NRI tax filing guide
NRI Tax Filing: A Complete Guide to Your US Tax Return
Whether you moved to the US on an H-1B, hold a green card while living in India, or earn US rental and investment income from abroad, your US filing obligation depends on your tax residency — not your passport or visa. This guide covers exactly how NRI tax filing works: which form to use, what to report, treaty relief under the US-India agreement, deadlines, and the errors that most often lead to IRS notices.
Forms
1040 or 1040-NR
Due
Apr 15 / Jun 15
Disclosures
FBAR + FATCA
Relief
US-India treaty
Step 1: Determine your US tax residency
Everything in NRI tax filing flows from residency. The IRS uses two tests, and visa category is irrelevant to both:
- Green card test — if you are a lawful permanent resident at any point in the year, you are a US tax resident, even if you live full-time in India.
- Substantial presence test — 31 days in the current year and 183 weighted days over three years (all of this year, 1/3 of last year, 1/6 of the year before).
Pass either test and you file Form 1040 on your worldwide income. Fail both and you are a non-resident alien filing Form 1040-NR on US-source income only. Move between the two mid-year — typically your first or last year in the US — and you file a dual-status return.
Step 2: Pick the right form
- Form 1040 — US citizens, green card holders, and substantial-presence residents. Reports worldwide income including Indian salary, rent, interest, mutual funds and capital gains.
- Form 1040-NR — non-resident aliens with US-source income: rental property, US brokerage dividends, effectively connected business income, or US wages.
- Form 1040 + 1040-NR statement — dual-status year.
- Form W-7 — apply for an ITIN if you or a dependent need a taxpayer number and are not eligible for an SSN.
Step 3: Report foreign accounts and assets
This is where most NRI returns go wrong. If you are a US tax resident, the accounts you kept in India are reportable even when no tax is owed on them:
- FBAR (FinCEN 114) — required if your combined foreign accounts exceeded $10,000 at any point in the year. NRE, NRO, savings, fixed deposits, PPF and demat accounts all count.
- FATCA (Form 8938) — filed with the return once foreign financial assets exceed the threshold ($50,000 for single filers in the US; higher living abroad).
- Form 8621 — Indian mutual funds and ULIPs are usually PFICs, with their own punitive tax regime and reporting.
- Form 3520 / 3520-A — certain gifts from Indian relatives above $100,000 and some trust interests.
FBAR penalties start at $10,000 per non-willful violation, per year — far more than the tax usually at stake. If you have missed years, the Streamlined Filing Compliance Procedures are typically the cleanest way back into compliance.
Step 4: Avoid double taxation
Reporting Indian income on a US return does not mean paying tax on it twice. Three mechanisms usually eliminate the overlap:
- Foreign tax credit (Form 1116) — credit for income tax already paid to India, dollar for dollar within limits.
- Foreign earned income exclusion (Form 2555) — excludes a large slice of foreign salary if you meet the bona fide residence or physical presence test.
- US-India treaty — caps withholding on dividends, interest and royalties, and allocates taxing rights on pensions, students and short-stay employment. Positions above the disclosure threshold go on Form 8833. Indian students and business apprentices are among the few non-residents who may claim the standard deduction, under Article 21(2).
Key deadlines
- April 15 — federal return and any tax owed.
- June 15 — automatic extension for US persons living abroad (interest still accrues from April).
- October 15 — extended filing deadline with Form 4868; also the automatic extended FBAR deadline.
- Quarterly — estimated payments if withholding does not cover your US rental or business income.
Mistakes we see most often in NRI tax filing
- Assuming a visa type decides residency instead of running the substantial presence test.
- Filing Form 1040 when a 1040-NR was correct, quietly overpaying US tax on Indian income.
- Skipping FBAR because the NRE account "already paid tax in India".
- Treating Indian mutual funds as ordinary investments and missing PFIC reporting.
- Claiming a treaty benefit without attaching Form 8833.
- Ignoring state filing — California, New York and New Jersey apply their own residency rules after you leave.
- Selling Indian property and reporting only the Indian capital gain, not the US basis calculation in dollars.
Where to get NRI tax help
If your situation involves more than a single W-2, professional NRI tax help pays for itself — mostly by preventing the disclosure penalties, not by shaving the tax bill. Bring your Indian Form 16 and 26AS, year-end statements for every Indian account, mutual fund and demat statements, property documents, and last year's US return.
Our document checklist covers the full list, and the tax estimator gives you a rough number before you start. For the non-resident form specifically, see our Form 1040-NR guide.
