U.S. EXPAT TAX GUIDE – INDIA

What are the main filing statuses for US expats in India, and what should they report to the IRS in 2025?

The IRS recognizes four main filing statuses that determine your tax filing requirements: Single, Married Filing Jointly, Married Filing Separately, and Head of Household. Your filing status affects the income threshold that decides whether or not you need to file a tax return.

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Here are the updated filing thresholds for the 2025 tax year:

Single: If you are under 65 and your income exceeds US$15,000, you must file a tax return. For those aged 65 or older, the threshold increases to US$17,250.
Married Filing Jointly: If you are married and filing jointly, the threshold is US$30,000 if both spouses are under 65. If one spouse is over 65, the threshold is US$31,600, and if both spouses are over 65, it increases to US$33,200.
Married Filing Separately: For those filing separately, the filing threshold remains just US$5, regardless of age. This requirement often surprises people, especially those married to non-US citizens, since even a small income can trigger the need to file.
Head of Household: If you qualify as Head of Household (typically meaning you are unmarried and support a dependent), you need to file if your income exceeds US$22,000. If you are 65 or older, the threshold rises to US$24,400.

What types of income should US expats report to the IRS?

If your income meets or exceeds the filing threshold, you are required to report all of your worldwide income to the IRS. This includes income from India as well as any other country.

The following types of income must be reported:

Wages or Salary: This includes earnings from an employer in India or elsewhere. Any income earned in Indian Rupees must be converted to US Dollars for reporting purposes.
Self-Employment Income: If you are self-employed in India, you need to report your income just as if it were earned in the US. This means you may also be responsible for self-employment taxes, even if you paid equivalent taxes in India.
Interest and Dividends: Any interest from savings accounts, fixed deposits, or dividends from investments—whether from Indian or US banks—must be reported.
Capital Gains: If you sell assets like stocks, bonds, or property, any gains must be reported. This includes assets located in India, the US, or any other country.
Rental Income: Any rental income from properties you own must be reported, whether the property is located in India or elsewhere.
Pension and Retirement Distributions: This includes any withdrawals from Indian retirement plans such as the Employees’ Provident Fund (EPF) or US retirement accounts.
Social Security Benefits: If you receive US Social Security benefits, you need to report them, although depending on your total income, some of this may not be taxable.

Are Green Card holders in India required to file US taxes?

Yes, Green Card holders residing in India must adhere to the same filing requirements as US citizens. This means that they are obligated to report all worldwide income to the IRS.

Additionally, Green Card holders must file an FBAR (Foreign Bank Account Report) if their total value of foreign bank accounts exceeds US$10,000 at any time during the year. These accounts include all savings, checking, and investment accounts.

Do US expats need to report foreign accounts if they have low income?

Yes, even if your income falls below the filing threshold, you may still need to file an FBAR if your foreign account balances exceed US$10,000 at any time during the year.

Similarly, if you have significant foreign assets, you may need to file Form 8938 under FATCA. These requirements are in place regardless of whether your income is high or low.

How can US expats avoid penalties for missed filings?

If you realize you have missed filing an FBAR or Form 8938, it’s critical to act as soon as possible.

The IRS offers options for those who are late in filing, particularly if the failure was not willful. The Streamlined Filing Compliance Procedures are available to help taxpayers who did not know they had to file. This program allows you to catch up on missed filings without incurring penalties, provided you can certify that the oversight was not intentional.

If you are unsure about how to proceed, consulting with a tax professional is highly recommended. They can help you determine the best approach for addressing any missed filings and assist with preparing the necessary forms and documentation.

Should US expats in India consult a tax professional?

Yes, consulting a tax professional is advisable for US expats living in India. A qualified tax professional can help you remain compliant, minimize your overall tax liability, and utilize available exclusions and credits such as the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC).

What are the benefits of proper tax planning for US expats in India?

Proper tax planning can help US expats minimize their tax liability and ensure compliance with both US and Indian tax laws.

Effective tax planning includes understanding the eligibility for the Foreign Earned Income Exclusion, which allows you to exclude up to US$130,000 of foreign-earned income in 2025.

Additionally, claiming the Foreign Tax Credit can help avoid double taxation on income that is taxed in both India and the US.

Why is it important for US expats to file correctly?

Filing correctly is essential for avoiding hefty penalties and legal consequences. The IRS may impose fines of up to US$10,000 per unfiled form, and in cases of willful non-compliance, the penalties can be much higher.

In addition, not filing could lead to further enforcement actions, such as asset freezes or criminal charges, especially for repeated offenses.

Why partner with a specialist Expat accountant?

Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in Germany. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.

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