U.S. EXPAT TAX GUIDE – INDIA

Do US citizens in India need to file US taxes?

Yes, they do. If you are an American citizen or Green Card holder living in India, you are still required to file a US tax return.

Moving abroad does not release you from your obligation to report all your income globally to the Internal Revenue Service (IRS).

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Why do Americans living in India still need to file US taxes?

The US tax system is based on your citizenship, not where you live. This means that if you hold a US passport or Green Card, you must file a tax return even if you are living and working in another country. You have to report all of your income, including what you earn in India, whether it comes from a job, freelance work, or investments.

What are the income limits for filing US taxes from India?

As a US citizen or Green Card holder, you must file a tax return if your income exceeds certain amounts. Here are the income limits for the 2025 tax year:

Filing Status	Age Under 65	Age 65 or Older
Single	US$15,000	US$17,500
Married Filing Jointly	US$30,000	US$31,500 (one over 65) / US$33,000 (both over 65)
Married Filing Separately	US$5	US$5
Head of Household	US$22,500	US$24,000

These rules apply no matter where you live. Even if you moved to India for work or are self-employed there, you must file a US tax return and report all your income from both US and Indian sources.

Do Green Card holders in India need to file an FBAR?

Yes, you might need to. If you have foreign bank accounts that total more than US$10,000 at any point during the year, you need to file an FBAR (Foreign Bank Account Report). This applies to bank accounts, investment accounts, or retirement savings in India.

For example, if you have multiple accounts in Indian banks and the combined value of those accounts exceeds US$10,000, you need to file an FBAR. This is separate from your tax return, and not doing so can result in hefty penalties.

What types of accounts do I need to report on the FBAR?

You must report various kinds of foreign financial accounts on the FBAR, including:

Savings accounts: Any savings accounts in Indian banks must be included.
Investment accounts: If you have investments in Indian mutual funds or stocks, you need to report them.
Retirement accounts: Any retirement funds held in India, like the Public Provident Fund (PPF), must also be reported.

What happens if I don’t file my US taxes from India?

If you don’t file your US tax return, you could face serious penalties. The IRS may charge late fees, interest, and additional penalties for not reporting your income.

Furthermore, failing to file an FBAR when required could mean penalties of up to US$10,000 per violation. If the IRS considers your failure to be willful, the penalties could be even higher.

For example, if you didn’t know you needed to file the FBAR but submitted it right after finding out, the IRS may consider waiving the penalties. You need to provide evidence to support your claim, such as being a first-time filer or having misunderstood the rules.

Even if the IRS waives the penalties, you are still required to file the FBAR. The waiver only applies to the penalties, not to the filing itself.

Do I also need to file Form 8938 for Indian accounts?

You might also need to file Form 8938 (Statement of Specified Foreign Financial Assets) if the value of your foreign accounts exceeds certain thresholds. For US citizens living in India, the thresholds are:

Single filers: US$200,000 on the last day of the tax year or US$300,000 at any time during the year.
Married couples filing jointly: US$400,000 on the last day of the tax year or US$600,000 at any point during the year.

FBAR and Form 8938 have similar requirements, but they are separate forms, and you must file both if you meet the conditions for each.

Even if the IRS waives the penalties, you are still required to file the FBAR. The waiver only applies to the penalties, not to the filing itself.

How can US expats in India meet their tax obligations?

If you are a US citizen or Green Card holder living in India, staying compliant with US tax laws can be tricky. There are specific steps you need to take to ensure you meet all your obligations:

File your US tax return each year: Even if you owe no taxes, filing is mandatory.
Report foreign accounts with FBAR: If the combined value of all your foreign bank accounts exceeds US$10,000, you must file an FBAR.
Include Form 8938 if necessary: If you hold significant foreign assets, make sure you also submit Form 8938 along with your tax return.
Get professional help: Consulting a tax expert familiar with both US and Indian tax regulations can help you remain compliant and reduce your tax liability.

What should you do if you haven’t filed US taxes while living in India?

If you haven’t filed your US taxes while living in India, it is important to address this as soon as possible. The IRS offers a solution called the Streamlined Filing Compliance Procedures, which helps taxpayers catch up without severe penalties.

This program is available to US citizens and Green Card holders who were unaware of their filing obligations. To use this program, you need to show that your failure to file was unintentional.

Through this program, you can file the last three years of tax returns and up to six years of FBARs to get back on track.

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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