530 Responses to Comprehensive Analysis of FATCA (Foreign Account Tax Compliance Act) of USA for US based NRIs

  1. Sanjay kapoor says:

    Hi,
    I was staying in US between 2011 to end of 2016. I had paid taxes for the earnings during the period. I had close to 1 million dolars in NRE account in india ( All of them are taxed in US and transferred to india). Was aware of the FATCA towards the end of my stay and did not bother much about the same. The funds reached 1 million dollars over the years i stayed.

    I have been in India for more than a year.. Now

    1. how can this affect me and can it while i am in India?
    2. Is there any real merit / advantage for me to pay penalty and declare for all the missing years. I dont have plans to return back to USA as we have moved back for good.

    Appreciate your help and all your in depth insight!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. FATCA / CRS is now part of revised KYC requirement and affect everyone – NRIs and residents. If you are considered a US resident, all the income would become taxable in USA. You would also need to file FATCA form as well as FBAR. The penalty for FBAR may also apply. However, FATCA/FBAR may not apply to Indian residents.
      2. The answer would depend on whether you are a US citizen or a greencard holder. Also, if you are an Indian resident, you are not allowed to maintain NRE account and all the interest in the NRE account would become taxable from the day of your return to India. I would suggest you to talk to your advisor to understand the regulation and how best to plan your investments for tax efficient investments and compliance. If you don’t have any, please contact us. Thanks.

  2. kaiz says:

    Very Informative article and well explained.
    I recently received (Dec 30) a notice from the Deputy Director of Income tax regarding FATCA.
    i am in indian citizen (salaried employee in India) , and have been allocated RSUs by my company (US based)
    i have a brokerage account with a US broker ( as required by my company) for vesting RSUs.
    after receiving this notice, i checked that there is a sum of USD 1105 as dividend applicable to me for FY 15-16
    how do i respond to the notice, where do i pay the tax , india or US ??

    could you help me please?

    thanks much
    kaiz

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you are an Ordinary Resident of India, your global income is taxable in India.
      2. The RSU (MV-cost) would also be taxable in India when RSUs were allocated to you. It is just like ESOP in India. The dividend would also be taxable in India. However, if you have paid taxes in USA, you would be able to claim the tax credit.
      3. I would suggest you to contact your CA and show the notice as only after reviewing the notice, I can guide you accordingly. Thanks.

      • kaiz says:

        thanks very much- that really helps
        i have been (mis)managing my financial filings till date, so will need to seek a CA.

        thanks for all your help, i am not sure if you are based out of india.
        Would you be able to suggest someone in Mumbai?

        thanks very much
        Kaiz

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          You are very welcome. We are based in Ahmedabad, India. Thanks.

  3. Minji says:

    Will I need to report my paper NSC of value more than 12000 dollars bought from postal office in India on FBAR. Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      FBAR limit is for all financial account so would include bank, deposits, demat, MF, brokerage etc. accounts. I would include NSC as it is like a deposit account and to save from any complications. Thanks.

  4. ketan upadhyay says:

    Sir,
    I am working in saudi arabia since dec 2014.
    I am working on work visit visa. I dont have Iqama.
    Since there is no tax in Saudi.What should i write in Fatca declaration form for my NRE account in india.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If you don’t have Iqama, you would give your work visa number. Thanks.

  5. Siva says:

    Thanks for the detailed blog on this topic. Really appreciate it Jigar. However, I still have this fundamental doubt.

    Based on FATCA, I understand that an NRI will have to declare the bank accounts in India having combined financial assets over $50K. Would this apply to the bank accounts (specifically NRE savings account) where the funds are only sourced from US after paying all taxes here in US.

    Please clarify. Thanks in advance!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The FATCA requirement is for US resident that require disclosing ALL account if the combined value is more than $50k. While you have paid the tax in USA on the principal, US also wants to track and tax the income generated on the investments. Thanks.

  6. Ganesh says:

    This blog is extremely informative. Thanks for this info.

  7. Sumesh says:

    Jigar,
    I am currently working in US under F1 student visa(OPT). I have an SBI NRE account in India in which I have deposited around 60,000$. I have also transferred INR worth 30,000$ to my parents account from the NRE account. I recently received a mail from SBI requesting me to submit “self-certification” for FATCA compliance.
    1. What is this self-certification about?
    2. In US do I need to report this to the IRS?
    3. Also if I have PPF, mutual funds in India, do I need to report that to the IRS also?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you are on a student visa, you may not be a US resident for tax purpose, provided you are filing 1040NR. And, you may not need to report your Indian income or assets to IRS. However, if you claim to be a US resident for tax purpose i.e. filing 1040, you are a US resident for tax purpose and accordingly would need to report everything. Thanks, Jigar

  8. Dhaval Panchal says:

    I have following two questions.

    1) I am a Citizen / Resident of USA for the purpose of Tax. I have taken education loan from India for pursuing higher studies in USA. I am paying Interest on that loan in India. Then can I take benefit in the form of deduction for such interest paid in India while filing tax return in USA?

    2) With the same residency situation as explained above, I have purchase an apartment in India and I am paying mortgage interest on the mortgage loan taken on the same property. Then can I take benefit in the form of itemized deduction in Schedule A for such interest paid in India while filing tax return in USA?

    Can you please guide me on above doubts keeping in mind compliance I need to do in India also.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you are a US citizen and resident, your global income / debt to be included in your tax return and you would be able to take the interest on loan as deduction. Please check with your CPA.
      2. Applying the same logic, I would think yes. However, there may be some restrictions. Please check with your CPA. Thanks.

  9. Bikash says:

    Dear Jigar,
    Thanks for this very useful article
    I have below doubt
    1. I transferred to Saudi Arabia from my Indian Company in the year Feb 2016 . The assignment will over by June 2017 and I will back to India . here I am getting salary in Saudi Arabia money only .
    2. I have some share in sharemarket and now the Broker wants me to submit the FATCA . In this case what shall I fill , like I am a NRI or only citizen of India . Since at Saudi Arabia there is no tax , I don’t have any tax identification number . In that case what is to be mentioned

    Kindly reply
    regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Your Iqama Number can be used as Tax ID number for FATCA/CRS declaration. Thanks.

  10. Rohit says:

    How do we calculate the maximum value for ICICI Prudential Life Insurance Policy to report on Form 8938 and interest income?
    Say policy premium is 50,000 per year for five years and sum assured is 500,000 after 10 years. This year all five premiums are paid (i.e. total premiums paid 2,50000). Policy statement shows that the fund value as of March 2016 is say 400000.

    So should I report USD equivalent of INR 400000 as the Maximum value of account during tax year (Line 4 in 8938) and show USD equivalent of 150000 (400000 – 250000) as interest income for this year?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would recommend you to obtain the statements of the Insurance product and you would report the balance and/or income from the statement. Please request statement for calendar year for easy compliance. The threshold for insurance plan with cash value is $250000 so you would include the amount only if you had to file 8938 for other accounts. Also, I recommend that you check with your CPA for reporting. Thanks.

