US Tax Returns for NRIs

If you’re an NRI with income sourced from the US, such as salary, dividends, rental income, or capital gains, you are required to file a US tax return. Additionally, even if your income is entirely foreign, you must file if your global income exceeds the filing thresholds set by the IRS. These thresholds depend on your filing status (Single, Married Filing Jointly, etc.) and age.

The standard deadline for filing US tax returns is April 15th each year. If April 15th falls on a weekend or holiday, the deadline extends to the next business day. For those unable to meet the deadline, a six-month extension is available, pushing the due date to October 15th. However, the extension applies only to filing, not payment. Interest and penalties may apply if taxes owed are not paid by April 15th.

Missing the deadline can result in penalties: Late Filing Penalty: 5% of unpaid taxes for each month the return is late, up to 25%. Late Payment Penalty: 0.5% of the unpaid taxes for each month the taxes remain unpaid. Additionally, interest accrues daily on unpaid taxes and penalties. Filing as soon as possible minimizes these charges.

Yes, NRIs can claim relief for foreign taxes paid under the Foreign Tax Credit (FTC). The FTC allows you to offset US tax liability by the amount of taxes paid to another country, provided the income is subject to taxation in both countries. To claim this credit, you must file Form 1116 with your US tax return.

The IRS requires NRIs to report worldwide income on Form 1040, regardless of where the income is earned. This includes income from employment, investments, rental properties, and business activities abroad. Specific reporting rules may apply depending on the type of foreign income and whether it qualifies for exclusions or credits under US tax laws.

The Global Intangible Low-Taxed Income (GILTI) tax applies to income earned through Controlled Foreign Corporations (CFCs). If you hold significant ownership in a foreign corporation, you may be required to report GILTI using Form 8992. This tax aims to reduce tax deferral on foreign earnings.

Payments can be made online through the IRS website or by international wire transfer.

To file accurately, gather the following documents: W-2 Forms: For income from US employers. 1099 Forms: For income from interest, dividends, freelance work, or capital gains. Foreign Income Records: Bank statements or pay stubs for income earned abroad. Form 8938 (FATCA) or FBAR: For foreign financial accounts exceeding reporting thresholds. Proof of Deductions/Credits: Receipts for deductible expenses like mortgage interest or education.

Yes, you can amend your return using Form 1040-X within three years of the original filing date or two years from the date the tax was paid, whichever is later. Amending is useful for correcting errors, claiming missed deductions, or adjusting income.

Yes. If you are a US citizen, Green Card holder, or meet the Substantial Presence Test, you are required to file US tax returns even if you reside outside the US. This includes reporting worldwide income

• FBAR (FinCEN Form 114) – if you have foreign bank accounts exceeding $10,000 • Form 8938 (FATCA) – for specified foreign financial assets • Form 8621 – for investments in Passive Foreign Investment Companies (PFICs) • Form 5471 – for ownership in foreign corporations • Form 3520/3520-A – for foreign trusts and gifts

FATCA (Foreign Account Tax Compliance Act) requires NRIs and expats to report specified foreign financial assets if their total value exceeds certain thresholds. Non-compliance can lead to hefty IRS penalties.

Failure to report income or file mandatory forms like FBAR, Form 8938, or Form 5471 can lead to civil and criminal penalties. FBAR violations alone can carry penalties of up to $10,000 per account, per year (non-willful).

Yes. NRIs can claim Foreign Tax Credit (Form 1116) or opt for Foreign Earned Income Exclusion (Form 2555) depending on eligibility. These provisions help avoid double taxation.

Yes. Indian Provident Fund (PF), NRE, NRO, mutual funds, and even certain LIC policies may be reportable under FBAR and Form 8938. They may also be treated as PFICs, requiring Form 8621

A Passive Foreign Investment Company (PFIC) includes most foreign mutual funds. US taxpayers must file Form 8621 for each PFIC and are subject to complex taxation rules and interest charges on gains.

The IRS provides options like the Streamlined Foreign Offshore Procedures for late filers to come into compliance without facing full penalties. We can help assess your eligibility.