I’ll never forget this.
A friend in our WhatsApp group had been living in the US for 11 years. Green card holder. Good job. Family.
He decided to move back to India.
He sold his home, transferred his 401(k), and shipped his stuff. All good.
Then April came. His CA asked – “Did you file Form 1040 for last year?”
He hadn’t. He thought once he left the US, he didn’t need to file anymore.
That mistake cost him $12,000 in penalties.
This is one of the most common (and expensive) misunderstandings among NRIs. And it all starts with one form – IRS Form 1040.
Let me walk you through everything you need to know.
What Is IRS Form 1040?
Form 1040 is the standard US federal income tax return.
Every US citizen, green card holder, and qualifying resident alien files this form to report their worldwide income to the IRS.
The keyword here is worldwide. Not just US income.
Everything – your salary in the US, rental income from a property in Bangalore, interest from your NRE account, dividends from Indian stocks. All of it.
Form 1040 is filed annually. The 2025 tax year return (Form 1040) is due by April 15, 2026.
If you’re planning your return to India or have already moved back, understanding this form is critical.
Because your filing obligations don’t end the moment your flight lands in India.
Form 1040 vs Form 1040-NR: Which One Do You File?
This is the first question every NRI asks. And getting it wrong can cause serious problems.
Here’s the simple rule:
| Your Status | Form to File |
|---|---|
| US citizen (living anywhere in the world) | Form 1040 |
| Green card holder (living anywhere in the world) | Form 1040 |
| Resident alien (passed Substantial Presence Test) | Form 1040 |
| Non-resident alien (did NOT pass Substantial Presence Test, no green card) | Form 1040-NR |
| Dual-status year (changed status during the year) | Form 1040 + Form 1040-NR as attachment |
The big difference:
- Form 1040 filers report worldwide income (everything from every country).
- Form 1040-NR filers report only US-source income (US wages, US rental income, US investments).
Most Indian NRIs in the US fall into two categories:
- H-1B workers – You’re a resident alien (H-1B days count toward the Substantial Presence Test from day one). You file Form 1040.
- Green card holders – You’re a resident alien the moment you get your green card. You file Form 1040. Even if you move back to India and keep the green card, you still file 1040.
If you’re still figuring out your NRI status and what it means, check our detailed guide.
The Substantial Presence Test – Quick Explanation
This test determines whether you’re a “resident alien” for US tax purposes.
You pass the test if you were physically present in the US for:
- At least 31 days during the current year, AND
- 183 days during the 3-year period that includes the current year and the 2 prior years
For the 3-year calculation:
- All days present in the current year count as full days
- Days in the first prior year count as 1/3 of a day
- Days in the second prior year count as 1/6 of a day
Example: If you were in the US for 120 days in 2025, 120 days in 2024, and 120 days in 2023:
- 2025: 120 days
- 2024: 120 x 1/3 = 40 days
- 2023: 120 x 1/6 = 20 days
- Total: 180 days – you did NOT pass the test
If you passed the test, file Form 1040. If not, file 1040-NR.
Important for F-1 and J-1 visa holders: Students on F-1 visas are “exempt individuals” for the first 5 calendar years.
Your days don’t count toward the Substantial Presence Test during that period. You file Form 1040-NR.
Important for H-1B visa holders: H-1B holders are NOT exempt. Your days count from day one.
Most H-1B holders pass the Substantial Presence Test and file Form 1040.
Who MUST File Form 1040?
You must file Form 1040 for the 2025 tax year if:
1. You are a US citizen or green card holder AND your gross income exceeds the filing threshold:
| Filing Status | Under 65 | 65 or Older |
|---|---|---|
| Single | $15,750 | $18,350 |
| Married Filing Jointly | $31,500 | $33,100 (one spouse 65+) / $34,700 (both 65+) |
| Married Filing Separately | $5 | $5 |
| Head of Household | $23,625 | $26,225 |
These thresholds combine the standard deduction amounts. If your gross income is below the threshold, you generally don’t need to file. But you might still want to (more on this later).
2. You are a resident alien (passed the Substantial Presence Test) with income above these same thresholds.
3. You earned self-employment income of $400 or more (you owe self-employment tax regardless of total income).
Critical point for NRIs who moved back to India: If you’re a US citizen or green card holder, you must file Form 1040 even if you earned zero dollars in the US. Even if all your income was in India. The US taxes based on citizenship, not residence.
Only two countries in the world do this – the United States and Eritrea.