  11. Vasan says:

    Hi Jigar, FATCA filing kicks in when total value of financial assets are more than 100K (when married filing jointly). Then why is the need to declare assets (PF, MF etc) if the total value is less than 100K?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. It is US requirement to report foreign financial accounts for US residents (FBAR requirement).
      2. In FATCA, while US resident reports, various countries also report accounts owned by US residents to IRS. If the US residents were reporting the assets and paying tax truthfully, there would not be any requirement for other countries. However, US does not want the countries to burden with wok so higher threshold is kept. Thanks.

  12. Vins says:

    Hi Jigar, Have couple of questions, could you pls answer the same?
    1) We need to declare all our financial assets in 8938 (FATCA) if the value is 100K$ no matter -
    a) When the account is opened in India?
    b) And the cumulative amount value of all accounts (FDs, savings, current etc..) and the highest value of each account in 2016 sums upto 100k$ (for MFJ)?

    2) In the future, if money is transfered to my US bank(for buying house in US etc..), and if the value of the total would be become less than 100k$ in 2017 year, then i would not need to file 8938 for 2017 FY tax return, right? hope is this ok as FATCA is filed for 2016 but not for 2017?

    3) As you may aware, each time we open Fixed deposit in india, a new account is created, do we need to report each account in 8938? or per customer id is ok.? the total number of accounts including FD and savings (resident) accounts is more than 30, is that ok.?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes, if you are filing MFJ and living in USA.
      2. You may still need to file for 2017 as even in April 2017, the foreign financial assets exceed $100k in 2017. You may not have to do that for 2018 and later years.
      3. You need to report the account by a unique ID. If you are using customer ID as unique ID, you may combine all the amount for reporting. However, if you are using the account number as unique ID, you would need to report all FDs and savings and other accounts separately.
      4. Due to RBI UCIC – Unique Customer Identification Code requirement, multiple residential status for a single customer ID may not be allowed, i.e. you may not have a resident account as an NRO account under same customer ID in the same bank. Thanks.

  13. PR says:

    Hello Mr. Jigar,

    I moved last year (Feb 2016) to USA from India on a work visa.
    I recently received emails from my banks and mutual fund accounts in India to update extended KYC (OR FATCA). While completing those, I came across your article. Unaware of these rules, I filed my first TAX return in USA by myself and couldn’t mention income of my PPF interest, Mutual fund investments etc. My return is still pending, however what options I have to keep IRS updated about other income that I would have incurred in Indian bank accounts. Is there an overall USD limit above which I need to declare and pay tax or I have to pay tax on any interest I have earned in India. I will still have to file tax return in India too for 2016-17 and I would have already paid some TDS for those income. What is the cutoff date applies to me for filing the FBAR. Can I still do that?

    Is there any contact information (email id etc) for you or your team where I can seek further advise.

    Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I am not sure whether you have filed the tax return or it is still pending.
      2. I would recommend you to file an extension (if not filed) or amend later (if filed). It is advisable to first file Indian tax return as based on that file US tax return and claim any foreign tax credit.
      3. From this year, the deadline for 1040 and FBAR are the same. However, you may get an extension for both, which was not allowed for FBAR earlier.
      4. Our contact details are available in the “Contact US” section of the blog. Thanks.

  14. Utkarsh Mehta says:

    Hi Jigar,
    Thank you for helping on taxation queries.
    Can you please help on below questions:
    I have 3 different PPF accounts (Self, Spouse & Daughter). All 3 accounts have PPF interest income but till date no withdrawal has been made from any one of it.
    Only 1 account has passed 5 yrs limit and other 2 have not.
    - Do I need to report interest income in my US tax return from all 3 PPF accounts?
    - If yes, then should I claim in form 1099-INT as Tax-Exempt Interest (box 8), Accrued Interest or not allowed to claim.

    Thank you,
    Utkarsh

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. An NRI is not allowed to open a PPF account so if you opened the account AFTER you became an NRI, it is in violation of FEMA and PPF act. Also, if the bank / post office finds out anytime before maturity, you may not receive any interest.
      2. Yes, I think the interest income on PPF account would need to be include for all 3 accounts (assuming you are filing return as Married Filing Jointly and claiming daughter as dependent).
      3. PPF interest is exempt as per Indian Income Tax Act. It has nothing to do with US taxes or IRS laws. So, it think it will be taxable in USA. For simplicity, I would recommend to include the interest as accrued interest in your tax return. Thanks.

  15. Dalbir Singh says:

    How can I change my Resident Accounts to Non-Resident accounts in India?
    I enquired from ICICI bank, PNB and UBI. They say that I shall have to go to their bank to change these.
    I am in US. How shall it be possible? Will you please advise? Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Physical presence is not required for changing your resident account to NRO. Please contact the bank. It is possible that the person who you talking to may not know the procedures. You may ask them to put you in contact of a person who is specialized in NRI matters in the bank. Thanks.

  16. anoop says:

    Dear Sir
    I ‘m an US based NRI staying here since 2015. I have some mutual fund investment SIP running since I came from India. I came to know recently that I need to file form 8621 only if MF investment value is more than US $25K. Is it true?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would file 8621 for all MF even less than 25k for consistency and clarity. Thanks.

  17. Satyam says:

    Dear Jigar,
    thank you for THE MOST INFORMATIVE FINANCIAL BLOG on the internet, especially for Indians.

    I, as a resident of Canada, have made NRE FD and NRE MF investments in India. The source of this money is Canada. I have no financial ties with the USA. Never have.

    does FATCA apply to me?

    Thank you

    Regards,
    Satyam.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As a Canadian resident, while FATCA may not apply, CRS will apply to you. Thanks.

  18. Ajay says:

    Dear Mr.Jigar,
    I have LIC Jeevan Anand Life insurance Policy , I will get the bonus only at the time of maturity, In this case do I have to calculate bonus each year and include that in 1040 tax return or at the time of maturity we can show?
    please help me
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      IT is a different way to reporting your income. If you report every year, your tax return will be smoothed. If you report on maturity, all your income will be reported in 1 year. Please contact your CPA. Thanks.

  19. Ajay says:

    Hi Mr.Jigar,
    I have LIC Jeevan Anand ploicy , do I need to include Bonus in the 1040 tax return.
    for LIC Jeevan Anand ploicy do we need to submit FORM 720.
    In the FBAR do I need to put the surrender value + Bonus as max value
    please advice me.
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You would include the surrender value i.e. cash value in FBAR.
      2. For reporting income, there are two ways – report accrued income annually or report all income at once on receipt basis (on maturity). Different CPAs take different views.
      3. I am not sure about Form 720. Please check with your CPA for reporting of income and value. Thanks.

  20. ajay says:

    Hi Mr. Jigar,
    1) I have 2 LIC policy form 2008, I am entering to OVDP , I could not able to get the surrender value for previous years, the LIC agent told they can give only for the current year and not for previous years, so in this case can I use Cost Method for showing interest at the time of maturity.

