We have been preparing US income tax
returns for US Citizens and permanent residents living in India for over 35 years. As a US Citizen or permanent resident
(green card holder) you are
required to file a US return each year regardless of the fact that you file
and pay taxes in your residence country. The expatriate earned income
exemption ($92,900 for 2011) only can be claimed if you file a timely tax
return. It is not automatic if you fail to file.
We have scores of clients located in India and know how to integrate your US taxes into the local income taxes
you pay. Any income tax you pay there can be claimed as a dollar
for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension
to file it until June 15th following the calendar year end. (You
cannot file using the Indian tax fiscal year for US tax
purposes). You must pay any tax that may be due by April 15th in order to
avoid penalties and interest. You can get an extension to file (if you
request it) until October 15th.
There are other forms which must be filed
if you have foreign bank or financial accounts; foreign investment
company; or own 10% or more of a foreign corporation or foreign partnership.
If you do not file these form or file them late the IRS can impose penalties
of $10,000 or more per form. These penalties are due regardless of
whether you owe income taxes or not.
There are certain times you may wish to make
elections with respect to your Indian Corporation or Investment Company which
will give you US tax benefits. There are other situations where
forming a US corporation to receive your business income may be more
advantageous than using a corporation in your resident country. We can help
you with these decisions.
If you are
self employed while working in India, you will have to pay US self employment
taxes (social security).
If you are a bona-fide employee you do not have to worry about paying US
social security on your wages earned in India.
We have helped hundreds of expats around the world
up because they have failed to US returns for many years. Unfortunately,
unlike India, Canada, UK, etc. you must also file so long as you are a
US citizen or resident. You can if you follow proper IRS and State
Department procedures surrender your US Citizenship and therefore cut off
your obligation to pay US taxes in the future. You must surrender that
Citizenship for non-tax avoidance reasons and then can usually not return to
the US for more than 30 days per year for the subsequent ten years.
You can more read about the Indian Income Taxes and
Let us help you with your US tax returns, US tax planning
and other US tax and legal concerns. Download our
expat tax questionnaire below
or email us to request a mini
consultation by phone, skype or email
I look forward to solving your tax concerns. Thanks
Don D. Nelson, Attorney at Law, partner
in Kauffman Nelson LLP, US Certified Public Accountants