What Changed for 2025 Tax Year? (OBBBA Updates)
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made several changes that affect 2025 returns (filed in 2026).
Here’s what NRIs should know:
1. Higher Standard Deduction (Made Permanent)
| Filing Status | 2025 Amount |
|---|---|
| Single | $15,750 |
| Married Filing Jointly | $31,500 |
| Head of Household | $23,625 |
| Married Filing Separately | $15,750 |
These are higher than previous years. The OBBBA made the Tax Cuts and Jobs Act (TCJA) standard deduction amounts permanent and increased them slightly.
2. Tax Brackets Made Permanent
The seven tax brackets from the TCJA are now permanent: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
3. SALT Deduction Cap Increased
The State and Local Tax (SALT) deduction cap jumped from $10,000 to $40,000 for most filers (2025-2028). However, if your modified AGI exceeds $500,000, the cap starts reverting back toward $10,000 at $600,000+.
This is a big deal for NRIs in high-tax states like California, New York, and New Jersey.
4. Child Tax Credit Increased
For 2025, the maximum child tax credit is $2,500 per qualifying child (up from $2,000). Phaseout starts at $200,000 (Single) / $400,000 (Married Filing Jointly).
5. Foreign Earned Income Exclusion (FEIE)
For 2025, you can exclude up to $130,000 of foreign earned income. For 2026, this increases to $132,900.
6. New Deductions (Schedule 1-A)
The OBBBA introduced four new deductions claimed on a brand-new Schedule 1-A:
- No tax on tips (up to $25,000)
- No tax on overtime (up to $12,500 single / $25,000 joint)
- Car loan interest deduction (up to $10,000)
- Enhanced senior deduction ($6,000 per person, age 65+)
These deductions are available whether you itemize or take the standard deduction.
For NRIs returning to India, understanding the US-India DTAA is crucial for avoiding double taxation.
Key Parts of Form 1040: Section-by-Section for NRIs
Let me break down the sections that matter most to NRIs.
Page 1: Personal Information
- Filing status (Single, Married Filing Jointly, etc.)
- Your name, SSN/ITIN, address
- Dependent information
NRI note: If you’ve moved to India, use your India address. If you’re filing jointly and your spouse doesn’t have an SSN, they’ll need an ITIN (Individual Taxpayer Identification Number). Apply using Form W-7.
Lines 1-9: Income
This is where you report ALL income:
- Line 1: Wages, salaries (from W-2). If you worked in both the US and India during the year, report both.
- Line 2: Interest income (includes Indian bank interest – NRE, NRO, FDs)
- Line 3: Dividends (US and Indian)
- Line 4: IRA distributions
- Line 5: Pensions and annuities
- Line 6: Social Security benefits
- Line 7: Capital gains/losses (from Schedule D)
- Line 8: Other income (rental income from India, freelance income, etc.)
Critical for NRIs: All foreign income must be converted to US dollars. Use the IRS yearly average exchange rate, or the rate on the day you received the income. Be consistent with whichever method you choose.
If you have rental income from Indian property, this gets reported on Schedule E, which flows into Line 8.
Line 12: Standard Deduction or Itemized Deductions
For 2025, most NRIs take the standard deduction ($15,750 single / $31,500 married filing jointly) because it’s simpler and higher than what most people can itemize.
But – if you’re in a high-tax state and your SALT deduction alone is close to $40,000 (the new OBBBA cap), itemizing may save you more.
Key exception: If you’re Married Filing Separately and your spouse itemizes, you MUST also itemize. You can’t take the standard deduction.
Another exception: Non-resident aliens on Form 1040-NR cannot take the standard deduction at all. Only itemized deductions are available (and limited ones at that).
Lines 22-24: Tax Calculation
Your taxable income (Line 15) gets taxed at the 2025 bracket rates:
| Taxable Income (Single) | Tax Rate |
|---|---|
| Up to $11,925 | 10% |
| $11,926 – $48,475 | 12% |
| $48,476 – $103,350 | 22% |
| $103,351 – $197,300 | 24% |
| $197,301 – $250,525 | 32% |
| $250,526 – $626,350 | 35% |
| Over $626,350 | 37% |
(Married Filing Jointly brackets are roughly double these amounts.)
Lines 27-33: Credits and Payments
This is where NRIs can claim:
- Foreign Tax Credit (from Form 1116 or directly on the return for amounts under $300/$600)
- Child Tax Credit
- Education credits
- Taxes already withheld (W-2 withholding, estimated payments)
The NRI-Critical Forms and Schedules
Here’s where it gets NRI-specific. These forms can save you thousands of dollars – or land you in serious trouble if you skip them.