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please contact your CPA who is helping you for OVDP and explain the situation. He will know how to report in the form properly. Thanks.

  21. J.N.Thakkar says:

    Dear Mr.Jigar

    I am an Indian Citizen and I have following queries.

    1) I had open PPF account in the name of my daughter immediately after her birth. At the age of 26 she got married to US Citizen and now settled in USA. Pl advise whether she needs to disclose under FABAR or FATCA and does she need to offer any tax on PPF interest? I feel that PPF is tax rebate item and controlled by Govt and so need not be reported under FABAR.

    2) I have taken one Insurance Policy from LIC on her life and regularly paying premium on her behalf. The policy will mature after 5 years. Is she required to declare under FABAR?

    3) I have placed Fixed Deposits of around Rs.10 lacs where my name is first and second name is of my daughter. I pay in India tax on entire Income as my name is first name and as per Indian law interest is paid to first holder and tax is deducted and credit given to first holder. Pl advise whether she needs to disclose this under FBAR or FATCA? Is she required to offer 50% of interest income in USA and pay tax in USA.

    4) I have kept 300 gms of gold bar for her children as Mosala. At present gold is in my possession. However I will hand it over to her after 3 years as I am not keeping good health. I have completed 68years of age.

    5) Is it advisable for me to create private trust, make her one of the beneficiary and dispose of my all properties, keep entire investment in tax free Bonds so that there is no tax payable by Trust and hand over them this money after 5 to 10 years.

    J.N.Thakkar

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Assuming she is not coming back and would stay in USA permanently, I would think she needs to include the PPF account in FBAR and FATCA as well as report the PPF interest as income in her US tax return. PPF is a tax rebate item as per Indian tax laws and not US.
      2. Cash portion of the insurance contract is also considered as a foreign financial account/asset and needs to be included provided it is above certain thresholds.
      3. I would advise you to remove her name as a joint holder and keep her as nominee. While she needs to report FD in FBAR and FATCA (if applicable) and also report interest as income as joint holder, no such requirement for nominee.
      4. Gold is not considered Foreign financial account or asset and not required to be include in the forms.
      5. I would not recommend creating a private trust as it would unnecessarily complicate the matter. There are other better ways. Please contact us if you need help with investment or estate planning. Thanks.

      • IS says:

        Could you please guide me as I am residing in Canada and SBI has asked me my KYC details including my SIN # which is a very sensitive piece of information to share with a third party.

        Thanks

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          As it is your Canadian Tax ID number, you would have to provide the same to the bank as a part of the revised KYC requirement so that bank would report your account and income to Income Tax department and then will be shared with the Canadian Tax department. So it is very important to invest looking at both Indian and Canadian tax laws for you. Thanks.

    • Ajay says:

      Dear J.N.Thakkar,

      I have LIC Jeevan Anand Life insurance Policy , I will get the bonus only at the time of maturity, In this case do I have to calculate bonus each year and include that in 1040 tax return or at the time of maturity we can show?
      please help me

      Thanks

  22. narsimha says:

    Hi,
    myself and my wife has 2 LIC policy (1 per each) in india which started in 2002 and still not matured. its for 15L each. we are paying 30,000/ person every year. i am US citizen and till today haven’t reported above LIC to IRS. should i do this in my current tax year? if yes, do you forsee any issue in doing so?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If FBAR and FATCA is applicable in your case, you would need to include the cash value of insurance in the forms. I suggest you contact your CPA and explain the matter. Thanks.

    • Ajay says:

      @narsimha , have you find answer for that? do we need to declare Bonus generated every year as income in the 1040 tax return(even though we get the money only at the time of maturity).
      for foreign Life insurance do we need to submit FORM 720.
      please help me

  23. Sanjay Gupta says:

    Hi,
    I was residing in US for 6 years. I had nearly 4.5 cr on my NRI account that i had accumulated over the past years. I paid taxes for those when i earned them in US.

    I only found out about fatca when i was notified about the fatca form by my bank. I have filled that and sent that back to my bank.

    I had to return back to India for good this September. I dont want to go through the pain of paying penalty as we moved back to India as it will be a substantial amount.

    Do you see any reason why i have to still do the same and do you think if there can be any consequences?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. If you are a US greencard holder or a US citizen, you are still consider as a US resident. Only after you surrender your citizenship or residency, you may make a declaration that you are not a US resident for tax purpose and your records would accordingly updated.
      2. If you do not have greencard or US citizen and have returned to India, please submit another declaration that you are no longer a US resident. Thanks.

      • Sanjay Gupta says:

        Thank you so much for the response. Just to clarify I was staying in US between April 2010 to September 2016.

        Do i need to submit a declaration to my bank in India (or) do i need to submit a declaration to IRS as i will be still considered US person for tax purposes for this year as i stayed more than 180 days.

        Appreciate your help again!

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Please note that if your account is flagged as a US resident, the information from June 30, 2014 will be shared with the IRS. Also, you were technically a US resident till 2016 tax year (assuming no greencard or citizenship). So I would recommend to consult your CPA in USA, make voluntary disclosure and pay tax, interest and penalty to officially clear and have a peace of mind. Else, you may submit a revised FATCA that you are not a resident of any country other than India and hope/pray that IRS is not informed or if informed, you are least bothered as you are not planning to go to USA in future. As indicated, I would prefer and recommend 1st option to officially close the matter. Thanks.

  24. Prakash says:

    Hi,

    I have invested in chit fund run by MSIL (Mysore Sales International Limited), last month I participated in the bid and got the bid in my favor. But while withdrawing the bid amount, the Company asked me to produce some surity. I sent my SBI Life Insurance Policy to be assigned in the name of MSIl, but my request was rejected by SBI as they wanted me to attach FATCA Form filled by MSIL. But MSIL is not ready to fill this form and say its not applicable for them to fill this form, without which I will not be able to assign my Policy.

    Please suggest what should I do now.

    Regards,
    Prakash

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      NRI is not allowed to invest in chit funds. It is against FEMA and I do not recommend. Thanks.

  25. sanket batra says:

    Thanks for the article Mr Jigar. , it is really helpful.
    I am a US resident and i hold a Joint NRO account with my brother and mother who are Indian residents. We earned interest income on this joint NRO account. The question is who pays tax on the interest income and in what proportions?
    Do i just pay US taxes for 1/3rd of the interest income to irs or should it be in proportion to the deposits made by holders of the account ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The first holder of the account would report the interest and pay tax. As NRO accounts are owned by NRIs only, it is considered your income and you would need to pay the tax. As all other joint holders are residents, I would think you would need to report 100% of the interest as your income to IRS. Thanks.

  26. Raj says:

    Hello Mr. Jigar,

    Question about the home loan products like SBI max gain. So SBI opens this account is as OD account and any surplus money parked can be used to reduce the interest.

    Howver, if some one decides to ‘prepay’ the loan amount then it reduces the principle amount but increases ‘available balance’. So my question is this ‘available balance’ is >10K does that need to be reported in FBAR? Please note that ‘Balance’ of the account still shows -ve as loan has not been fully paid yet.

