Tax tips for US Citizens living in

India

Citizens of the United States who hold OCI status and have relocated to India, as well as those who have business interests in India, should ensure that they continue to comply with IRS laws. There appears to be an extra push in the United States, to recover taxes from their citizens, who may have assets and undeclared income abroad.

U.S. tax liability basis

Contrary to the Indian tax system which is based on residency, The United States tax system is based on one's citizenship as well as residence. As a U.S. citizen, no matter what part of the world you go to, the chances are, you cannot escape U.S. taxes. The penalties levied by the IRS are also severe and enough to force just about everyone, to stay in compliance. As a U.S. expatriate residing in India, you still owe U.S. taxes each year on your worldwide income. U.S. Permanent Residents (green card holders) as well as U.S. Citizens must report each year their income earned anywhere in the world.

Penalties for not filing U.S. taxes

Failure to comply with U.S. tax filing laws may possibly result in civil penalties, criminal penalties or both. By combating international tax evasion the IRS claims to have collected 2.7 billion dollars, since 2009, from thousands of U.S. taxpayers! (IR- 2011-94, Sept. 15, 2011) According to an article, published in the 'Wall Street Journal' (March 10, 2011) growing numbers of Americans who live overseas are renouncing U.S. citizenship because of mounting tax and reporting obligations. What is worldwide income for U.S. Citizens

Worldwide income means that your

U.S. income tax return must include:

1. Foreign dividends. 2. Rental Income Earned Abroad. 3. Foreign pension income. 4. Foreign capital gains or losses on stocks, bonds, real estate. 5. Foreign royalties. 6. All other foreign income. Be aware that if you aren't filing your U.S. 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 U.S. has income tax treaties with several countries, including India. 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 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. Those who voluntarily disclose their foreign bank accounts and assets could receive reduced penalties, preventing large fines and possible jail sentences.

IRS news release in Hindi

On February 8, 2011 the IRS issued a news release in the Hindi language, perhaps to encourage U.S. Citizens of Indian origin to comply and not risk the possibility of penalties. You can view the IRS Hindi news release on the IRS website, or access it from our website NriInformation.com by clicking HERE The time frame for latest amnesty program expired on September 9, 2011. Next Page: Tax Filling Requirements for U.S. Citizens living in India . . . read now >>