Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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U.S. Citizens having bank account in India - Should you notify the IRS!

Citizens of the United States, as well as those who are deemed to be U.S. residents, are required to report foreign bank accounts to the IRS if they meet the defined guidelines. Reporting foreign bank accounts is called FBAR and such reports are submitted on Form TD F 90- 22.1. More information on FBAR is provided below.

Reporting foreign bank accounts (FBAR)

FBAR is a report of foreign bank and financial accounts held by U.S. Citizens/residents abroad. If you are a U.S. citizen or green card holder who has bank accounts abroad, you must file a FBAR report on Form 90-22.1 if the aggregate value of the accounts exceeds $10,000, during a calendar year. The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold.

FBAR filling for OCI holder residing in India

U.S. citizens and residents who have financial accounts in India, such as NRO, NRE accounts, where the value of the account exceeds the equivalent amount of  US$ 10,000 at any time during a calendar year, must file a 'Report of Foreign Bank and Financial Accounts' (FBAR) on form number TD F 90-22. Example1: (When living abroad) Mr. Raja, a U.S. Citizen having OCI is living in India and has a bank account in India.  Let's assume that the current balance in his account is of Rs. 5, 41,000. Using the conversion rate of Rupee to U.S dollar @ 48 the total amount in Mr. Raja's account is equal to US$ 11,270. As this amount is over the US$ 10,000 threshold, Mr. Raj is required to file a FBAR report. Example2: (When living in USA) Mr. Sharma, a U.S. citizen is living in New York. He has a bank account in India that has more than the equivalent of US$ 10,000 in the account. Even though Mr. Sharma continues to live in the United States, he is still required to file a FBAR report.

Failure to file foreign bank accounts report

Failing to file an FBAR when required to do so may possibly result in civil penalties and/or criminal penalties. If you have questions regarding FBAR, contact the IRS at FBARquestions@irs.gov

Statute of limitations for US Taxes

Here is how the statute of limitations generally applies when it comes to US taxes. Suppose you are now living in India and file a US tax return every year. In most situations the statute of limitations for IRS audits will expire after three years and the IRS normally, cannot go back and to audit any returns you filed three years ago.   On the other hand, if you don't file a tax return the statute of limitations will never run out. Even if you don't have income, you may want to consider filling a tax return every year, just so the statute of limitations for that filling year runs out.

Advantages to filling U.S. Taxes from India

If the mere fact, that you are legally obligated to file taxes in the United States being a U.S. citizen or resident, is not motivation enough. There are a few other advantages to filing that you should know about. Several income tax benefits might apply if you meet certain requirements while living abroad. However you can only claim these benefits if you file your taxes in a timely manner.

Foreign Earned Income Exclusion

If you have moved to India and live there now as a full time resident for a full calendar year or live there for 330 days out of any consecutive 12-month period; You can exclude up to $92,900 of earned income from U.S. Income Taxation for 2011. If you are married, both of you earn income and reside abroad, you can also exclude up to $92,900 of your spouse's income from taxation. These exclusions can only be claimed by filling a tax return in the applicable year. Remember, foreign earned income exclusion applies only if a tax return is filed and the income is reported.

The Foreign Account Tax Compliance Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010. FATCA affects US tax payers who hold foreign assets that exceed US$50,000. The IRS requires Information about such assets on a new form (Form 8938). This form must be attached to the taxpayer's annual return.  FACTA reporting applies for assets held in taxable years beginning after March 18, 2010.

Foreign banks requirement to notify IRS

It does not get any easier for US citizens who live abroad.  The IRS appears to be moving to stricter enforcement methods to track down those who may owe taxes. From the year 2013, foreign banks would also be required to provide certain information, such as the names of all their U.S. account holders, directly to the IRS.
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U.S. Citizen’s having bank

account in India - Should you

notify the IRS!

Citizens of the United States, as well as those who are deemed to be U.S. residents, are required to report foreign bank accounts to the IRS if they meet the defined guidelines. Reporting foreign bank accounts is called FBAR and such reports are submitted on Form TD F 90-22.1. More information on FBAR is provided below.

Reporting foreign bank accounts

(FBAR)

FBAR is a report of foreign bank and financial accounts held by U.S. Citizens/residents abroad. If you are a U.S. citizen or green card holder who has bank accounts abroad, you must file a FBAR report on Form 90-22.1 if the aggregate value of the accounts exceeds $10,000, during a calendar year. The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold.

FBAR filling for OCI holder residing

in India

U.S. citizens and residents who have financial accounts in India, such as NRO, NRE accounts, where the value of the account exceeds the equivalent amount of  US$ 10,000 at any time during a calendar year, must file a 'Report of Foreign Bank and Financial Accounts' (FBAR) on form number TD F 90-22. Example1: (When living abroad) Mr. Raja, a U.S. Citizen having OCI is living in India and has a bank account in India.  Let's assume that the current balance in his account is of Rs. 5, 41,000. Using the conversion rate of Rupee to U.S dollar @ 48 the total amount in Mr. Raja's account is equal to US$ 11,270. As this amount is over the US$ 10,000 threshold, Mr. Raj is required to file a FBAR report. Example2: (When living in USA) Mr. Sharma, a U.S. citizen is living in New York. He has a bank account in India that has more than the equivalent of US$ 10,000 in the account. Even though Mr. Sharma continues to live in the United States, he is still required to file a FBAR report.

Failure to file foreign bank accounts

report

Failing to file an FBAR when required to do so may possibly result in civil penalties and/or criminal penalties. If you have questions regarding FBAR, contact the IRS at FBARquestions@irs.gov

Statute of limitations for US Taxes

Here is how the statute of limitations generally applies when it comes to US taxes. Suppose you are now living in India and file a US tax return every year. In most situations the statute of limitations for IRS audits will expire after three years and the IRS normally, cannot go back and to audit any returns you filed three years ago.   On the other hand, if you don't file a tax return the statute of limitations will never run out. Even if you don't have income, you may want to consider filling a tax return every year, just so the statute of limitations for that filling year runs out.

Advantages to filling U.S. Taxes from

India

If the mere fact, that you are legally obligated to file taxes in the United States being a U.S. citizen or resident, is not motivation enough. There are a few other advantages to filing that you should know about. Several income tax benefits might apply if you meet certain requirements while living abroad. However you can only claim these benefits if you file your taxes in a timely manner.

Foreign Earned Income Exclusion

If you have moved to India and live there now as a full time resident for a full calendar year or live there for 330 days out of any consecutive 12-month period; You can exclude up to $92,900 of earned income from U.S. Income Taxation for 2011. If you are married, both of you earn income and reside abroad, you can also exclude up to $92,900 of your spouse's income from taxation. These exclusions can only be claimed by filling a tax return in the applicable year. Remember, foreign earned income exclusion applies only if a tax return is filed and the income is reported.

The Foreign Account Tax Compliance

Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010. FATCA affects US tax payers who hold foreign assets that exceed US$50,000. The IRS requires Information about such assets on a new form (Form 8938). This form must be attached to the taxpayer's annual return.  FACTA reporting applies for assets held in taxable years beginning after March 18, 2010.

Foreign banks requirement to notify

IRS

It does not get any easier for US citizens who live abroad.  The IRS appears to be moving to stricter enforcement methods to track down those who may owe taxes. From the year 2013, foreign banks would also be required to provide certain information, such as the names of all their U.S. account holders, directly to the IRS.
Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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