    Or this ‘available balance’ is like credit card limit ?

    Thanks,
    Raj.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If available balance is the limit to borrow, it is not your money but a liability i.e. credit facility. However, if available balance is your asset i.e. more than liability, FBAR may be applicable. Thanks.

  27. vgarg says:

    Hi Sir,
    I have been staying in USA for 3 years (2013 to 2016) and wish to return to India in 2017 for good. During my stay in USA I have invested in Indian stock market, IPOs & mutual funds with growth plans. I have been holding the shares & MF since then. Now if I were to sell the shares in Indian stock market in 2017 when I will be a resident indian for tax purpose(2017), am I liable for any tax on long term capital gains in USA for my investments done in India?
    Assuming the long term investments were done from my Income in USA between 2013-2016 during my stay in US ( tax resident in US).
    Also how with Indian tax work on the long term investments (greater than 1 year)
    Kindly clarify.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would need to check the residential status in 2017. If you can be claimed as a US resident, you would have to report your income and pay tax in USA. If not, I don’t think you would need to pay tax in USA. However, please consult your CPA. He will understand your situation in detail and properly guide you. Thanks.

  28. Naveen K says:

    Hello Mr.Patel,

    I have a question investment in ICICI prudential. As I understand from information at different website and IRS, as an NRI there is no tax/TDS for long term capital gain from equity/mutual funds. Does it mean that once my ICICI prudential life insurance is matured I can transfer many back to USA without any additional tax ?

    IRS also mentions that threshold for declaring foreign investment is 100,000 if filing jointly. Is that correct?

    Thanks a lot for your response in advance.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes, you will be able to transfer the funds to USA.
      2. There may not be any tax in India. However, as a US resident, you may have to pay tax in USA on the gain.
      3. The FATCA (Form 8938) limit for MFJ is $100,000. However, the FBAR (FinCEN report 114) threshold is only $10,000 and if your asset has generated ANY income (even $1), you need to report the same in your tax return 1040. Thanks.

  29. Utpal Rawal says:

    Dear Mr.Jiger Patel, I am LIC Agent (Mumbai -India) my one client Mr Chetan , plan to take L I C Policy Endowmwnt plan for 30 Years , He leave in USA (Indian Oversies) more then 15 year, but now he realise FATCA Tax & he say at the time of maturity what tax he pay in US or at the time of pay insurance premium pay tax also ? Please help me for Tax calculation .

    Awaiting your prompt reply.

    Utpal Rawal

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Unfortunately, without data, I may not be able to help with tax calculation. However, I think any income/gain (additional money than investments) would be taxable in in USA. Please ask your client to contact his CPA in USA. Thanks.

  30. K,Nagarajan says:

    To
    Mr.Jigar Patel

    Dear Sir
    I took a dollar denominated endowment policy from an insurance company when I was a NRI in my daughter’s name when she was a minor. Now she is in USA. There is no tax on maturity value in India that is about 25000 USD that will come in 2018. But what is her tax liability in USA? The surrender value is less than 10000 USD now.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I think it will be taxable. I would suggest you to contact your CPA for exact tax liability. Thanks.

  31. ELIZBETH CASAS says:

    Valuable piece . I Appreciate the points ! Does anyone know where I might find a blank IRS 8938 form to complete ?

  32. Kishore Jagtiani says:

    I am Indian Resident, Indian Passport holder aged 64, Retired, filing IT returns, having income below taxable limit, and a Green Card Holder. How does FATCA affect me?

    In future if I have additional income & cross the taxable limit & pay my taxes in India, THEN at that time how does FATCA affect me?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You need to include your Indian income in your US tax return. You would also report any exempt income you generate (e.g. PPF interest, NRE FD interest, LTCG on sale of equity shares/MF, etc.) in your tax return. Also, FATCA will help the institutions to determine that you are a US person. Some institutions or MF do not accept investments from US resident so you may not be able allowed to invest in them and will increase compliance. However, the current FATCA limit is $50,000 so only if your ASSETS are more than the threshold, information will be shared. Thanks.

  33. P Vijay says:

    Sir,

    I am an independent contractor from India working for a software company. The company has branches in USA. I work in flexible times as i like. I am getting $3.5 per hour. They send payments by Wire Transfer once in month. Now the company saying that I am responsible for my own tax payments. However, they are saying that they provide 1099 form to me.
    Now coming to the point, I am a full time employee and paying taxes to Income Tax Department, India.
    1) Let me clarify that what is form 1099?
    2) Where should I file taxes for my foreign earnings. (India/USA)
    3)Is it necessary to file taxes for my foreign earnings (Approximately Rs. 10000-20000).
    4) If I have to file taxes in USA, then what is the process for it?
    5) If it is India, then what is the process for it?

    Regards,
    Vijay

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. 1099 is a form that indicates how much money paid by the company to you. It is your income and the company’s expense. It is given when a person is working as a consultant (not an employee).
      2. As you are an Ordinary Resident of India, you need to report and file your tax return in India. You may also have to file tax return in USA. However, looking at the amount, you may not have to pay any taxes in USA.
      3. Yes.
      4. You may file the tax return online or have a US based CPA file it for you.
      5. You would include the income as other source in your computation of income and would pay tax on the total (India + US sourced) income. Thanks.

      • P Vijay says:

        Dear Sir,

        I really appreciate your feedback. But I still have some more queries and want your valuable feedback.
        1) What is the tax slabs for US as my earnings are Rs 10000-20000 per month, it is expected to increase 40000 per month occasionally

        Regards,
        Vijay

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          You may not have to pay any federal taxes in USA as you would get the standard deduction and personal exemption. However, you may have to pay the self employment tax (SSN & Medicare). Thanks.

  34. A Kumar says:

    Hi Jigar

    I am a UK based NRI (Indian Passport holder). In 2002, I had a NRE FD for three years. The interest was paid quarterly which was tax free. Unfortunately, at the same time I came to India and stayed for four years as I my wife and children were living here.

    Now, reading your blog, I understand that after living in India for a certain period of time you become a resident Indian. Therefore, I should be paying tax on my interest.

    My question
    (1) As an Indian National resident in, am I suppose to pay the tax to Indian Government?

    (2) Where do I go to pay the tax. Is there a site where I can declare this income and pay the dues?

  35. Pankaj says:

    Dear Mr Patel,

    I was in USA on H1-B visa and came back to India in Mar 2015. I filed my 2015 US tax return as a Resident and 2015-16 Indian tax return also as a Resident. When I fill the FATCA form this year in India, should I mention that I am/was a tax resident of USA or will I be considered Indian tax resident only from now on? (I will not be visiting US in 2016)

    Thanks & Regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The FATCA requirement is not per year but as of day. Also, when there is any change, you are obligated to report the same. So, if you are not a US resident now, it is okay just to report your status as Indian resident only. Thanks.

