India-US Cross-Border Tax Guides
The US rules that catch people out are rarely about how much tax you owe. They are about what you have to report — and the penalties attach to the reporting, not the tax. These guides cover the ones that matter if you moved to the US and kept a financial life behind you.
The reporting rules themselves apply whatever country you came from. The worked examples here are Indian — NRE and NRO accounts, Indian mutual funds, EPF and PPF — because that is where most of our cross-border work sits, but the FBAR, Form 8938 and the PFIC regime reach accounts and funds in any country.
FBAR and Indian Bank Accounts
Which Indian accounts are reportable on FinCEN Form 114 — savings, NRE, NRO, FCNR, fixed deposits, PPF, EPF, demat — how the $10,000 aggregate threshold really works, and why many F-1 students owe nothing at all.
- NRE and NRO treatment
- Signature authority
- FBAR vs Form 8938
- Never filed before
Indian Mutual Funds and the PFIC Problem
PFIC status turns on the US income and asset tests applied to the fund — tests a pooled vehicle holding securities will often meet. What that means for your SIPs, why the default regime is the punitive one, why the QEF election is usually closed to you, and how many Form 8621s you may owe.
- Form 8621 per fund
- QEF vs mark-to-market
- ELSS and ETFs
- Held for years already
Form 8938 and FATCA Reporting
Filing an FBAR does not satisfy Form 8938, and neither form is a subset of the other. The thresholds, and exactly which Indian holdings each one catches — including the ones only Form 8938 reaches.
- The four thresholds
- Directly held shares
- Indian LLP interests
- Overlap with Form 8621
The India-US Tax Treaty
It does not stop the US taxing your Indian income — a saving clause preserves that. What the treaty really provides, why the foreign tax credit is the actual mechanism, and the one benefit that is unique to India.
- Article 21(2) for students
- What it does not cover
- Form 8833
- Dual residence
The Foreign Tax Credit and Form 1116
The mechanism that actually stops you being taxed twice — and it does not work evenly. NRE interest is fully taxable in the US with no credit at all, because India exempted it. Plus the April-March year mismatch nobody warns you about.
- The NRE trap
- Per-category limits
- Form 26AS timing
- Skipping Form 1116
NRE, NRO and FCNR Accounts
India taxes the three accounts three different ways and the US recognises none of those distinctions. What actually goes on your return, the April-March timing mismatch, and the currency rules only FCNR deposits raise.
- Why the Indian exemption costs you
- Cumulative term deposits
- FCNR exchange gain
- Moving back to India
Indian Rental Income on a US Return
You declared the rent in India and paid Indian tax on it, so it feels handled. But India’s flat 30% deduction does not exist in the US, depreciation is mandatory here, and Indian property cannot use the 27.5-year period every calculator defaults to.
- Schedule E in dollars
- The depreciation trap
- Basis in rupees
- Joint ownership
Sending Money Between the US and India
A transfer is almost never taxed, but it is often reportable — and which of the two of you has to file depends on which way the money moved. Gift tax follows the donor; Form 3520 follows the recipient.
- Gift tax follows the donor
- Form 3520 over $100,000
- Domicile, not residence
- What LRS does not do
EPF, PPF and NPS on a US Return
The hardest topic in India-US filing, and the one where a confident answer should worry you. There is a Form 3520 exception almost nobody claims — and a timing question that is genuinely unsettled, so we set out the positions instead of picking one.
- The foreign trust question
- Rev. Proc. 2020-17 relief
- Four competing positions
- No totalization treaty
RSUs and ESPP Across India and the US
Vesting is the taxable event, and if you moved countries mid-vesting the income splits on a day count over the grant-to-vest period — a split that locks on the vesting date and cannot be changed afterwards.
- Sourced grant to vest
- The zero-basis error
- The 183-day trap on F-1
- State trailing liability
Selling Property in India
The gain arises on the sale, not when you bring the money over. How the dollar basis puts exchange movement inside your gain, why India’s indexation gives you nothing here, and the home-sale exclusion that can reach an Indian flat — for about three years after you move out.
- Basis in dollars
- The $250,000 exclusion abroad
- The three-year window
- Depreciation comes back
Streamlined Filing Compliance
You have just worked out that your Indian accounts should have been reported for years. There are two procedures, one costs 5% of everything you hold and the other costs nothing — and which one you get depends on dates that are moving.
- 5% penalty, or zero
- The non-residency test
- What closes the door
- The certification
H-1B Tax Filing Checklist
You are on H-1B and it is filing season. Which residency status does this year fall into, what does that change, and which of the W-2, equity, India-side and state items on the list actually apply to you?
- Residency status first
- W-2s, RSUs and basis
- India-side items
- State and multi-state
F-1 and OPT Tax Filing Checklist
Do you have to file at all if you earned nothing, are you a nonresident this year or not, and was your employer right to withhold social security on your OPT pay? The three questions students actually arrive with.
- Form 8843 with no income
- Nonresident or resident
- FICA and the treaty
- Scholarships and 1042-S
Why the FBAR, Form 8938 and PFIC rules come first
They are the obligations most likely to apply to someone who moved to the US and kept their financial life in their home country — and the ones people are least likely to know exist. None of them depends on owing extra tax. You can be fully paid up and still have an incomplete return.
Start with the FBAR, because its threshold is the lowest by a wide margin: $10,000 across all your accounts combined, at any point in the year. If you kept a savings account anywhere outside the US, you are probably in scope.
Form 8938 comes next, because it overlaps the FBAR heavily but not completely, and because filing one does nothing for the other. Its thresholds are much higher, so plenty of people owe an FBAR and no 8938.
The PFIC rules are last but usually cost the most. If you hold Indian mutual funds, the default treatment is punitive and it applies unless you act — and the longer it runs, the worse the eventual bill.
Not sure which of these apply to you?
Send us a list of what you still hold outside the US. We will tell you which forms are due, which are not, and what to do about any year already filed without them.