Moving back to India? US tax rules NRIs should know
An Indian professional who lives in the United States and then moves back to India may still be considered a US tax resident, despite physically leaving the country. This can lead to costly mistakes for non-resident Indians (NRIs) when it comes to their tax obligations. It is important to understand that immigration status and tax residency are two separate concepts, governed by different rules.
US citizens are always taxed on their global income and assets, regardless of where they reside, until they formally cease to be US citizens. Green card holders must formally surrender their green card or have it revoked to terminate their residency status. The substantial presence test, based on the number of days spent in the US over a certain period, determines tax residency for those on H-1B, L-1 or H-4 visas.
A common mistake NRIs make is to close all American bank and brokerage accounts before moving, when in fact they should inform the financial institutions of their change in tax residency and provide appropriate tax documentation. They can generally continue to hold US securities, but must consider the brokerage firm's rules and applicable tax documentation.
It is advisable to seek professional tax advice before obtaining or relinquishing a green card and to disclose any foreign assets to avoid potential penalties under Indian income tax laws.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