  36. Hindustani says:

    Hi Jigar,

    Thanks a lot for informative article. I had no knowledge about either FATCA or FBAR but your article definitely helped me to start doing some brainstorming and research more on this.

    I have few questions. It would be really great if you can help answering them.

    Scenario – I came to US in Oct 2010 and stayed till January 2014. I happened to move back to India in Feb 2014 and returned to US in January 2015. During my duration in USA, I used to remit funds in my savings account held in India. I used those funds to prepay the home loan that I availed before moving to USA in Oct 2010. I purchased another home during my stay in India in 2014 financed mainly through home loan.

    Questions

    1. Does my account need to have $10,000 or more any given instance or total deposit in a given year should be more than $10,000 in order to be considered under declaration. I mean, overall remittance in a given year was more than $10,000 but I used to move the funds to loan account as soon as they became available in savings account. Does this need to be reported?

    2. I never knew about FATCA and FBAR till date. I think deadline for this year is already gone. I am planning to start reporting from next year. Do I need to report for all previous years even or can start directly from next year?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The FBAR reporting is not about overall remittance but of amount balance. So, if you remitted less than $10000 and then immediately transferred to repay the loan and if the balance has not crossed the threshold, there is no need to report.
      2. FATCA reporting threshold is $50000/$100000 (single/MFJ) so if you do not qualify for FBAR, FATCA will not apply to you as well. I suggest you to consult your CPA. Thanks.

  37. Mobin Shaikh says:

    Hi Jigar,

    Wanted to check the impact of FACTA on death claims one gets in India from a term plan in NRE and NRO account?
    Thanks in advance

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would think it would not be taxable. However, please consult with your CPA about taxation of receipt. Anyway, you would need to report the balance. Thanks.

  38. Vinod says:

    I am a NRO Employed in Abu Dhabi Gulf and after retiring after 25 Yrs of Service will settle in India from Oct 2016 . Please advise if I open an account in US whether it will come under FATCA regulations . I Have only Visit Visa for US for 10 Yrs but no other Identification like Social Security No or any other local Card or Driving License etc . I have my children who are working in US on Work Visas . Please advise

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. FATCA is only for US residents. So, if you are not a US resident, it won’t apply. However, you would need to submit FATCA/CRS declaration to let the banks / financial institutions know your resident status and if you are a resident of any country other than India.
      2. FATCA will apply to your children. Please do not invest in their name to avoid any complications. Thanks.

  39. Dhaval Panchal says:

    One of my client (being senior citizen) planning to come back India. He wish to have minimum monthly income of 45k-50k for the purpose of meeting daily needs. So can you please suggest me best risk free OR low risk investment alternatives. They are ready to invest the required amount.
    Please advice.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please contact us via email for the investment advise. Thanks.

  40. Dhaval Panchal says:

    One of my client(Tax Payer) is a USA Green Card Holder. He has taken Life Insurance Policy from LIC of India in the name of her daughter means that the Insured Person / benificier is his daughter. Tax Payer pays the annual insurance premium in INR. Tax Payer is a nominee and signature authority (not joint holder) in that policy.
    So my question is do I need to report that policy in FBAR + FACTA and Streamlined Domestic Offshore Procedure.
    Please advice.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      While the policy would have your client’s daughter as nominee or beneficiary, he would be the owner of the policy and can still be able to surrender the policy and get the cash. So he would need to report the same in FBAR and FATCA. However, I would request to contact his CPA who would be helping him for Streamlined Compliance. Thanks.

      • Sebstin says:

        Jigar: There is no tax benefits in US for paying LIC premium then why would IRS/USA is interested in knowing what policies we have in India?. If policy matures, def we need to show that amount while filing taxes (usual LIC policies are 10-20years term).

        Also if we take 20 years policy (say sum assured is 20L) and pay premium of 10L INR, we get back around 35L (on a higher side). So what is the tax we need to pay after 20 years?. 35L or 25L (35-10L INR)?. As per me, I have already paid taxes on 10L INR here in US.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          When there is a cash value, it is not for insurance but an investment for return, which may be taxable. If no cash value, it can be said only for risk protection and may not be taxable. Thanks.

  41. Sebstin says:

    An NRI in US having NRE/NRO accounts with CITIBANK. I have max balance of 20L INR in NRE account in 2015 (for about a month). As Citibank has presence in US, I am under the impression that I do not need to file FBAR. Pl correct me. I do get 1099-INT forms every year ($250-$700 interest) and I am reporting in tax filing 1040 along with W2 income.

    I have 10L INR cumulative premium payment made to LIC/ICICI policies since year 2000 (every year ~1.5L per annum – few opened in 2000, 2005, 2008 etc). I dont know the surrender value of these policies now. Do I need to file FBAR with several policies details?. I have one res account with 2L INR amount but closed as dormant as I did not operate for about one year. I dont have any other resident accounts in India.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Financial account held at a foreign branch of a U.S. financial institution needs to be included in FBAR. It is not required to be included in Form 8938.
      2. You need to contact the LIC agent or ICICI bank and obtain the surrender value or statement of account respectively, which will show the balance of the accounts and report the same. Please make sure that you request the statements/surrender value as on Dec 31, 2015. Thanks.

      • Sebstin says:

        Thanks.. Citibank NA is located in NY. I do get 1099-INT statements from there. SO its not considered as foreign bank.. right?. No need of FBAR or form 8938 in this case.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          FBAR or 8938 is required only if you have an account or investments outside USA. No need for US based accounts or investments. Thanks.

  42. nisha says:

    I am a US citizen, and an OCI holder – have been living in India for the past 3 years, so I am a resident of India and have a permanent residence here according to article 4 of DTAA, now I work in India but my income is not taxable according to India tax standards, should I still file my India taxes. Also am I required to fill form 8833 for US taxes? Please help. thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If your income in India is less than Rs. 250,000, you are not required to file income tax return in India. However, you may need to file your US tax return. Also, if you have foreign financial accounts of $10,000, you also need to file FBAR. I am not sure about form 8833. Please check with your CPA. Thanks.

  43. Nicky says:

    Hello Jigar,

    Really informative article. 

    1. If  NRI person is first holder in bank account in India and if this account is not operated ( no financial transactions ) since long time…..do we need to report this account?

    2. In NRI person is second holder in bank account in India and if this account is not operated ( no financial transactions ) since long time…..do we need to report this account?

    Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes
      2. Yes
      As you are an owner (first or joint), account needs to be reported. Thanks.

  44. Naresh Mehta says:

    Hello,

    I have a question:

    1) Under FATCA, is someone liable to pay taxes on UNREALIZED capital gains ? Or do you need to pay taxes only when you sell those Indian mutual funds ?

    Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      It is not a FATCA requirement. FATCA requirement is only that you report your foreign assets. Mutual fund is a foreign assets. If you include MF in Form 8621 and report unrealized gain, you may not include the same in form 8938. Reporting of unrealized gain is just one way of reporting your gain in mutual fund. Please note that if you sell the MF after 3 years that results in gain of $30, it is not one year income but of 3 years and that’s why the annual gain needs to be reported in the year it occurred. Different CPA has different ways/methods to report so please consult your CPA. Thanks.