Form 2555: Foreign Earned Income Exclusion (FEIE)
This is the most powerful tool for US citizens and green card holders living abroad.
What it does: Lets you exclude up to $130,000 (2025) of foreign earned income from US taxes.
Who qualifies: You must pass EITHER:
- Bona Fide Residence Test: You were a bona fide resident of a foreign country for an entire tax year
- Physical Presence Test: You were physically present in a foreign country for 330 full days during any 12-month period
What it covers: Salary, wages, self-employment income earned abroad. Does NOT cover passive income (interest, dividends, rental income, capital gains).
Example: Rahul is a US citizen working in Bangalore earning ₹90 lakh ($108,000). He passes the Physical Presence Test. He excludes the entire $108,000 from US taxation. His US tax bill on this salary? Zero.
Foreign Housing Exclusion: If your housing costs exceed the base amount ($20,800 for 2025, which is 16% of the FEIE limit), you can exclude additional housing expenses. The general cap is about $39,000 (30% of FEIE), with higher limits for expensive cities.
NRI community tip: If you moved to India mid-year, you might not qualify for the Physical Presence Test that year (330 days is strict). In that case, consider the Foreign Tax Credit instead. You can’t use both FEIE and FTC on the same income.
Form 1116: Foreign Tax Credit (FTC)
What it does: Gives you a dollar-for-dollar credit against your US tax for taxes you paid to India (or any other country).
Who should use it: NRIs in India’s higher tax brackets. India’s top tax rate (new regime) is 30% + surcharge + cess.
If you’re paying more tax to India than you’d owe the US, the FTC can wipe out your US tax liability entirely.
FTC vs FEIE – which is better?
| Scenario | Better Choice |
|---|---|
| Living in a low/no-tax country (UAE, Singapore) | FEIE |
| Living in a high-tax country (India, UK) | FTC |
| Mix of earned and passive income | FTC (covers all income types) |
| Just foreign salary, no other income | FEIE (simpler) |
| Moved mid-year, didn’t meet 330-day test | FTC |
Many NRIs in our community who’ve moved to India find the FTC more beneficial because India’s tax rates are generally higher than US rates for the same income levels.
For a deeper look at how to file income tax returns as an NRI, check our India-side guide.
Schedule B: Interest and Dividends
Line 7a asks: “Did you have a financial interest in or a signature authority over a financial account in a foreign country?”
If you have any Indian bank account (NRE, NRO, savings, FD), the answer is YES.
Checking “yes” doesn’t trigger an audit. Not checking “yes” when you should can trigger serious penalties.
This question also links to your FBAR obligation (covered below).
Schedule D: Capital Gains and Losses
Report any gains or losses from selling:
- US stocks, ETFs, mutual funds
- Indian stocks (yes, these count too)
- Property in India
- Any other capital assets
If you sold property in India while being a US tax resident, the gain is reportable on your Form 1040 in addition to any Indian tax obligations.
Understanding capital gains tax rules in both countries is essential for NRIs with cross-border investments.
Schedule E: Rental Income
If you own rental property in India, report the income on Schedule E. You can deduct expenses (property tax, maintenance, insurance, depreciation) against this income.
Double taxation concern: You’ll pay Indian tax on this rental income AND report it on your US return. But you can claim the Indian tax paid as a Foreign Tax Credit on Form 1116 to offset the US tax.
FBAR and FATCA: The Reporting Obligations That Catch NRIs Off Guard
These aren’t part of Form 1040 itself, but they’re filed alongside it. And the penalties for missing them are brutal.
FBAR (FinCEN Form 114)
What it is: Report of Foreign Bank and Financial Accounts.
Who must file: Any US person (citizen, green card holder, resident alien) who had a financial interest in or signature authority over foreign accounts with an aggregate value exceeding $10,000 at any point during the year.
What counts: ALL foreign financial accounts – NRE, NRO, savings, FDs, PPF (if still active), demat accounts, mutual fund accounts, insurance policies with cash value.
Key detail: It’s the AGGREGATE value. If you have an NRE account with $6,000 and an NRO account with $5,000, you’re above $10,000. You must file.
The $10,000 is based on the MAXIMUM balance at any point during the year.
Not the year-end balance. If your NRO account had ₹12 lakh in July when you received rental income, but dropped to ₹6 lakh by December, you still triggered the filing requirement.
