Information and tips (guidance) for NRIs in the USA — 2026

The United States is home to the largest Indian diaspora outside India — well over 5 million people of Indian origin, including roughly 2 million Indian-passport holders on H-1B / H-4 / L-1 / F-1 / Green Card status, and a much larger number of Indian-American citizens. The US also has the most complex tax-and-reporting framework that an NRI deals with, because the US taxes its citizens and residents on worldwide income with no exit on simply leaving the country. This page is the practical hub.

Two tax systems — both of them want you

Unlike the UAE or Singapore, the US does tax you on salary and global income — and it keeps doing so even after you return to India if you are a citizen or Green Card holder.

US tax residency

You are a US tax resident if any of these apply:

US citizen (regardless of where you live).
Lawful Permanent Resident (Green Card) at any time in the year — and continuing until you formally abandon it.
You meet the Substantial Presence Test (SPT) — at least 31 days in the current year AND a weighted total of 183 days or more across three years (current year × 1, prior year × 1/3, two-years-prior × 1/6).

Once a US tax resident, your worldwide income is reportable on Form 1040, including Indian rental income, NRO interest, Indian capital gains, and EPF / NPS accruals.

Indian tax residency for the same person

Under the Income Tax Act, you are an NRI if you spend less than 182 days in India in a financial year (1 April to 31 March).
A 120-day rule applies if you are an Indian citizen / PIO with ₹15 lakh or more of Indian-source income — staying 120 to 181 days in India can make you Resident but Not Ordinarily Resident (RNOR).

Tip: US citizens and Green Card holders cannot "switch off" US tax residency by spending less time in the US — only formal renunciation (citizenship) or abandonment (Green Card) does. Until then, every Indian bank account, mutual fund, and PPF balance is reportable on the US return.

The India-US DTAA

The double-tax treaty between India and the US has been in force since 1990 and is the most heavily used bilateral instrument NRIs rely on. Key points:

Salary income earned in the US is taxed in the US; the same person filing in India as an NRI does not pay Indian tax on US salary.
Indian-source income (rent, interest on NRO, capital gains on Indian shares) is taxable in India; foreign tax credit is claimed on the US return via Form 1116.
Dividends from Indian companies are subject to 15% withholding under the DTAA (versus the higher domestic rate without treaty relief).
Capital gains on Indian listed equities are taxable in India under domestic law regardless of DTAA position.

To claim DTAA benefits in India you need a Tax Residency Certificate (TRC) from the IRS (Form 6166) and Form 10F filed online on the Indian tax portal.

See the India-US DTAA framework and Indian pension USA DTAA for deeper coverage.

FBAR, FATCA and the reporting burden

US tax residents must separately disclose foreign financial accounts on two parallel filings:

FBAR (FinCEN Form 114) — required if the aggregate value of all your non-US financial accounts exceeded USD 10,000 at any point during the calendar year. Filed electronically with FinCEN, separate from the income tax return. Penalties for non-filing are severe even when no tax is owed.
FATCA Form 8938 — filed with Form 1040 if account values exceed thresholds (USD 50,000 / USD 100,000 for US-resident filers; USD 200,000 / USD 400,000 for bona-fide-resident-abroad filers).

Reportable accounts include NRE, NRO, FCNR, PPF, EPF, NPS, demat / Zerodha / brokerage, mutual funds, and LIC-style policies with cash value. The Indian financial system reports under FATCA IGA to the IRS, so non-disclosure is generally detected.

See FATCA vs FBAR comparison for the side-by-side detail.

The PFIC trap — Indian mutual funds for US persons

This is the single most expensive mistake US-resident NRIs make. Indian mutual funds and UTI-style ETFs are classified as Passive Foreign Investment Companies (PFICs) under US tax law. The PFIC regime imposes:

Punitive interest charges on deferred gains.
A complex Form 8621 filing per fund per year.
Effectively eliminates the tax efficiency of holding Indian mutual funds while a US tax resident.

Tip: If you are a US tax resident, use direct equity through a PIS-linked broking account for Indian equity exposure rather than mutual funds. If you already hold Indian mutual funds from before becoming a US resident, get specialist advice before redeeming — the "purging" mechanics matter.

Banking — what to open in India

NRIs in the US typically run three Indian rupee / foreign-currency accounts:

NRE (Non-Resident External) — fully repatriable, interest tax-free in India (but taxable in the US for US tax residents).
NRO (Non-Resident Ordinary) — for Indian-source income. Interest is taxable with TDS at 30% unless DTAA relief is claimed via Form 10F + TRC. Repatriation capped at USD 1 million per FY with Form 15CA / 15CB.
FCNR (Foreign Currency Non-Resident) deposit — fixed deposits in USD and other major currencies, 1-5 years. Avoids INR conversion risk on the principal.

Most major Indian banks accept NRE / NRO online applications from US-based NRIs. ICICI Bank, HDFC, Kotak, Axis, SBI, IDFC FIRST all have mature NRI-from-USA workflows.

Tip: All these accounts are reportable on FBAR and Form 8938. Plan to capture the maximum balance during the year for each — that is the figure FinCEN wants, not the year-end balance.

See NRI bank accounts in India for the detailed comparison.

USD-to-INR — the remittance corridor

USD-to-INR is a high-volume, fiercely competitive corridor. The realistic options in 2026:

Wise — transparent mid-market FX with a small upfront fee. Strong default for transparency and speed.
Remitly — competitive promotional rates; large Indian-bank network.
Xoom (PayPal) — good for smaller transfers; fast delivery to many Indian banks.
ICICI Money2India and SBI Express Remit (FX-Out) — Indian-bank corridors.
Wire transfer through Chase / BofA / Wells Fargo — fine for large amounts (USD 50,000+) where the wire fee is small relative to the transfer; otherwise expensive on FX margin.