  45. Rupesh says:

    Hi Jigar,
    Thanks for the informative article. I came to US on SEPTEMBER 2015 and filed my Taxes as Jointly (Married). Now reading through your article, I have one query:

    1) I sold a property and purchased another one while I was in India in 2015, so for only the month of June I had about >100k but less that 150k in my account, hence wondering if I need to file FATCA ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you moved to USA in 2015, you are not a US resident as you have stayed in USA only from Sept 2015. If you are married and joined your spouse who used to live in USA since long and filing as MFJ, you would need to comply with US tax laws as resident and report your foreign income i.e. sale of property and also foreign assets in form 8938 as well as FBAR. Please contact your CPA. Thanks.

      • Rupesh says:

        Hi Jigar,

        Thanks for answering the questions. Just to make sure, both of us moved to USA in Sep 2015 only. So this is first time we filed as MFJ, so If i understood correctly I don’t need to file FATCA correct ? Thanks once again.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Provided you filed 1040NR and not 1040. If you file form 1040, you are asking IRS to treat you as a resident for tax purpose. You may want to amend and file 1040NR. Please consult your CPA. Thanks.

  46. Sreejith says:

    Sir,
    I have received FATCA letter for my Insurance policy, I am just a Indian Citizen, not a NRI, doesn’t have any relations with US.
    1) Do I need to comply with this letter ?
    2) Suppose I comply, In future I move to US, what will happen to this compliance ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes, you need to comply with the letter.
      2. Your investment in insurance would be considered as foreign financial account/asset and you need to report the same to the IRS (Tax department of USA) when you become “resident” as per US tax laws. Thanks.

  47. DKS says:

    Hi Jigar,

    Thanks for the informative article. I came to US on Aug 2014 and filed my Taxes through H&R Block as a Resident. They did not advocate any FBAR then. Now reading through your article, I have few queries please:
    1) As I was earning in India back in 2014 until July 2014, do I still have to file for 2014?
    2) I sold a property and purchased another one while I was in India 2014, but transactions were huge (>100K), hence wondering if all that has to be declared, as practically I was not in US until Aug?
    3) I had not opened any NRE account in 2014, but only in 2015, so does that make any difference and just allows me to report for 2015?
    4) I own property in India, so does I have to declare property values as well, or just the bank accounts information?? how about the Insurance policies?
    5) I regularly pay taxes on my income in India, so do I have to show the Indian income still in USA, as I believed there was a Taxation treaty between US and India, and as long you are paying taxes in both countries on the Income and earnings generated there, I should be fine??
    6) But if you tell me that above is not correct way, then do I need to make any TAX amendments, since I have not shown any Indian incomes either in 2014 or 2015 US tax returns, what are my options now?

    Thanks for your guidance and advise.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1-3. If you moved to USA in August, you may not be a US resident for 2014 and there is no need to file FBAR or include global income in your tax return. However, you would be resident for 2015 and need to include global income and file FBAR and/or Form 8938 for foreign financial accounts and/or assets.
      4. Only financial accounts and assets are required to be disclosed. There is no requirement for disclosure of immovable properties.
      5. For any tax you pay in India, you would get credit for the same income included in your US tax return.
      6. As long as you file 2015 tax return disclosing all income and assets, I think it would be okay. However, you may want to amend the 2014 tax return and file as non-resident. Please check with your CPA. Thanks.

  48. rakesh says:

    Thanks for all information available on your web site.

    I am Canadian passport holder , 64 year old and filing taxes in Canada on investment income and pension income of Canada . Further , I get pension in India from Government and I have NRI other accounts in India . My major investment is in NRI account ( more than 10000 dollars) . I am considered resident as per Canada and also for India .

    If I become non resident of Canada as per Canadain rules ( i will stay only 2-3 months every year) , it is benificial since I will not be taxed on global income in Canada .

    Please confirm and clarify if I can continue to hold NRI tax free account ( I have all FD for 10 years) and interest will be tax free in India . ( I will stay 8-9 months in India) as per rules in India..

    Further , my rental income from Canada + investment in MF in canada will be taxed in Canada and since I will be paying taxes in Canada , it will not included in India .

    Please offer your comments.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If you are considered a Resident of India, you are not allowed to maintain NRE account. Currently, if you are living in Canada, you may not be considered as resident of India. However, detailed review needs to be made to determine your exact residential status. When you become Ordinary Resident of India (after 2-3 years of moving to India), your global income (Canadian income) would also be taxed in India. Thanks.

      • rakesh says:

        I am resident in India since year 2009 as was posted in India through Canadian company . Now please confirm if I have to liquidate my NRI FD which is due to mature in next 8 years and NRI ban interest will remain tax free or not.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Please note that you are an Indian resident since the day you moved to India. So, you are not allowed to keep NRE or NRO account since 2009 and any interest would be chargeable to tax after your return i.e. since 2009. Thanks.

  49. Mahesh says:

    I sold property in India in 2013 and moved some money which is more than $50000 USD in capital gains savings account. Will caital gains saving account will also be reported. Please let me know.

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes. All bank accounts will be reported. Thanks.

  50. LSK says:

    Hi Jigar,

    I moved to US on H1B while my spouse on H4 visa. I had queries regarding the income we earn in India (salary , rent and interest) . I will be filing as Married Filing Jointly – Form 1040.
    How should I declare my and spouse’s Indian income in the form. In Wages section they need W2s. We have only Form -16 to show such income .

    Also where in Form 1040 we can show rent income and interest income.

    Thanks and Regards.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would need to first determine whether you are “US resident” for tax purpose. Only then you need to include your Indian income. The income would be reported in the respective section. Please contact your CPA. Thanks.

  51. Kannan says:

    Hi Jigar, Thanks for a very detailed and informative write up. Clarifies most of my doubts. My Son is in USA and working since 2014. Having known this issue recently, now he is keen to file tax amendment for 2014 and 2015 and pay the tax on interest earned on NRI FD. Is it possible to do now by submitting 1040X with a cheque for tax mount. Then can he submit FBAR this year before 30-Jun-2016? Will this cause any problem / penalty etc. Request your advice.

    Thanks & Best Regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      While he may amend his tax returns. FBAR may not be amended and penalty may be applicable. I would suggest to contact your CPA and regularize. If amount is not material, you may want to transfer funds to your account as gift and close an account so no future compliance requirements. Thanks.

  52. Mohit Jain says:

    Hello,

    Thanks for the wonderful article. I have a quick question.

    I have had NRE & NRO account for since 2014. I came to know about FATCA this year and have included the interest and filed FBAR for year 2015.

    Now I also want to pay the tax on interest earned in 2014 and ready to pay the penalty as part of OVDP. The IRS website says you need to amend 3 years of tax returns, but I only have changes in last year return i.e. for year 2014.

    Do I still qualify for OVDP? Or, is it only for people who have not shown earning for more than 3 years?