NRI tax filing document checklist
Gather these before you start. Missing Indian account statements and cost-basis records are the two things that stall an NRI return most often.
Identity & prior filings
- Passport, visa stamps and US entry/exit dates (for the substantial presence test)
- SSN or ITIN for you, spouse and dependents (Form W-7 if not yet issued)
- Green card / I-551 details if applicable
- Last two years of filed US returns (Form 1040 or 1040-NR)
- Prior year state return(s), if you lived in CA, NY or NJ
US income
- W-2 from every US employer
- 1099-NEC / 1099-K for US contract or platform income
- 1099-INT, 1099-DIV and 1099-B from US banks and brokerages
- 1099-R for IRA / 401(k) distributions or rollovers
- Schedule K-1 from any US LLC, partnership or S-corp
- US rental income and expense summary per property, plus the depreciation schedule
- Form 1042-S for US-source income subject to withholding
Indian income
- Form 16 from your Indian employer
- Form 26AS and the Annual Information Statement (AIS)
- Indian rental income and municipal tax receipts
- Interest certificates for NRE, NRO, savings and fixed deposit accounts
- Capital gains statements for shares, mutual funds and property
- Indian tax return (ITR-V) and challans for tax already paid
Foreign account & asset reporting
- Year-end and maximum balances for every foreign account (FBAR / FinCEN 114)
- Account numbers, bank names and addresses for each foreign account
- Foreign financial asset totals for Form 8938 (FATCA)
- Indian mutual fund and ULIP statements (PFIC / Form 8621)
- PPF, EPF and NPS statements
- Details of gifts over $100,000 from Indian relatives (Form 3520)
Treaty, credits & deductions
- Proof of Indian income tax paid, for the foreign tax credit (Form 1116)
- Days of physical presence abroad, for Form 2555 eligibility
- Treaty positions you intend to claim (Form 8833)
- Foreign housing costs if claiming the housing exclusion
- Mortgage interest (1098), property tax and charitable receipts
- Tuition (1098-T) and student loan interest (1098-E)
Want a personalized version you can tick off and download? Build your checklist.
NRI tax filing FAQs
- Do NRIs have to file a US tax return?
- If you are a US citizen or green card holder living in India, you must file a US return on your worldwide income regardless of where you live. If you are a non-resident alien, you file Form 1040-NR only when you have US-source income or are engaged in a US trade or business.
- Which form does an NRI file — 1040 or 1040-NR?
- It depends on residency for tax purposes, not visa type. Green card holders and anyone meeting the substantial presence test file Form 1040. Everyone else files Form 1040-NR. People who change status mid-year file a dual-status return.
- What is the deadline for NRI tax filing?
- April 15 for most filers. US persons living abroad get an automatic extension to June 15, and Form 4868 extends the filing deadline to October 15. Tax owed is still due in April. FBAR is due April 15 with an automatic extension to October 15.
- Do NRIs pay tax twice on Indian income?
- Usually not. The US-India tax treaty plus the foreign tax credit (Form 1116) or the foreign earned income exclusion (Form 2555) generally prevent double taxation, though you must still report the income on your US return.
- Do I need an ITIN to file as an NRI?
- You need an ITIN if you or a dependent must appear on a US return but are not eligible for a Social Security Number. Apply on Form W-7, filed together with the tax return and certified identity documents.
- What documents do I need for NRI tax filing?
- US income documents (W-2, 1099, K-1), Indian Form 16 and Form 26AS, year-end statements for every Indian bank, demat and mutual fund account, proof of Indian tax paid, property sale documents with cost basis, and last year's US return.
About the author
Prashanth Pemmasani, EA
Enrolled Agent · Founder, PP NRI Advisory
An IRS-licensed Enrolled Agent with over a decade preparing US returns for NRIs, expats and foreign-owned LLCs — more than 1,800 returns across 40+ countries. Work focuses on cross-border cases: Form 1040-NR and dual-status returns, FBAR/FATCA and streamlined catch-up filings, PFIC reporting on Indian mutual funds, US-India treaty positions, and ITIN applications as a Certifying Acceptance Agent workflow.
PP NRI Advisory, LLC · 30 N Gould St, Suite R, Sheridan, WY 82801
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- Form 1040, 1040-NR and dual-status returns
- FBAR, FATCA and streamlined catch-up filings
- US-India treaty analysis and Form 8833
- ITIN applications (Form W-7)
This guide is general information, not tax advice. Rules change and individual facts matter — consult a licensed tax professional about your specific situation.