Tip: Compare the all-in INR landed amount for the same USD figure across two providers before each transfer. The "no-fee" option often hides a worse FX rate; the "best rate" option may have a fee that flips the comparison.

See transferring money to India and transferring money abroad.

Investing in India from the US

US-resident NRIs can hold:

Indian listed equities through a PIS account — the PFIC issue does not arise on direct equity.
Government securities, NCDs and bonds — generally fine.
NPS — open to NRIs; tax treatment in the US is complex (likely treated as a foreign retirement account with annual reporting).
Real estate (residential / commercial; not agricultural — see below).
Indian mutual funds — avoid unless you have specialist advice (PFIC, see above).

Buying property in India from the US

Same rules as elsewhere — residential and commercial only, funds via NRE / NRO / FCNR, USD 1 million repatriation cap. See property tax for NRIs and US NRI property tax for the US side.

Tip: Indian rental income flows into NRO. As a US tax resident, you also report the rental on Schedule E and claim depreciation under US rules. Foreign tax credit (Form 1116) avoids double taxation. Maintain parallel records — Indian books for ITR, US books for 1040 — they reconcile but use different conventions.

OCI for US citizens of Indian origin

If you (or your parent / grandparent / great-grandparent) held an Indian passport, you are eligible for an OCI card — lifelong multi-entry visa, the right to live and work in India, near-citizen rights short of voting and certain government posts.

US-specific points:

Apply online at ociservices.gov.in, then submit documents physically through VFS Global in the US. Centres in Washington DC, New York, San Francisco, Houston, Atlanta, Chicago and elsewhere act on behalf of the Embassy of India, Washington and consulates in NY / SF / Houston / Chicago / Atlanta.
Spouse-category OCI requires two years of registered marriage.
OCI re-issue required only on the under-20 and first-passport-after-50 milestones.
A Surrender Certificate is required for former Indian citizens who took US citizenship on or after 1 June 2010, before they can apply for OCI.

See the OCI application guide and renouncing US citizenship for the related flow.

401(k), IRA and Roth IRA on return to India

A common US-NRI return-to-India question: what happens to my 401(k) / IRA when I move back?

Account stays with the US custodian (Fidelity, Vanguard, Schwab) — most allow non-resident-alien holders.
Withdrawals before age 59½ trigger the 10% US early-withdrawal penalty plus US tax (mitigated by DTAA where applicable).
Indian tax treatment depends on RNOR status (foreign pension income is generally outside the Indian net during RNOR) and on the article of the DTAA invoked.
Roth IRA: tax-free in the US under US rules; India does not specifically respect the Roth wrapper, and withdrawals after RNOR may face Indian tax.

See Indian pension USA DTAA for the detailed framework.

Returning to India — the US-specific timing trap

The single most common error among US-based NRIs returning to India long-term:

Liquidating US 401(k) / IRA / brokerage holdings in the same financial year as the move back, after Indian tax residency has already kicked in — and forgetting that US citizenship / Green Card status keeps the US 1040 filing obligation alive indefinitely.

Plan the timing so:

Large US-side liquidations happen while you are still NRI or in the RNOR window.
The Green Card abandonment (Form I-407) is timed deliberately if you are abandoning it — there are expatriation tax consequences (covered expatriates under IRC §877A).
US citizenship renunciation is a separate, more serious process with its own exit-tax regime.

The RNOR window typically gives 2 to 3 years of foreign-income exemption after return — see returning to India for the framework.

Quick-reference checklist

Topic	What to do
US tax residency	Track SPT days; remember citizens / Green Card holders are residents wherever they live.
FBAR / 8938	File annually on aggregate Indian account balances above thresholds.
Mutual funds	Avoid Indian MFs while US tax resident — PFIC. Use direct equity.
DTAA	TRC (IRS Form 6166) + Form 10F for India-side withholding relief.
Bank accounts	NRE for US-source money; NRO for Indian-source; FCNR for USD deposits.
Remittance	Wise / Remitly / Xoom for under USD 25,000; bank wire for larger.
Property	Residential / commercial only; funds via NRE / NRO; USD 1 M / FY repatriation cap.
OCI	Apply through VFS Global at the consular jurisdiction for your US address.
401(k) / IRA	Account stays after return; plan withdrawals around RNOR window.
Returning	Citizens / GC holders still file 1040; plan abandonment / renunciation deliberately.

A note on what this article is — and is not

General guidance, not professional advice. This page is a practical orientation hub for NRIs in the USA; it is not tax, legal, or financial advice. US tax rules — particularly the PFIC regime, FBAR / Form 8938 thresholds, expatriation tax for citizens and long-term Green Card holders, and the interaction with Indian capital gains under the DTAA — are unforgiving of mistakes and change with Treasury releases. Verify the current position with a qualified Indian Chartered Accountant and a US-licensed CPA / Enrolled Agent familiar with India-US cross-border issues before acting on anything material.

Where to go next

NRI bank accounts in India — NRE vs NRO vs FCNR.
Transferring money to India — remittance comparison.
US tax filing for NRIs — the US-side mechanics.
US NRI property in India — rental and sale tax handling.
Indian pension USA DTAA — pension and retirement-account treatment.
FATCA vs FBAR — reporting comparison.
OCI application guide.
Returning to India — the RNOR framework.
Renouncing US citizenship — exit-tax consequences.
NRIs in Singapore, NRIs in UAE — sister hubs.