    Thanks a lot

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I think you may also qualify for Streamlined, where penalty is less. However, you would need to prove “non-wilful”. In either declaration (OVDP or Streamlined), you would need to comply with all the requirements and file forms for last years as required. If you only open the accounts in 2014, you would only report your accounts in 2014 forms. For other years, you may file the forms without any revision. Thanks.

  53. Abhinav says:

    Hello Jigar, very impressive write-up. Thank you for sharing.

    A quick question concerning ULIP (Unit linked investment plans, basically an insurance cover where premiums minus charges are invested in capital markets in India) investments made in India. I am deemed a US resident for tax purposes since I have been residing here for several years now (Indian citizen working in the US on a H1B visa).

    My question is – am I subject to PFIC taxation rules in the US for holding the ULIP plan? I understand taxation under PFIC in the US is very punitive as any notional capital gains arising from the ULIP plan held in India are considered ordinary income and taxed in the US at the highest rate in the year it is earned.

    While no taxes are due in India, PFIC treatment could make these plans unreasonable to hold. Just not sure if gains arising from ULIP plans qualify for PFIC treatment.

    Thanks so much in advance. Will deeply appreciate your take on this.

    Abhinav.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, I would think ULIPs are also a PFIC investment. Thanks.

  54. Arjya says:

    Hi Jigar,
    I am working on h1B in US since a year. I have a a normal savings account in India to which I normally transfer my savings. I also have an NRO account with IOB which I use for my home loan payments. I have submitted FATCA details with the bank with IOB NRO account. Do I have to convert my HDFC account to NRO account as well? Or I can operate it as usual. I normally have INR 4-5 lacs in that account. Or should I transfer all the money to my wife’s account or father’s account who are not NRIs. I don’t plan to stay more than 3-4 years in USA and will return once my project ends. Do I afterall fall into the category of NRI? Please advice.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you live outside India for more than 6 months, you are an NRI.
      2. As you are an NRI, you need to covert all your savings account to NRO.
      3. Do not transfer to wife. You may gift funds to your father. Please contact us if you need more advise. Thanks.

      • Arjya says:

        Thanks Jigar. I have submitted Fatca and KYC to my bank. Now I am shifting to another state in US. Do I need to submit another FATCA? I have a dormant savings account with HDFC. I contacted them to change it to NRO. But they say I have to come physically to convert it. They can only open a new account by closing that account. I cannot close that account because I have enrolled ECS, NEFT with all the LIC and Mutual fund accounts which are maturing in a few years and it will be difficult to enroll again.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          FATCA is for residential status and SSN. If you update your address with bank, I think it would be okay and no need to update FATCA. However, please inquire with the bank. Thanks.

  55. Surya says:

    Sir,

    I been working on H1 since 2001, and I have saved around $100K (after paying taxes in US) in India bank as Fixed deposit, I been getting an interest around Rs 40,000 now, do I need to report that amount (balance) or interest I been getting to FATCA ?

    Thank you
    Surya

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes. If you don’t banks in India will report to IRS. I suggest you contact your CPA and explore one of voluntary disclosure schemes of IRS. Thanks.

    • ss says:

      Hi Surya ,

      What was the process you followed? Please share.

      Thanks
      ss

  56. Jay says:

    It is understandable that IRS is looking for taxing foreign income as part of Global income theory, can you help throw some light on tax exemptions (foreign) for folks having investments in India? Given that people investing in India are doing so because they have roots, family, parents in India (of other things) and they have expenses for maintaining the same like – Home loans EMI, Paying property taxes to say Mumbai Municipality, Paying medical insurance premium for parents and life insurance for self, monthly maintenance charges for the apartment, expenses for caring for parents… everything that goes around maintaining a house and family.. is there a list of IRS tax exemptions for such expenses that can be deducted from US income?

    It just seem unfair (I know it is not to you but to Uncle Sam), that they want to tax the foreign income but not the expenses for caring for Parents who potentially could be here in USA if not for the very long GC queue.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Any tax you pay in India is allowed as foreign tax credit in your US tax return 1040.
      2. You are also allowed a foreign income exclusion of about $95000 from your SALARY income. No deduction for self-employment income. You would pay self employment tax (SS+Medicare) in USA.
      3. It is a cost of having US residency/citizenship. Please contact us if you have any question. Thanks.

  57. pandit says:

    How do we handle closed FD’s ? Matured amount transferred to savings account.

    Is below understanding correct :

    Eg : 10000$ FD (ABC ) matured in month of July and 11000$ was transferred to savings account (XYZ) by closing that FD in September after its autorenewal in July 2015..

    So we report as below for 2015:
    ABC : 11000
    XYZ :11000
    Double reporting ..

    For 2016 ..

    No need to report ABC as deposit was closed in 2015.

    I hope closing 10 FD’s out of 20 odd to buy a house doesnt create any red flag as tax would be paid for that year on those FD’s.

    Similarly for FATCA :

    Is it correct to assume that we dont double count for calculating threshold but only double count to declare once the threshold is met ?

    eg : Joint filers never had 100k at last day or 150k at any day in all the accounts aggregate..
    However they had 120k in July and transferred 35k between accounts. So I am of assumption we dont make it 155 and declare 8938 as the balance was never 150 in reality.. However if this amount of 120k was present during the last day then only we declare 8938 ?

    Sorry for 2 long questions. But thought of asking in detailed manner with examples..

    Thanks in advance for all the help on this forum/ blog.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, account balances are counted twice if you report by account number. If you report by your Customer ID, there is no double counting. IRS is also aware of this and in FAQs have clarified that they would like to know in this manner. I hope this helps. Thanks.

      • pandit says:

        Right.. But for determining my threshold of 100k for 8938 for joint filing .. I do not double count right? As it is total value of all accounts on the last day of the year which 31st dec.. This eliminates double counting / transfers as money is only in 1 account after transfer on that particular last day ? Am I correct?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          If money is transferred from one account to another, there may be double counting for FBAR and also for 8938. Please check the instructions of the form. Thanks.

  58. Varun says:

    Hi Jigar

    Thank you for this informative blog. i have couple of questions though:

    1. I first became tax resident in USA in year 2013 but my total balance of all Indian financial accounts were less than $10k. In 2014 and 2015 total balance > 10k. I got to know about this couple of days ago and i am thinking of Filing FBAR for 2014 and 2015 only. Is this right?
    2. My wife does not have any Indian account with > $10k balance in these 3 years. Since we file joint IT return in USA, should she also file FBAR separately?
    3. I am also planning to file IT return Amend for 2014 and 2015 and i might owe around $1000 in Taxes. what kind of penalty i should expect for both tax owed and not filing 2014 FBAR on time?

    Thank you for all your help

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I don’t think so you can do it for 2014. For 2015, the deadline is April 15 and you may still do it.
      2. Yes. I would recommend the same.
      3. Please don’t do on your own but contact an experienced CPA. Also, IRS may not entertain “Quiet Disclosure” as they have 2 programs – Streamlined Compliance and Voluntary Disclosure available. I think you may select Streamlined as it was unintentional. However, please contact your CPA. Thanks.

