International Tax
US Tax Attorney for Indian-Americans and US Citizens in India
Indian-Americans are the largest immigrant group from Asia in the United States. Many maintain financial ties to India — NRI accounts, inherited Indian assets, gifts from Indian parents, and Indian mutual fund investments. Each of these has US reporting implications.
Key US Tax Issues for India
NRI Bank Accounts (NRE / NRO)
Indian NRE and NRO accounts held by US persons must be reported on the FBAR if the aggregate balance exceeds $10,000. Many Indian-Americans are unaware that their NRI accounts are subject to US reporting.
Indian Mutual Funds (PFICs)
Indian equity mutual funds are PFICs under US law. Without proper elections (QEF or MTM), gains are subject to the excess distribution regime — punitive effective tax rates.
Gifts and Inheritances from India
Gifts from Indian parents or grandparents to US persons exceeding $100,000 require Form 3520. This is one of the most commonly missed international reporting requirements among Indian-Americans.
PPF and EPF Accounts
Indian Public Provident Fund (PPF) and Employee Provident Fund (EPF) accounts may require FBAR reporting. The US tax treatment of these accounts is nuanced.
Common Questions
Do I need to report my NRI account to the IRS?
Yes. NRE and NRO accounts held by US persons are foreign financial accounts for FBAR purposes. If your aggregate foreign accounts exceed $10,000, the FBAR must be filed annually.
Are Indian mutual funds PFICs?
Generally yes. Most Indian equity mutual funds qualify as PFICs under the US income test. Without a QEF election, gains are subject to the punitive excess distribution regime.
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