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Reporting Indian income from Interest and FBAR

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  • Reporting Indian income from Interest and FBAR

    1. Are green card holders required to report their income in India from various sources such as interest deposited in bank accounts and others? even if they are already paying taxes in India and filing a separate tax return in India. My tax CPA in the USA said it is not required but some poeple I know opined that it is required to report these on 1040 schedule B. Also how does one match the tax return in India with tax return in USa because they work on different fiscal periods and the incomes shown in India could be different from what has to be shown in USA (Jan-Dec).

    2. I just read that US nationals and GC holders are required to submit TDF 90-22.1 known as FBAR by June for the previous year, if the combined total in accounts held abroad either singly or jointly exceeds $10K at any time in a year. Any idea about this? I spoke to a number of people and they did not know about this. But on the net it seems to say there is an automatic penalty of $10K for every year of default if one fails to submit this form. In extreme cases fine can be $500K with 5 year prison. Does anyone know about this? are people filing it? Is there provision for late filing? How do they track whether a person had $10K combined total at any point in a year?

    3. Is there any limit of sending money from USA to India in a calendar year? Does it have to be accounted for in any tax form?

  • #2

    I am not a lawyer and you need to consult with one to validate any info posted on the forum and discuss your case specifics. H1b Question? Read the FAQ first.

    Comment


    • #3
      For FBRA the IRS website says "The term “United States person”
      means a citizen or resident of the United States, or a person
      in and doing business in the United States."

      I am on work permit and as per my understanding, working in IT industry for a biweekly pay check is not considered business. Still, some people in my organization are filing FBRA and I am confused.

      Any inputs will be greatly appreciated.

      Comment


      • #4
        A U.S. citizen or resident alien individual (U.S. taxpayer) generally pays U.S. income tax at ordinary rates on his or her worldwide income, regardless of where the income is earned. For U.S. tax purposes, your income must be computed in U.S. dollars. Thus, if you receive or accrue interest income denominated in a foreign currency during the tax year, you must translate the income into U.S. dollars at the spot rate on the date the interest is received or accrued.

        The interest income can be translated using a reasonable spot rate convention if the convention is consistently applied in all tax years and to all accounts not denominated in U.S. dollars in the same foreign bank. For example, if you receive interest on a foreign savings account, you can translate the income into U.S. dollars on the last day of each quarter of the tax year, on the last day of each half of the tax year, or on the last day of the tax year. If you adopt the spot rate convention for a particular account or accounts, you will not realize foreign currency gain or loss on the receipt or accrual of the interest income.

        Interest earned on your foreign savings account may also be subject to foreign withholding taxes, which may be reduced by a U.S. income tax treaty. In order to mitigate the double taxation on foreign interest income, you may either deduct, or elect to take a credit for, the tax paid to the foreign country.

        Besides reporting your foreign savings account interest income on Form 1040, Schedule B, you must also file Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts (FBAR)) annually with the Treasury Department to report financial interests in, and signatory and other authority over, foreign accounts.

        The FBAR requirements apply to any “U.S. person,” which includes all U.S. citizens and resident aliens. Nonresident aliens are not required to file a FBAR. Consequently, an individual who otherwise would qualify as a nonresident alien must be careful to avoid being classified as a resident alien under the substantial presence test of Code Sec. 7701(b)(3) and thus subjected to the FBAR requirements (and related penalties for failure to comply).

        The substantial presence test provides that an individual becomes a resident if he or she is physically present in the U.S. for 183 or more days during the current tax year. An individual not physically present in the U.S. for 183 days or more during the current tax year, still may satisfy the substantial presence test under a three-year look-back. The rule requires the individual to be physically present in the U.S. during the current tax year for at least 31 days, and for a total of 183 days over a three-year period that includes the two preceding calendar years.

        Most people on H1B are considered resident aliens for tax purposes (meaning they file a 1040 rather than a 1040NR). An easy way to remember this rule is, if you file a 1040, 1040A or 1040EZ, you are subject to the FBAR requirements.
        Jeff Pickering


        Work : (972) 378-5200
        Fax: (972) 692-7215
        Website:

        Comment


        • #5
          How to report Income in India without a 1099

          I have Interest and dividend income from india investments.
          Are we supposed to convert to $ as explained by Jeff and just include it in Schedule B even though we do not have a 1099?
          Do we need to provide some indication to IRS that a 1099 is not available for the india Income, such as an attachment.
          Since I use Turbo Tax and electronic filing options are more limited.

          Comment


          • #6
            No 1099, no special attachment.
            Immihelp Support
            No legal advice. Use at your own risk.

            Visa and Greencard Tracker

            Visitor Medical Insurance for your visiting relatives.

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            • #7
              HIRE Act’s Foreign Account Tax Compliance Provisions

              Do we need to file FATCA form (HIRE Foreign Account Tax Compliance: Reporting Requirements) also in addition to FBAR for Indian NRI accounts
              Are there any issues of not filling FATCA forms after filing FBAR? . I have filed FBAR and payed tax for interest accrued in my NRI account in US for last year.

