there was no US obligation.
For people whose non-compliance was non-willful meaning it came from a genuine misunderstanding, negligence, or an honest mistake rather than deliberate avoidance the IRS’s Streamlined Filing Compliance Procedures offer a way back into good standing. Depending on your facts, that can involve filing the missing returns, filing prior years’ FBARs, reporting the foreign assets, paying any tax and interest owed, and submitting a certification explaining what happened.
Every case needs an individual assessment before anything gets submitted to the IRS we handle eligibility review, the Streamlined Foreign or Domestic Offshore Procedures as applicable, delinquent filings, asset reconciliation, and preparing the non-willful certification.
An IRS notice lands and the instinct is to panic understandably, especially from outside the US. Most of the time, though, it’s simply the IRS asking for clarification or supporting documentation, not a demand for additional tax. We handle information requests, CP-series notices, identity verification, FBAR and FATCA correspondence, foreign tax credit questions, PFIC and Form 8621 queries, Form 5471 and 3520 correspondence, amendments, and penalty responses building the documentation to back up whatever position we’re taking.
| Late filing of Form 1040 | Generally 5% of unpaid tax per month, capped at 25% |
| Failure to file FBAR | Up to USD 10,000 per non-willful violation; substantially more for willful violations |
| Failure to file Form 8938 (FATCA) | Typically starts at USD 10,000, with further penalties if non-compliance continues after IRS notification |
| Failure to file Form 8621 (PFIC) | Interest on unpaid tax, unfavourable default tax treatment, and greater IRS scrutiny |
| Failure to file Forms 3520 / 3520-A | Significant penalties tied to the value of the reportable transaction |
| Failure to file Form 5471 | Substantial information-return penalties |
| Failure to file Form 8865 | Penalties for undisclosed foreign partnership interests |
*Actual penalties depend on your specific facts and any statutory relief available this table is a general guide, not a substitute for a case-by-case review. If you’ve missed any of these filings, get advice before you file a correction, not after.
Initial consultation. We start by understanding your citizenship and immigration status, residency, employment history, where you actually live, your income sources, investments, business interests, prior filings, and where things are headed.
Document collection and review. W-2s, 1099s, K-1s, your Indian ITR, Form 26AS, AIS and TIS, salary slips, foreign tax payment records, bank and brokerage statements, RSU/ESOP statements, mutual fund statements, property documents, rental details, pension statements, and foreign asset information.
Technical review. We work through residency status, filing status, worldwide income, Foreign Tax Credit eligibility, FBAR and FATCA applicability, PFIC exposure, foreign corporation and partnership reporting, trust reporting, and treaty benefits.
Return preparation. Every applicable form gets prepared 1040 or 1040NR, FBAR, 8938, 1116, 2555, 8621, 3520/3520-A, 5471, 8858, 8865, 8833 and every return goes through more than one round of review before it’s filed.
Filing and follow-up. Electronic filing, extensions, IRS acknowledgements, refund tracking, payment planning, and handling whatever correspondence follows.
Year-round advisory. Compliance doesn’t end when the return is filed. We stay involved on things like a move back to India, RNOR planning, selling property in India, DTAA questions, Foreign Tax Credits, RSUs and ESOPs, 401(k)/IRA/Roth planning, PFIC investment decisions, trust reporting, and business ownership structuring as they come up through the year.
Cross-border tax isn’t just Form 1040 done twice. It takes genuine fluency in US tax law, Indian tax law, the DTAA, international information reporting, and how foreign tax credits actually interact which is a narrower skill set than it sounds.
We’ve been doing this for over 25 years, have worked with more than 10,500 NRI clients globally, and our team combines Chartered Accountants, US CPAs, Enrolled Agents, and ACCAs under one roof. Beyond the compliance forms FBAR, FATCA, PFIC, DTAA, Foreign Tax Credits we also handle RSUs, ESOPs, 401(k)s, IRAs, and Roth IRAs regularly, work with US citizens, Green Card holders, H-1B professionals, founders, and global executives, and stay involved year-round rather than disappearing after filing season. Our goal isn’t just a filed return it’s making sure you’re not paying more tax than you have to, in either country.
A US citizen in India with Indian investments we handled salary reporting, Indian rental income, FBAR, FATCA, PFIC reporting on Indian mutual funds, and Foreign Tax Credit planning under the DTAA.