Where to file: Electronically through FinCEN’s BSA E-Filing System. NOT with the IRS. NOT with your tax return.
Deadline: April 15 (with automatic extension to October 15).
Penalties for not filing:
- Non-willful violation: Up to $16,536 per violation (2026 amount)
- Willful violation: Greater of $100,000 or 50% of the account balance
Yes, you read that right. The penalties can be larger than the actual account balance.
For a complete guide on FBAR filing requirements, see our dedicated resource.
FATCA (Form 8938)
What it is: Statement of Specified Foreign Financial Assets.
Who must file: US persons with foreign financial assets exceeding certain thresholds.
Thresholds:
| Filing Status | Living in US | Living Abroad |
|---|---|---|
| Single | $50,000 year-end OR $75,000 anytime | $200,000 year-end OR $300,000 anytime |
| Married Filing Jointly | $100,000 year-end OR $150,000 anytime | $400,000 year-end OR $600,000 anytime |
What counts: Everything on the FBAR list PLUS foreign stocks, securities, partnership interests, and certain foreign insurance policies. Broader than FBAR.
Where to file: With your Form 1040 (attached to your tax return).
Key point: FBAR and Form 8938 are SEPARATE requirements. You may need to file both. Filing one does NOT satisfy the other.
FBAR vs Form 8938: Quick Comparison
| Feature | FBAR (FinCEN 114) | Form 8938 |
|---|---|---|
| Filed with | FinCEN (not IRS) | IRS (with your 1040) |
| Threshold | $10,000 aggregate | $50,000-$400,000 (varies) |
| Covers | Foreign accounts only | Accounts + other assets |
| Deadline | April 15 (auto extension to Oct 15) | Same as tax return |
| Penalty (non-willful) | Up to $16,536/violation | Up to $10,000/violation |
If you have Indian bank accounts, demat accounts, or investments, these filings apply to you.
The PFIC Trap: Indian Mutual Funds
This is something that catches almost every NRI off guard.
Indian mutual funds are classified as PFICs (Passive Foreign Investment Companies) by the IRS.
This is a terrible classification from a tax perspective.
What it means:
- Gains from Indian mutual funds are taxed at the HIGHEST ordinary income tax rate (up to 37%), not the favorable capital gains rate (15-20%)
- The IRS adds an “interest charge” on top, as if you deferred the tax for your entire holding period
- You must file Form 8621 for each PFIC investment
- If you don’t file Form 8621, the statute of limitations on your entire tax return stays open INDEFINITELY
What to do:
- If you’re a US tax resident, avoid investing in Indian mutual funds directly
- Instead, invest in Indian stocks directly (individual shares like Reliance, TCS, HDFC are NOT PFICs)
- Use US-domiciled India ETFs (like INDA or EPI) if you want India exposure
- Portfolio Management Services (PMS) in India may also avoid PFIC classification since you own stocks directly
If you already hold Indian mutual funds, talk to a cross-border CPA before selling. The timing and method of reporting matters enormously.
For NRIs looking at investment options, our guide to investing in Indian stocks covers what’s safe from a US tax perspective.
NRI Scenarios: Real Examples from Our Community
Let me walk through the situations I see most often.
Scenario 1: Working on H-1B, Filing From the US
Situation: Priya works in Seattle on H-1B, earning $140,000. She also has ₹3 lakh interest from NRE FDs and ₹2 lakh from NRO savings.
What she files:
- Form 1040 (she’s a resident alien)
- Reports US salary on W-2 (Line 1)
- Reports Indian interest income on Schedule B (converted to USD)
- Checks “yes” for foreign accounts on Schedule B, Line 7a
- Files FBAR for her Indian accounts (if aggregate exceeds $10,000)
- May need Form 8938 if total foreign assets exceed $50,000
Tax relief: NRE FD interest is tax-free in India but taxable in the US. She can’t claim FTC on this income because no Indian tax was paid on it.
Scenario 2: Green Card Holder Who Moved Back to India
Situation: Arun has a green card. He moved to Hyderabad in March 2025. He earned $35,000 in the US (Jan-March) and ₹50 lakh in India (April-December).
What he files:
- Form 1040 (green card = worldwide income reporting)
- Reports both US and Indian income
- Converts Indian income to USD at IRS average rate
- Can claim Foreign Tax Credit (Form 1116) for Indian taxes paid
- Files FBAR and possibly Form 8938 for Indian accounts
- Must check if he qualifies for FEIE (probably not – didn’t meet 330-day test in first year)
Arun’s biggest mistake would be: Not filing at all because he “left the US.”