              Any recommendations or comments will be very helpful.

              Thanks in advance.

              Comment


              • #8
                Persons filing 1040 or its equivalent must report world wide income including interest earned in India converted to USD.

                Generally all interest income regardless of country of source can be reported on schedule B. If there is a tax liability on the interest earned ( not tax withholding) payable to India income tax, then claim credit for tax paid on 1116 form.

                Comment


                • #9
                  Significance of TD-F90 on foreign bank accounts

                  FBAR or TD-F90 form which is applicable to US resident and non resident aliens if during tax year, total of all funds in banks including retirement funds like PPF exceeds $ 10,000 then EVERY bank account details needs to be submitted to Treasury EVERY year.

                  It is not a one time event.

                  Also TD-F90 form is to be submitted to treasury and not IRS.

                  Please read carefully important recent information on the subject in link below

                  Last edited by Nishant; 01-30-2011, 11:19 PM.

                  Comment


                  • #10
                    How do I find what the currency rate was on a particular date? For last year, I received interest in Indian rupees on June 30, 2010 & Dec 31, 2010. If I understand right, I will have to convert the interest into dollars so that I can file it on my income tax return.

                    Comment


                    • #11
                      You can use an average exchange rate to convert IR into USD. Try (beginning of the year rate + end of the year rate) / 2. Also, be aware that as of April 7th, 2011 the IRS is seeking the names of HSBC account holders from HSBC India. http://www.justice.gov/opa/pr/2011/April/11-at-439.html
                      Jeff Pickering


                      Work : (972) 378-5200
                      Fax: (972) 692-7215
                      Website:

                      Comment


                      • #12
                        H1 visa candidates, i have question on NRE/NRO account and money savings in it and reporting that in USA as FBAR and then interest amount report in tax filings in usa.

                        -> NRO Account - 30% tax charged by indian govt on interest amount. do we need to report again this NRO account savings amount and interest amount in US?

                        -> NRE Account - this is not taxable so we need to report interest amount in US right?

                        -> Regular Indian Resident Accounts - some NRI people still have regular Resident accounts in india, do we need to report that too in US?

                        -> Fixed Deposits also there as deposit accounts.


                        should we add all accounts money in india and check if that exceeds $10K and file FBAR? or do we need to file FBAR for only NRE account and skip NRO account amount?

                        if we are not planning to repatriate amount from NRE to US back then can we ignore FBAR?

                        currently my india BANK don't provide any 1099 or any other interest earned document.


                        if we are married, is it better to have account for wife also in india so that some of them can transfer to spouse account and some of them to our individual account? or joint account in india better? what is the best option. and also maintaining joint account in US better for transferring amount from that account?

                        Comment


                        • #13
                          Originally posted by vikky789 View Post
                          H1 visa candidates, i have question on NRE/NRO account and money savings in it and reporting that in USA as FBAR and then interest amount report in tax filings in usa.

                          -> NRO Account - 30% tax charged by indian govt on interest amount. do we need to report again this NRO account savings amount and interest amount in US?

                          -> NRE Account - this is not taxable so we need to report interest amount in US right?

                          -> Regular Indian Resident Accounts - some NRI people still have regular Resident accounts in india, do we need to report that too in US?

                          -> Fixed Deposits also there as deposit accounts.


                          should we add all accounts money in india and check if that exceeds $10K and file FBAR? or do we need to file FBAR for only NRE account and skip NRO account amount?

                          if we are not planning to repatriate amount from NRE to US back then can we ignore FBAR?

                          currently my india BANK don't provide any 1099 or any other interest earned document.


                          if we are married, is it better to have account for wife also in india so that some of them can transfer to spouse account and some of them to our individual account? or joint account in india better? what is the best option. and also maintaining joint account in US better for transferring amount from that account?

                          are you saving in your NRI accounts, how are you managing

                          Comment


                          • #14
                            Need to file FBar for previous years ?

                            Hi,

                            Before moving to U.S, I had a N.R.I account in India. The account value exceeds $10k with Fixed Deposits attached to the account. I have not received any interest on the amount since the Fixed Deposits have not matured. Also, I have never transferred/received any money to this account after moving to U.S.

                            I was not aware about Fbar till now, so I selected to file FBar in this year's return.

                            Do I need to file FBar for previous years ? If yes, do I need to amend my tax returns too even though I didn't receive any interest from this account ?

                            Comment


                            • #15
                              Originally posted by akw452 View Post
                              Hi,

                              Before moving to U.S, I had a N.R.I account in India. The account value exceeds $10k with Fixed Deposits attached to the account. I have not received any interest on the amount since the Fixed Deposits have not matured. Also, I have never transferred/received any money to this account after moving to U.S.

                              I was not aware about Fbar till now, so I selected to file FBar in this year's return.

                              Do I need to file FBar for previous years ? If yes, do I need to amend my tax returns too even though I didn't receive any interest from this account ?
                              If your NRI/NRO account has presence in USA (ex: CITI BANK) then FBAR is not needed as you have already declared that interest income in your tax returns already (in 1099-INT).

                              Comment

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