An H-1B professional moving back to India departure-year US filing, FBAR compliance, Foreign Tax Credit planning, 401(k) advisory, and coordinating both countries’ returns.
A founder with an Indian Private Limited Company Form 5471 reporting, ownership disclosures, cross-border restructuring, and international information returns alongside the annual US filing.
If you have US-source income salary, dividends, rental income, capital gains you’re required to file. Even with entirely foreign income, you’ll need to file once your worldwide income crosses the IRS filing threshold, which depends on your filing status and age.
April 15 each year (the next business day if that falls on a weekend or holiday). A six-month extension pushes filing to October 15 but that’s an extension to file, not to pay. Interest and penalties still accrue on unpaid tax from April 15.
A late-filing penalty of 5% of unpaid tax per month, capped at 25%, plus a late-payment penalty of 0.5% per month on the unpaid balance, with daily interest on top. Filing as soon as possible limits the damage.
Yes the Foreign Tax Credit (Form 1116) offsets your US liability by the tax already paid to India, provided the income is taxable in both countries.
On Form 1040, alongside everything else the IRS wants worldwide income reported regardless of source. The specific rules depend on the type of income and whether it qualifies for an exclusion or credit.
It can, if you hold significant ownership in a Controlled Foreign Corporation the Global Intangible Low-Taxed Income tax gets reported via Form 8992 and is designed to limit deferral on foreign earnings.
Through the IRS’s online payment system or by international wire transfer.
W-2s for US employment income, 1099s for interest, dividends, freelance income or capital gains, bank statements or pay stubs for foreign income, FBAR/Form 8938 details for foreign accounts above threshold, and receipts for any deductions or credits you’re claiming.
Yes, using Form 1040-X, within three years of the original filing or two years from when the tax was paid, whichever is later.
Yes, if you’re a citizen, Green Card holder, or meet the Substantial Presence Test location doesn’t change the obligation, and worldwide income still needs reporting.
FBAR for foreign accounts over USD 10,000, Form 8938 for specified foreign financial assets, Form 8621 for PFICs, Form 5471 for foreign corporation ownership, and Forms 3520/3520-A for foreign trusts and gifts.
It requires NRIs and expats to disclose foreign financial assets above set thresholds. Ignoring it can bring significant IRS penalties.
Both civil and criminal penalties are possible. FBAR violations alone can reach USD 10,000 per account per year on a non-willful basis and considerably more if willful.
Yes through the Foreign Tax Credit (Form 1116) or the Foreign Earned Income Exclusion (Form 2555), depending on which fits your situation better.
Generally yes PF, NRE, NRO accounts, mutual funds, and even some LIC policies can be reportable under FBAR and Form 8938, and mutual funds specifically may also trigger Form 8621 as PFICs.
Broadly, most foreign mutual funds. Form 8621 is required for each one you hold, and the tax treatment tends to be less favorable than standard capital gains, with interest charges layered on.
The Streamlined Foreign Offshore Procedures let non-willful late filers come into compliance without the full penalty exposure. Worth an eligibility check before doing anything else.
Yes, generally, until the Green Card is formally relinquished or otherwise terminated under US tax law moving away on its own doesn’t end it.
Yes Form 1120 for C-Corps, Form 1120-S for S-Corps, and Form 1065 for partnerships and multi-member LLCs, including the associated K-1s, shareholder and partner considerations, and cross-border coordination.
Yes single-member and multi-member LLCs, S-Corps, C-Corps, and other US entities, coordinated against the owner’s Indian tax position.
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With over 21 years of experience, Mr. Abhishek Batra specializes in NRI taxation and cross-border corporate tax strategies. His expertise spans tax planning, compliance advisory, and financial structuring, helping individuals and businesses navigate complex international tax regulations.
Based in Canada, Mr. Batra offers tailored solutions to NRIs, expatriates, and global companies with operations in India. A Chartered Accountant, CPA, and SRCC graduate, he is known for delivering impactful financial strategies that support growth and compliance.
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An Experienced Chartered Accountant with over 5 years of expertise in cross-border taxation, NRI taxation, and US tax compliances. She has extensive exposure in handling complex international tax matters, including India-US taxation, DTAA advisory, foreign disclosures, expatriate taxation, and tax planning for NRIs and returning Indians.
She is a Chartered Accountant and a Commerce Graduate, with strong proficiency in US tax filings and global tax advisory services.
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