US Tax Filing for NRIs: Forms, Foreign Income, FBAR & India–US Tax Rules

Living in the United States while maintaining bank accounts, investments, or property in India can make tax filing more complicated than you might expect. You may wonder whether your NRE/NRO interest is taxable in the US, whether you need to report Indian mutual funds, or whether moving back to India ends your US tax obligations. The answer depends on your US tax residency, income sources, and foreign financial assets - not simply your NRI status. This guide explains the filing requirements, relevant tax forms, deadlines, and common mistakes NRIs should understand.

Do NRIs Need to File US Taxes?

Your US tax filing obligations depend on your tax status, income, and circumstances.

• US citizens: Generally need to consider worldwide income and applicable US filing requirements, even when living in India.

• Green card holders: Generally remain US tax residents until their status ends or another applicable rule changes the result.

• Indian citizens working in the US: Need to check the substantial presence test, applicable exceptions, and income.

• Nonresident aliens: Generally follow different rules based on US-source income and income effectively connected with a US trade or business.

• NRIs with Indian bank accounts or investments: May have separate reporting obligations, including FBAR, Form 8938, or investment-specific forms.

These are general guidelines, not a final determination. Your exact obligations depend on your circumstances and the rules for the relevant tax year.

How Is US Tax Residency Determined for NRIs?

US tax residency determines which income you generally need to report and which return you may need to file. Indian tax residency and US tax residency are separate determinations.

US citizens and green card holders

US citizens generally remain subject to US tax filing rules even when living abroad. They generally need to consider worldwide income, subject to applicable exclusions, credits, deductions, and other provisions.

Green card holders are generally treated as US tax residents under the green card test. Moving to India does not automatically end that status. Surrendering a green card can have additional tax consequences, particularly for certain long-term residents.

Substantial presence test

An individual who is not a US citizen or green card holder may qualify as a US tax resident under the substantial presence test.

For 2025, the general test requires:

• At least 31 days of physical presence in the US during 2025.

• At least 183 weighted days across 2025, 2024, and 2023, counting all qualifying days in 2025, one-third of days in 2024, and one-sixth of days in 2023.

Certain days may be excluded, and exceptions or treaty provisions may apply. Review the IRS substantial presence test guidance.

Nonresident aliens

If you are neither a US citizen nor a US tax resident, you may be classified as a nonresident alien. Your US tax liability generally depends on US-source income, income effectively connected with a US trade or business, and other applicable rules.

Some nonresident aliens must file Form 1040-NR even if tax was withheld. Others may not have a filing obligation, depending on their circumstances.

Important: Do not determine your US tax status solely from your Indian NRI classification, visa label, or time spent in India.

US Tax Filing Thresholds for Tax Year 2025

For most US citizens and resident aliens, the general filing threshold depends on gross income, filing status, and age.

Source: IRS Publication 501.

These thresholds are not universal filing rules. Self-employment income, dependent status, certain special taxes, and other circumstances can create a filing obligation even when income is below a general threshold. Nonresident aliens must check the separate Form 1040-NR rules.

Form 1040 vs. Form 1040-NR

The appropriate federal income tax return depends on your US tax status.

Dual-status taxpayers may have additional filing requirements. Do not choose a form based only on your visa or Indian residency status.

See the IRS Instructions for Form 1040-NR for nonresident filing requirements.

How Is Indian Income Treated on a US Tax Return?

US citizens and resident aliens generally need to consider worldwide income when preparing their US returns. The treatment of each income type depends on the applicable rules. Nonresident aliens generally follow a different framework based on relevant US-source income and other provisions.

Important points for Indian investments

• NRE and NRO accounts: Interest that is exempt from Indian tax is not automatically exempt from US tax for a US citizen or resident alien.

• Indian mutual funds: Some non-US pooled investments may qualify as PFICs under US law, potentially triggering complex tax calculations and Form 8621. The specific investment must be reviewed.

• Indian property: Direct ownership of foreign real estate is not, by itself, an FBAR-reportable financial account, although rental income may still need to be reported.

• Retirement arrangements: Indian tax treatment does not automatically determine the US treatment of PPF, EPF, NPS, or other arrangements.

Do not simply copy figures from an Indian income tax return into a US return without checking the relevant US rules.

FBAR vs. Form 8938: Reporting Indian Bank Accounts and Assets

FBAR and Form 8938 are separate foreign-asset reporting requirements. Depending on your US tax status and assets, you may need to file both, one, or neither.

FBAR

You generally need to file an FBAR if you are a US person for FBAR purposes, have a financial interest in or qualifying authority over foreign financial accounts, and their combined maximum value exceeded $10,000 at any time during the calendar year.

For example, if the maximum values of your NRE account, NRO account, and Indian fixed deposit were $4,000, $5,500, and $3,000, respectively, the combined value would be $12,500. If the person and accounts fall within FBAR rules, an FBAR filing would generally be required.

FBAR is filed separately through FinCEN; it is not an income tax return. However, interest and other income from those accounts may still need to be reported to the IRS.

Official guidance: FinCEN FBAR resources.

Form 8938

Form 8938 is attached to an applicable US income tax return when the specified foreign financial asset reporting requirements are met.

