United States citizens and green card holders are taxed on their worldwide income, wherever it is earned, and are required to report many foreign accounts, assets and companies on top of the income itself. The rules reach people who moved here years ago, students and workers on visas, expats living abroad, foreign owners of U.S. companies, and families who keep money or property in another country. Our international and expat tax service handles those filings, with particular depth in US-India situations.
US-India situations
Families with ties to India have a recurring set of issues, and each has its own page in our Indian CPA section:
- Indian bank accounts, including NRE, NRO and FCNR accounts, which generate income to report and may have to be disclosed. See NRE, NRO and FCNR accounts and FBAR for Indian bank accounts.
- Indian mutual funds, which the U.S. generally treats as passive foreign investment companies with special reporting. See PFIC and Indian mutual funds.
- Sale of property in India, rent from it, and gifts or inheritance received from relatives. See selling property in India, rental income from India and gifts and inheritance.
- Avoiding double tax through the foreign tax credit and the US-India tax treaty.
- Ownership of an Indian company or partnership. See Indian business ownership forms.
- Spouses and children who need an ITIN. See ITIN for spouses and dependents.
We explain each item in plain language, so you can follow what is being reported and why.
The reporting forms
| Form | What it reports | How and when |
|---|---|---|
| FBAR (FinCEN Form 114) | Foreign financial accounts with a combined value over $10,000 at any time in the year | Filed electronically with FinCEN, not with the tax return. Due April 15, with an automatic extension to October 15 |
| Form 8938 | Specified foreign financial assets above filing thresholds | Attached to your income tax return |
| Form 5471 | Foreign corporations, for certain officers, directors and shareholders | Attached to your return, due with the return including extensions |
| Form 5472 | Transactions of a U.S. corporation or foreign-owned U.S. disregarded entity that is 25% foreign-owned, with related parties | Attached to the corporate return; a foreign-owned disregarded entity files a pro forma Form 1120 |
| Form 8858 | Foreign disregarded entities and foreign branches | With the income tax return |
| Form 8865 | Foreign partnerships | With the income tax return |
The FBAR and Form 8938 overlap but are not the same. Form 8938 thresholds for tax year 2025 depend on where you live and your filing status:
| Filing status and residence | Year-end value over | Any time in the year over |
|---|---|---|
| Single, living in the U.S. | $50,000 | $75,000 |
| Married filing jointly, living in the U.S. | $100,000 | $150,000 |
| Single, living abroad | $200,000 | $300,000 |
| Married filing jointly, living abroad | $400,000 | $600,000 |
Missing these forms can lead to significant penalties, which is why accuracy matters more than speed. See FBAR penalties, Form 8938 penalties, Form 5471 penalties, Form 5472 penalties and the overview of foreign reporting penalties.
Credits, exclusions and treaties
Foreign tax credit. Foreign income taxes can be claimed as a deduction or as a credit. In most cases the credit is better. Individuals use Form 1116. Generally only income taxes qualify, and when a treaty reduces the foreign rate only the reduced amount counts. No credit is allowed for foreign tax on income that you exclude.
Foreign earned income exclusion. Americans living abroad may exclude a limited amount of foreign wages if they pass either the bona fide residence test or the physical presence test of 330 days in 12 months. The amount is adjusted every year, and Form 2555 claims it. It is not always the better choice, because it can limit other benefits.
Treaties. The U.S. has income tax treaties with a number of countries. They can reduce or exempt U.S. tax on some U.S.-source income of treaty-country residents, but they generally do not reduce U.S. tax for U.S. citizens and residents. Some treaty positions must be disclosed on Form 8833.
Nonresidents and residency
A non-citizen is a U.S. tax resident if they hold a green card or meet the substantial presence test; otherwise they are a nonresident. Year of arrival and departure are often dual-status years, with part-year resident and part-year nonresident treatment. A nonresident files Form 1040-NR. Income connected with a U.S. trade or business is taxed at graduated rates after deductions, while U.S.-source passive income such as dividends is generally taxed at a flat 30% unless a treaty gives a lower rate. For tax year 2026, Form 1040-NR is due April 15, 2027 for those who receive wages subject to withholding, and June 15, 2027 for others. See the nonresident return and residency rules.
How an engagement works
- Consultation on where you live, where you have income and assets, and what you have filed before.
- Written engagement agreement defining the forms and years in scope, deliverables and how fees are determined, before any work begins.
- Document collection: foreign statements, account opening dates, maximum balances, exchange rates, foreign tax receipts and entity documents.
- Preparation of the returns and information forms, with currency conversion and credit calculations.
- Review and delivery, explaining what is reported and how each form is filed.
- Follow-up: an annual filing calendar and, if earlier years have gaps, a discussion of your options.
How we can help
We work with families in Naperville, Aurora and across Chicagoland, and with clients abroad or in other states, using secure document exchange and video calls. We coordinate with your individual return so foreign and domestic numbers agree. If past filings were missed, we review the facts and options, but cannot promise that penalties will be waived. Contact us to begin.
Frequently asked questions
Do I have to file an FBAR if I have an Indian bank account?
If you are a U.S. person and the combined value of your foreign financial accounts exceeded $10,000 at any time during the calendar year, yes. The $10,000 test applies to all accounts together, not each one.
Does the US-India tax treaty remove U.S. tax on my Indian income?
Usually not. Treaties generally do not reduce U.S. tax for U.S. citizens and residents. They mainly help by allocating taxing rights and supporting the foreign tax credit.
Can I file as a nonresident if I am on an H-1B?
It depends on the substantial presence test and on the year. Most H-1B workers become tax residents after enough days in the U.S., but the first year can be different. See H-1B and visa holders.
Official sources
- IRS: Report of Foreign Bank and Financial Accounts (FBAR)
- IRS: Summary of FATCA reporting for U.S. taxpayers
- IRS: Foreign tax credit
- IRS: Taxation of nonresident aliens
- IRS: Instructions for Form 5471
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.