The green card stays active for tax purposes until formally abandoned using USCIS Form I-407. If you’re considering cancelling your green card, understand the tax implications first.
Scenario 3: US Citizen Retired in India
Situation: Meena is a US citizen, retired in Chennai. She receives $2,400/month in Social Security, has NRE FDs earning ₹6 lakh/year, and rental income of ₹4 lakh/year from a flat in Pune.
What she files:
- Form 1040 every year (US citizen = forever filing, unless she renounces)
- Social Security: Depending on her total income, up to 85% may be taxable
- Indian interest: Reported on Schedule B
- Indian rental income: Reported on Schedule E
- FTC (Form 1116) for Indian taxes paid on rental income
- FBAR and possibly Form 8938
Tax treaty benefit: Under the India-US DTAA, Social Security is only taxable in the country of residence (India). Meena may be able to exclude her Social Security from US taxation by claiming the treaty position. But she must disclose this on Form 8833.
Scenario 4: NRI on F-1 Student Visa
Situation: Vikram is an Indian student on F-1, in his second year. He has a part-time on-campus job earning $8,000.
What he files:
- Form 1040-NR (F-1 students are exempt individuals for first 5 years)
- Reports only US-source income
- Does NOT need to report Indian income
- No FBAR or FATCA reporting (he’s not a US person for these purposes)
Filing Deadlines for 2025 Tax Year
| Deadline | What’s Due |
|---|---|
| April 15, 2026 | Form 1040 due (or extension request via Form 4868). Tax payment due (extensions don’t extend payment). FBAR due (automatic extension to Oct 15). |
| June 15, 2026 | Automatic extension for US citizens/residents living abroad. You get 2 extra months, but interest runs from April 15. |
| October 15, 2026 | Extended filing deadline (if you filed Form 4868). FBAR extended deadline. |
NRI tip: Even if you file for an extension, PAY your estimated tax by April 15. The extension only extends the filing deadline, not the payment deadline. Interest and penalties accrue from April 15 on any unpaid balance.
When You Should File Even If You Don’t Have To
Sometimes filing makes sense even if your income is below the threshold:
- To claim a refund – If taxes were withheld from your paycheck but your total income is below the filing threshold
- To claim refundable credits – Child Tax Credit, Earned Income Credit
- To start the statute of limitations – The IRS generally has 3 years to audit a filed return. If you don’t file, there’s no statute of limitations.
- To establish filing history – Helpful for future loans, mortgages, or immigration purposes
Common Mistakes NRIs Make with Form 1040
From years of community experience, these are the errors I see most often.
1. Not filing at all after moving to India
US citizens and green card holders must file Form 1040 regardless of where they live. There is no “I left the US so I’m done” rule.
2. Forgetting to report Indian income
Your NRE FD interest, NRO interest, rental income, capital gains from Indian stocks – all reportable on Form 1040 if you’re a US tax resident.
3. Missing FBAR and Form 8938
These are separate from your tax return. Many NRIs file their 1040 perfectly but forget FBAR. The penalties are severe.
4. Investing in Indian mutual funds (PFIC trap)
Indian mutual funds create a reporting nightmare and punitive tax treatment. Switch to direct Indian stocks or US-domiciled India ETFs.
5. Not claiming the Foreign Tax Credit
If you paid tax to India on income that’s also reportable in the US, claim the credit. Don’t pay tax twice.
6. Using wrong exchange rates
Use IRS yearly average rates or consistent spot rates. Don’t use Google’s real-time rate.
The IRS publishes yearly average exchange rates at irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates.
7. Filing 1040 when you should file 1040-NR (or vice versa)
Your residency status determines which form you file. Get this wrong and everything else cascades.
8. Not filing Form 8833 when claiming treaty benefits
If you’re using the India-US tax treaty to reduce your US tax, disclose the position on Form 8833. Undisclosed treaty positions can be denied.
9. Forgetting Form 8621 for PFIC holdings
Each Indian mutual fund needs its own Form 8621. Missing this keeps your entire return open for audit indefinitely.
10. Not adjusting withholding when leaving the US
If you left the US mid-year, your W-2 withholding was calculated assuming a full year of income. You may have overpaid and are due a refund. File to claim it.
For a comprehensive look at US NRI tax filing, check our dedicated guide.
How to File Form 1040 as an NRI
Option 1: Tax Software
TurboTax, H&R Block, TaxAct all support Form 1040 with international forms. They’re good for straightforward situations (W-2 income, simple foreign accounts).
