US Tax Returns for NRIs

Navigating US tax laws as an NRI (Non-Resident Indian) can be challenging due to the unique rules surrounding residency, worldwide income, and the need to report foreign assets. If you have income in the US or hold US citizenship or a Green Card, understanding your tax obligations is essential for compliance and avoiding double taxation. This comprehensive guide provides insights into the filing process, critical forms, and strategies to maximize tax relief.

NRIs must stay informed about their US tax responsibilities to ensure compliance and optimize their tax situation. Whether your income includes rental earnings, capital gains, or dividends, the correct reporting and adherence to deadlines are paramount to avoiding penalties and interest charges.

For expert assistance in filing your US tax return as an NRI, reach out to Dinesh Aarjav & Associates. We simplify cross-border tax compliance and ensure that your filings are accurate and timely.

Schedule A Call Today

Who Needs to File US Tax Returns?

NRIs need to file a US tax return if they:

Hold US citizenship or a Green Card
Earn income from US sources such as rental properties, dividends, or capital gains
Have worldwide income that surpasses filing thresholds

Important Deadlines

Standard deadline: April 15th for the previous calendar year.
Extension deadline: October 15th (with Form 4868 submission).

Timely filing is crucial to avoid penalties and interest charges.

Key US Tax Forms for NRIs

Form 1040: Main individual income tax return
Schedule E: For reporting rental income
Form 8938 (FATCA): Reporting foreign assets
Form 5471: Reporting foreign corporations
Form 3520: Reporting certain foreign trusts or large gifts
FBAR (FinCEN Form 114): Reporting foreign bank accounts

Reporting Foreign Income on US Tax Returns

You must report all foreign income on Form 1040 and attach Schedule B for interest/dividend income. Additional disclosures may include:

Schedule E for rental income
Form 8938 for financial assets

GILTI Tax and Controlled Foreign Corporations (CFCs)

If you own 10% or more of a CFC, you may be subject to GILTI (Global Intangible Low-Taxed Income) tax, reported on Form 8992.

Penalties for Non-Compliance

Late filing penalty: 5% of unpaid tax per month, up to 25%
Failure to report foreign assets (Form 8938): Up to $10,000 per violation
FBAR penalties: Civil penalties of up to $10,000 per non-willful violation

Foreign Tax Credit (FTC) and Double Taxation Relief

The IRS allows taxpayers to claim a Foreign Tax Credit to offset taxes paid in another country. This helps prevent double taxation on the same income.
Amending US Tax Returns

Amendments can be made using Form 1040-X within three years of the original filing date.

Frequently
Asked Questions

Q: Who needs to file a return in the US?

NRIs with US-source income or those meeting global income thresholds.
Q: What is the filing deadline?

April 15th for standard returns, with an extension available until October 15th.
Q: What if I miss the filing deadline?

Penalties and interest will accrue for late filing and payment.
Q: Can I claim tax relief for foreign taxes paid?

Yes, through the Foreign Tax Credit (FTC) to reduce US tax liability.
Q: How do I report foreign income?

All foreign income must be reported on Form 1040.
Q: What is GILTI tax?

A tax on income from Controlled Foreign Corporations, reported using Form 8992.
Q: How do I pay taxes from abroad?

Payments can be made online through the IRS website or by international wire transfer.
Q: What documents are needed for filing?

W-2s, 1099 forms, foreign income records, and bank statements.
Q: Can I amend my tax return?

Yes, within three years

Our Team

Ayushi Jain

Partner (London Office)

FCA, ACCA, B. Com (H)

Aarjav jain

Executive Director

MBA (Int'l Banking & Finance), LLB, B. Com (H)

Priyal Goel Jain

Partner

ACA, CISA, B. Com (H)

Sanyam Goel

Associate

CPA(USA), CA, CISA, B.Com (H)

Tripti Goel