For certain qualifying taxpayers who meet the IRS requirements for living abroad, the general thresholds are:

Different thresholds generally apply to taxpayers who do not qualify as living abroad under the relevant rules. The filing requirements depend on residency, filing status, asset ownership, and exceptions.

See the IRS Form 8938 guidance.

Remember: Filing FBAR does not automatically satisfy Form 8938, and filing Form 8938 does not automatically satisfy FBAR.

US–India Tax Treaty and Foreign Tax Credits

The US–India income tax treaty and US foreign tax credit rules may help address certain cases of double taxation. Relief is not automatic; eligibility depends on income type, source rules, residency, applicable treaty provisions, and taxes paid or accrued.

• Foreign tax credit (Form 1116): A qualifying taxpayer may be able to claim a credit for eligible foreign income taxes, subject to US limitations. The credit is not necessarily equal to all Indian tax paid.

• Foreign earned income exclusion (Form 2555): Some qualifying taxpayers who live and work abroad may be able to exclude certain foreign earned income if they meet the applicable tax-home and residence or physical-presence tests.

• Treaty provisions: The US–India treaty may affect the treatment of particular income or certain dual-residency situations. Eligibility and any required disclosures must be checked.

Taxes attributable to income excluded under the foreign earned income exclusion generally cannot also be claimed as a foreign tax credit. Compare the available options before filing.

Do Gifts From India Need to Be Reported?

A genuine gift from a foreign individual is generally not taxable income to a US recipient merely because it was received. However, separate reporting rules may apply.

A US person who receives aggregate gifts or bequests exceeding $100,000 during a tax year from a nonresident alien individual or foreign estate may generally need to report them on Form 3520. Different rules apply to purported gifts from foreign corporations or partnerships.

The reporting obligation is separate from whether the receipt is taxable income. Review the IRS guidance on gifts from foreign persons and the Instructions for Form 3520.

US Tax Filing Deadlines for Tax Year 2025

For most calendar-year individual taxpayers, the regular deadlines for Tax Year 2025 fell in 2026.

As of October 12, 2026, the regular deadlines have passed. The exact deadline depends on your circumstances and the form involved.

Certain US citizens and resident aliens living abroad may qualify for an automatic filing extension. An extension to file generally does not extend the time to pay tax due, and interest may accrue on unpaid tax. Form 1040-NR and FBAR have their own applicable rules.

Verify your deadline using the IRS Form 1040-NR instructions and the relevant official guidance before filing.

What If You Missed a US Tax Filing Deadline?

If you missed a required return or foreign-asset report, identify which obligation was missed and take action promptly.

Do not assume that every missed filing qualifies for the same relief procedure. Eligibility can depend on the reason for noncompliance, the forms involved, and your circumstances.

For relevant cases, review the IRS streamlined filing compliance procedures. Seek qualified advice if multiple years, foreign investments, or missing information returns are involved.

Documents Needed for US Tax Filing as an NRI

Prepare the documents relevant to your situation:

• Residency: Passport, immigration status, US travel dates, and green card details if applicable.

• US income: Forms W-2, 1099, and other relevant income statements.

• Indian income: Salary statements, bank interest, dividends, capital-gains records, rental income, and expense records.

• Foreign tax: Indian tax returns and evidence of eligible taxes paid.

• Foreign accounts: Account ownership, signature authority, and maximum account values.

• Investments: Brokerage statements and records for Indian shares, mutual funds, and retirement arrangements.

• Prior filings: Previous US returns, FBARs, Form 8938 filings, amendments, and extension confirmations.

Keep records supporting the figures on your returns and any required disclosures.

Common Mistakes NRIs Should Avoid

• Assuming Indian NRI status determines US tax residency.

• Reporting only US-earned income when worldwide-income rules apply.

• Assuming Indian tax exemptions automatically apply in the United States.

• Confusing FBAR with Form 8938.

• Overlooking potential PFIC reporting for Indian mutual funds.

• Treating a foreign tax credit as an automatic full refund.

• Assuming an extension to file also extends the time to pay.

• Ignoring missing income or foreign reporting from previous years.

Review the complete tax situation — not just the amount of tax withheld — to identify the obligations that apply.

Get Your US–India Tax Situation Reviewed

US tax filing for NRIs can involve more than preparing a federal income tax return. Residency classification, Indian income, foreign tax credits, foreign financial accounts, investment reporting, and prior-year filing gaps may need to be considered together.

If your situation involves Indian mutual funds, green card changes, dual-status residency, treaty claims, or unfiled returns, consider having a qualified professional review your circumstances.

Explore Savetaxs' India–US tax compliance services to review the available assistance and determine whether it fits your needs.

The appropriate support should clarify your filing obligations, explain the scope of work, and identify the documents required. No provider can guarantee a particular refund, tax saving, or compliance outcome without reviewing the facts.

Final takeaway: Determine your US tax status first. Then identify the appropriate return, consider Indian income, evaluate foreign tax relief, and separately check foreign-account and investment reporting obligations. Do not rely on NRI status alone or assume that FBAR and Form 8938 are interchangeable.