Limitations: Most software handles Form 2555 and Form 1116 reasonably well. But PFIC reporting (Form 8621), complex treaty positions, and dual-status returns often need professional help.
Option 2: Cross-Border CPA
This is what I recommend for most NRIs with significant Indian assets or income. Look for a CPA who specializes in US-India cross-border taxation. They’re more expensive ($500-$2,000+ per return) but can save you multiples of that in optimized filing.
Our community maintains a list of recommended cross-border tax consultants. Ask in our WhatsApp groups for referrals.
Option 3: IRS Free File
If your AGI is $84,000 or less, you may qualify for free filing through IRS Free File partners. Check irs.gov/freefile.
What Happens If You Haven’t Filed?
If you’ve been living outside the US and haven’t filed Form 1040 for past years, don’t panic. But don’t ignore it either.
The IRS Streamlined Filing Compliance Procedures allow eligible taxpayers to catch up on past filings with reduced penalties:
- File the last 3 years of tax returns
- File the last 6 years of FBARs
- Certify that your failure to file was non-willful (you didn’t know)
- Penalties are usually reduced or eliminated
This program has helped thousands of NRIs in our community get back into compliance without catastrophic penalties.
Important: This option is only available if the IRS hasn’t already contacted you about missing returns. Act before they come to you.
Quick FAQ
Q: I’m an Indian citizen on H-1B. Do I file Form 1040?
Yes. H-1B holders are resident aliens and file Form 1040.
Q: I moved back to India. Do I still file?
If you’re a US citizen or green card holder, yes. If you’re an Indian citizen who no longer meets the Substantial Presence Test, generally no (but file 1040-NR for the year of departure if you had US-source income).
Q: Is NRE FD interest taxable in the US?
Yes. NRE account interest is tax-free in India but taxable in the US for US tax residents. This catches many people off guard.
Q: Can I file jointly with my spouse who has no SSN?
Your spouse needs an ITIN (Individual Taxpayer Identification Number). Apply using Form W-7, submitted with your tax return.
Q: Is there a tax treaty between India and the US?
Yes. The India-US Double Taxation Avoidance Agreement (DTAA) provides relief for many types of income. But you must actively claim it on your return.
Q: I have a 401(k). What happens when I move to India?
Your 401(k) remains in the US. Withdrawals are taxable in both countries. The DTAA provides relief, and you can claim FTC. Timing the withdrawal strategically can save significant tax.
Q: What if I only earned income in India, nothing in the US?
If you’re a US citizen or green card holder, you still file. Report the Indian income. Use FEIE or FTC to reduce or eliminate US tax.
Q: Do I need to report my Indian PPF account?
Yes, on FBAR (if aggregate foreign accounts exceed $10,000) and possibly Form 8938. The contributions aren’t deductible on US returns. Check our PPF for NRIs guide for details.
Q: What about Indian life insurance policies?
Report on FBAR if cash surrender value exceeds the threshold. Some policies may require Form 3520 reporting if they’re considered foreign trusts. This is a gray area – consult a CPA.
Q: How do I convert INR to USD for my return?
Use the IRS yearly average exchange rate (published on the IRS website) for income earned throughout the year. For specific transactions (property sale, stock sale), you can use the spot rate on the transaction date. Be consistent.
Key Resources
- IRS Form 1040 and Instructions: irs.gov/forms-pubs/about-form-1040
- Publication 519 (Tax Guide for Aliens): irs.gov/pub/irs-pdf/p519.pdf
- Publication 54 (Tax Guide for US Citizens Abroad): irs.gov/pub/irs-pdf/p54.pdf
- FBAR Filing: bsaefiling.fincen.treas.gov
- IRS Exchange Rates: irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates
- Form 2555 (FEIE): irs.gov/forms-pubs/about-form-2555
- Form 1116 (FTC): irs.gov/forms-pubs/about-form-1116
Disclaimer: This guide is for informational purposes only and does not constitute tax, legal, or financial advice. US tax law is complex, and individual circumstances vary significantly. Always consult a qualified tax professional – particularly a cross-border CPA familiar with US-India taxation – for advice specific to your situation. Tax laws, thresholds, and filing requirements are current as of early 2026 and are subject to change.
If you’re navigating the complex world of US-India taxes while planning your move back, join our WhatsApp community at https://backtoindia.com/groups – 20,000+ NRIs helping each other with real, lived experience. It’s free and volunteer-run.
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