Q.1252 Indian resident with

foreign assets - Must File Tax

return even if no income . . .

Question: Hello Mr chand, I have purchased and read your informative book . I am US citizen living in India for few years and have less than 2,50,000 rupee income in any of the years that I am living in India. I have not filed my taxes in India as income was less that $500(in US) and in India less than one lakh.. In march- I was told that income accruing in retirement accounts in the form of dividends is taxable in India each year- is that true?I have not withdrawn anything from my retirement accounts ..I am also being told that since i have foreign assets, even if I dont have income, I needed to file my taxes in India. Please advise if that is true. Most of my money in US is in retirement accounts that I created while working in US before year 2003. Income in retirement accounts is not taxable in USA (till we withdraw-so it never occured to me that they may be taxable in India.Also, I was not aware of ROR status concepts which i found out only recently. I came back to India as I had gotten depressed in US( have been on depression medication ) . I left everything in US as it was and am living with my parents in India. I do not own any property in US and have a small commercial property(land- not built) in India.Since my move was not planned and i was not aware of residence permit concept either- I have not applied for it either. Can I apply this now? can i apply it from India? I seek your help in advising me as to what should be my course of action now. since i am living in India- I have been filing my US taxes( even if no income so as to stay compliant ) .I have no FBAR or 8833 requirement as I do not quallify for that.I have one bank account and one regular brokerage account in US in which i had bought shares in year 2000 and sold them in 2018 at a loss. I am now thinking of renouncing my US citizenship and reading online two things are unclear which i was hoping your book will clarify but I have not found the answer to it. 1) if i renounce- do I need to withdraw my retirement account before doing it and pay penalty or I can let them stay in US? are there any negative consequences of leaving retirement accounts there and becoming an Non resident of US for tax purposes? 2) I understand I will have to file final dual status tax return along with form 8854(?). I am unclear whether 8854 applies to me my total net worth is less than $300K. If it applies then - could you explain how 401K,traditional IRA and roth IRA accounts need to be reflected in part V of the form( if I can leave them in US without negative impact) 3) what do I need to submit by way of indian property detail on 8854 in calculation of net worth Would really appreciate it if you could answer. I would also request if you choose to update this email in FAQ section , please remove personla details regarding mental health before posting your site has been very helpful in understanding banking and overall picture. Thanks, Answer: While I appreciate your query please be informed that I am not able to offer any type of personal financial planning or advice on my website. Information posted on my website is only for informational purposes and should not be considered as professional advice of any sort. Rules and regulations change periodically and all readers are urged to consult with professional tax consultants familiar with USA tax laws. I can only make general observations that some readers of this page may find useful. • Those who fall under the classification of a resident in India [ROR] must file tax returns in India if such individuals have assets abroad. This applies regardless of whether such individual has any taxable income in India. • Non-Residents or RNORs are exempt. They need to file a tax return only if they have taxable income for Indian sources. Their worldwide income is exempt from taxes in India. • Foreign Income accruing or arising outside India in any financial year is liable to income-tax in that year even if it is not received or brought into India. Reporting information on foreign assets • Filing an income tax return in India for residents of India [ROR] is mandatory if you are a Resident individual and have an asset or financial interest in an entity located outside of India. (Not applicable to NRIs or RNORs) • The requirement to report foreign assets on the Indian tax return was introduced from financial year 2011-12 for disclosure reasons. Foreign assets are reported on a form called ‘Schedule FA’. Renouncing US Citizenship • High net worth individuals may be subject to an exit tax when they renounce their US citizenship. [For example someone having assets over two million dollars] USA Retirement account after renouncing US citizenship My understanding is that you have option to cash out or continue your retirement account. A lot would depend on the type of retirement account you have. It is best to check with a tax professional in USA to determine the pros and cons of cashing your retirement account and get help with tax planning. Form 8854 Regarding Form 8854 filling, here is what the IRS says: ‘Until you file Form 8854 and notify the Department of State or the Department of Homeland Security of your expatriating act, your expatriation for immigration purposes does not relieve you of your obligation to file U.S. tax returns and report your worldwide income as a citizen or resident of the United States.’ When it comes to tax laws and IRS compliance it is always best to consult a US tax professional.