NRI tax filing in the U.S.: who must file and what to report
"NRI" is a status under Indian law. U.S. tax uses its own residency tests. Here is how a U.S. tax resident with India ties reports India income and accounts, and avoids paying tax twice.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 9, 2026.
First: are you a U.S. tax resident?
You are a U.S. resident for tax purposes if you pass either test for the year:
- Green card test: you held a green card (lawful permanent resident status) at any time in the year.
- Substantial presence test: you were in the U.S. at least 31 days in the year and at least 183 days over three years, counting all of this year, one-third of last year and one-sixth of the year before.
- Certain visa holders are exempt individuals, including F-1 and J-1 students for up to 5 calendar years, and do not count those days.
Residents file Form 1040 on worldwide income. Nonresidents file Form 1040-NR on U.S.-source and certain other income. See the IRS pages on residency and Publication 519.
How India income is treated
| India item | U.S. treatment for a U.S. resident |
|---|---|
| Salary or consulting in India | Taxable. Foreign tax credit for tax paid to India |
| Interest on NRE, NRO and fixed deposits | Taxable interest, even where India exempts it. The accounts are reportable |
| Rent from property in India | Taxable. Foreign residential rental property is depreciated over a longer period (30 years) |
| Gain on selling property or shares | Taxable capital gain. Convert basis and sale price at the exchange rates on the dates. Credit for Indian tax |
| Indian mutual funds | Usually treated as PFICs: harsh rules and Form 8621. See India accounts and investments |
| Gifts from relatives in India | Not income, but a foreign gift over $100,000 in a year is reported on Form 3520 |
What to report beyond the return
- FBAR (FinCEN 114): if your foreign accounts total more than $10,000 at any time in the year. Due April 15 with an automatic extension to October 15.
- Form 8938: if your foreign financial assets pass the thresholds (see India accounts).
- Form 8621 for PFICs, Form 3520 for foreign gifts and trusts, and Form 1116 for the foreign tax credit.
Common questions
Do I have to report my India income on my U.S. return?
If you are a U.S. citizen or a U.S. tax resident (green card holder or someone who meets the substantial presence test), yes. U.S. residents are taxed on worldwide income, including India salary, rent, interest and gains.
Is NRE interest tax-free in the U.S.?
India may exempt NRE account interest for NRIs. The United States generally does not: a U.S. tax resident reports the interest as income, and the account is a foreign account for FBAR.
How do I avoid paying tax twice?
Mainly with the foreign tax credit (Form 1116) for income tax you paid to India on the same income. The U.S.-India tax treaty can also help, though a "saving clause" limits many treaty benefits for U.S. citizens and residents.
Do I need to report India property?
Real estate you own directly is not reported on Form 8938, but the rent and any gain on sale are taxable in the U.S. Property held through a company or fund is treated differently, so ask us.
What if I move back to India?
Leaving does not end U.S. tax filing for U.S. citizens. Long-term green card holders who give up residency may face the expatriation (exit tax) rules and must file Form 8854. Plan before you go.
Official sources
- IRS Publication 519: U.S. tax guide for aliens
- IRS: Determining tax residency status
- IRS: Foreign tax credit
- IRS: India tax treaty documents
- IRS: Expatriation tax (Form 8854)
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