Are you a US. Citizen and now living in in India? Filling US. tax returns are legally required and why you must do so . . . OCI holders who are US citizens and living in India should realize that as a US expatriate residing in abroad, you still owe US. taxes each year on your worldwide income to the US government. US Permanent Residents (green card holders) as well as US. Citizens must report each year their income earned anywhere in the world.Worldwide income means that your US. income tax return must include:•Foreign dividends•Rental Income Earned Abroad•Foreign pension income•Foreign capital gains or losses on stocks, bonds, real estate•Foreign royalties•All other foreign incomeBe aware that if you aren't filing your US. tax return, the statute of limitations on tax collections will not run out and your tax return obligation will continue to grow greater as each year passes.The US. government has income tax treaties with several countries. Now, both the IRS and the foreign taxing authorities have the capability to easily exchange information on their citizens living in the other country. The IRS probably has IRS staff in the US Embassies around the world to keep an eye on expatriates who may be dodging US. taxes.The IRS had in 2009 offered an amnesty program offering lower penalties for those who declared their foreign bank assets. Approximately 15,000 accounts held abroad were uncovered in 2009.The time frame for latest amnesty program is said to be up to August 31, 2011. Those who voluntarily disclose their foreign bank accounts and assets could receive reduced penalties and could avert large fines and possible jail sentences.US Citizens living abroad may benefit by filling taxes in USAA Tax Treaty may reduce or eliminate any double taxation of your income by both countries by allowing credits for foreign income taxes you pay while living outside the US. against your US. income taxes.The chances are that this credit may quite often totally offset any US. tax you might owe on your worldwide income in the US. However, to claim the credit you must file your US. tax return every year.Suppose you live abroad for 5 years, and then return to the United States, the IRS may question your failure to file returns for the past five years and make assessments based on their best estimate of your income.The interest and penalties on any old tax amounts owed grows faster than you can imagine and after 4-5 years may exceed the amount of the original taxes owed.Furthermore, there are several advantages to filling your taxes every year, even if you reside abroad and have NO income!