Question 1

How does the IRS determine my tax residency status after moving back to Chennai?

Accepted Answer

The IRS determines your tax residence status after moving back to Chennai based on your citizenship status or physical presence in the US, regardless of where you live presently. If you are a US citizen or green card holder, you are liable to pay tax on your global income. If you are not any of these, your tax status in the US depends on the Substantial Presence Test.

Question 2

Do I need to pay US Social Security and Medicare taxes on my Indian income in Chennai?

Accepted Answer

It depends entirely on your employment type and residency status in Chennai. FICA taxes (Social Security 6.2% + Medicare 1.45%) on US-sourced wages or self-employment income. Indian business or salary income earned in Chennai is not subject to tax under FICA. However, after moving to India, even if you remain self-employed and a US tax resident, you are still liable for the 15.3% Self-Employment tax.

Question 3

Do I still owe US taxes after moving back to Chennai from California or New York?

Accepted Answer

Yes, in most cases, states like California, New York, and Virginia impose state tax on former residents even after moving abroad. To avoid this, you should formally terminate your domicile by closing your local bank accounts, surrendering your driving license, and updating your voter registration. Savetaxs can also help you review your state tax exposure and help you correctly exit high-risk state tax jurisdictions.

Question 4

Are gifts or inheritance received from India taxable in the USA for Chennai NRIs?

Accepted Answer

If you are a Chennai NRI who is a US taxpayer (citizen or green card holder), gifts or inheritance received from India are not taxable as income in the US. However, if their total value is more than $100,000 in a calendar year, you should formally declare them using IRS Form 3520. Non-filing penalties are 5% of the gift value per month up to 25% of the gross amount.

Question 5

How can I report Indian rental income on my US tax return from Chennai?

Accepted Answer

To report your Indian rental income on your US tax return from Chennai, declare your gross rent and eligible expenses like repairs and property taxes on Schedule E (Form 1040). Additionally, you can avoid double taxation on the taxes you already paid in India by claiming a foreign tax credit (Form 1116).

Question 6

Are Indian PPF, EPF, and Gratuity amounts taxable under US tax laws?

Accepted Answer

Yes, Indian PPF, EPF, and Gratuity are generally taxable under US tax laws if you are a US tax resident. Here is how these are taxed: PPF: Interest may be annually taxable- treaty position contested EPF: Generally, employer contributions and interest are taxable each year Gratuity: Taxable as ordinary income in the received year NPS: Generally, contributions and growth are taxable, not tax treaty exemption Savetaxs advises Chennai-based NRIs on the most defensible US tax treatment for each instrument.

Question 7

What are the US tax implications of selling my Chennai property?

Accepted Answer

Capital gains generated from selling Chennai property should be reported on Schedule D (Form 1040) in the USA. The capital gain is calculated in USD based on the original purchase cost. Considering this, long-term capital gains are taxed at 0%, 15%, or 20% depending on your income. Additionally, you can claim a foreign tax credit on already paid Indian TDS to avoid double taxation.

Question 8

Can my Indian spouse without a US visa be included in my US tax return?

Accepted Answer

Yes, you can include your spouse on your US tax return, even if they do not have a US visa. However, to file together or claim them as a dependent, your Indian spouse will need an Individual Taxpayer Identification Number (ITIN) from the IRS. You can either file married filing separately (higher tax rates) or elect to treat your Indian spouse as a US resident and file married filing jointly (lower tax rates, but your spouse should report global income).

Question 9

What US tax obligations arise if I own or direct an Indian company from Chennai?

Accepted Answer

Owning or directing an Indian company triggers several high-penalty US reporting requirements: Form Requirement Penalty for Non-Filing Form 5471 10%+ ownership in an Indian company USD 10,000 per form per year Form 8865 Ownership in an Indian LLP or partnership USD 10,000 per form per year GILTI Tax Tax on Indian company profits Varies Form 926 Transfers to a foreign corporation 10% of the transfer value

Question 10

What are the key US tax deadlines that US-based NRIs in Chennai should know?

Accepted Answer

The key US tax deadlines that US-based NRIs in Chennai should know are asl follows: Deadline Requirement April 15 Form 1040 due offers a two-month auto extension for overseas filers June 15 Extended deadline for NRIs living outside the USA April 15 FBAR due auto extension to October 15 October 15 Final extended deadline for Form 1040 Further, missing any one deadline triggers automatic IRS penalties. Savetaxs sends proactive reminders and ensures all Chennai-based NRI filings are accurately submitted on time.

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