  59. Rohan says:

    Hey Jigar,

    So wanted to know a few things. I live in Canada. I have reported my income from my Canadian Earnings in my tax returns for the past 2 years.I wasn’t entirely sure if I am supposed to report any interest on foreign income earned which in my case would primarily be NRE FD’s and of the order of around 5-6 thousand CAD. Also the interest earned annually on PPF deposits, is it something I need to report in Canada as well as the interest earned would be tax free in India whether you are a resident or not. Kindly let me know if that is the case or not.

    Regards,
    Rohan

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I am not very much familiar with Canadian tax laws. However, if as a Canadian residemt, your global income is taxable, you are required to report all your interest income, including PPF as interest on PPF is exempt from Income tax in India. I don’t think it will be exempt in any other country. Thanks.

  60. Jayesh says:

    HI jigar,

    Can you please tell if i can declare indian interest income without declaring my foreign account( FBAR)? i think FBAR is required only if balance is >$10K also is there a timeline for filing FBAR, like if i file FBAR now so i need to amend previous returns

    Jay

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, you would file FBAR only if your total foreign financial account balance exceed $10,000. Thanks.

  61. AA says:

    Hi Jigar,
    Your article has been very informative and helpful.
    I have a query –
    How should I determine the highest value of my bank account? Should I look at the monthly or quarterly balance in the email statements issued by the bank or go by the individual daily transactions in my account? In my case I had an initial balance of Rs 14,000 and then deposit of Rs 30 lac on 3rd March 2015 and I transferred it to my father on 7th March 2015. So the balance in the monthly statement is only Rs 14,000. But the 30Lac deposit and withdrawal are also mentioned in the transaction details section. Please share your opinion about this.

    Thanks for your comments.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would take the daily transaction balance. So in your case, it would be Rs. 30,14,000. Thanks.

      • AA says:

        Thanks for the reply Jigar. Going forward I am going to make sure that as soon as the money is deposited into my account it gets transfered into my father’s account on the same day, so it will not come up in the daily transaction balance as well.

        I have another question – although we know that we have to file FBAR only if total foreign financial account balance exceeds $10,000, do you think it is advisable to file FBAR even though the total balance is less than $10,000?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. I would recommend transferring money directly to your father’s account and not involve your bank account.
          2. I would not recommend. Thanks.

  62. Arun says:

    Jigar ,

    I would be really grateful if you can please clarify me on the below queries. I have asked 2-3 CPAs and none of them know a definitive answer for these.
    This question is specifically regarding Foreign Mutual Funds and the PFIC requirements.
    1,) Is filing of form 8621 mandatory if I hold a foreign mutual fund. Are there any penalties for not filing.
    2.) What happens if 8621 is not filed. Is it assumed that the person has elected the Excess distribution method by default (where any gains on selling is distributed uniformly to all the previous holding years and taxed at highest rate along with interest). Is this understanding correct?
    3.) My next question is specific for a person who is not a USA citizen or Green card holder, but who comes on a work visa and works for a few years thereby acquiring resident status due to 183 day SPT rule, and then returns back to his country thereby eventually again falling out of USA jurisdiction due to 183 day rule.
    If such a person had foreign mutual funds before coming to USA (and also purchased while in USA) but never sold any, then in absence of filing 8621, is it assumed that he has elected Excessive distribution method. Is my understanding correct ?

    Also, what will happen the when residency ends. Can IRS say that all mutual funds are assumed sold on the last day of residency and tax it as per excessive distribution method. Is there a chance I can be asked to pay tax like that.
    I am asking this because I have read in numerous places that the same logic is applied when a US citizen gives up his citizenship, or when a GC holder gives it up. But there’s no clear info of what happens in case of so many people who come here on a temporary basis for work go back after some years.

    4.) My last question is just to confirm that foreign stocks which are listed on stock exchanges and traded in their respective countries are not considered PFIC. Any capital gains/dividends from them is treated and taxed the same way as USA stocks without any of the burdensome reporting requirements of PFIC. Please confirm if this is correct

    Thanks a lot

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please understand that we are an expert on Investments in India and with our knowledge, provide basic guidance for reporting and compliance. And, then always ask to check with your CPAs in USA, who practice as a CPA and supposed to be an expert on the subject. As we do not practice as CPA, our advise can not be taken as the sole advise but needs to be confirmed / corraborated with your CPA. We are not responsible for any action taken based on the information as we may not have full information about your case. Please read the Disclaimer before posting your question/comment.

      In light of above, please see my answer below:

      1. I would think so. I think there is a penalty. Please read the instructions.
      2. I would think so.
      3. I don’t know.
      4. Yes. However, you may need to report the Demat account in FBAR or FATCA (Form 8938), depending on the threshold of your foreign accounts/assets. Thanks.

      • Arun says:

        Thanks Jigar for the info. I am trying it hard to find a CPA who knows a definitive answer to these.

        • Same situation says:

          Hi Arun,

          Were you able to find a knowledgeable and experienced CPA wrt your questions/situation. It would be helpful if you could share any further insights and next steps based on your findings.

          Thanks a lot!

  63. Solomon says:

    Dear Mr Jigar,

    I was on a H1B for the past few years in the U.S and have returned to India in October 2014 permanently – no green card but son was born there with U.S citizenship . I had not reported my accounts in India and I got a fatca letter from my bank asking for my details. I closed the account and removed the money from that account in 2015 but not sure if the bank has already reported the account to IRS. Should I go ahead and do the Streamlined process or OVDP? Of the last three years my total unreported interest earned in 1 year was maximum as it was to the tune of 20000USD. Other years was very small less than 2000 USD.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Only your son would be considered as US resident so don’t invest in his name. For you, please make a declaration that you are an Indian resident and give documentary evidence. I would suggest to inform all banks, income tax, financial account of your residential status as resident. Then, it would be okay. You can take the calculated risk of not going through Streamlined process. However, please consult with your CPA before making any decision. Thanks.

  64. Minu says:

    I am an Indian residing in Oman for over 10 years. India and Oman have an agreement of Avoidance of Double Taxation. There is no Individual Income Tax levied on the Residents of Oman so we do not pay any tax.

    Under the circumstances please clarify whether I declare in the FATCA form that I am a tax resident of another country other than India. – Yes or No ?
    If Yes what should I give as Tax id since I do not have one. ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, you are required to. In your case not FATCA but CRS would apply. You would give any unique ID by which you are recognized in Oman. Thanks.

  65. Narayan says:

    Hi Jigar,

    Thank you very much for the detailed article. I have few questions, if you can advise I will be highly thankful.

    I have been in the US for past 4-5 years and I just found out about this FATCA rules. In the past years i have not declared anything in US tax returns. I do have NRE & NRO accounts in India. Over the period of past few years, I have transferred money from my US accounts to Indian accounts (totalling about 100k). I have the following questions:

    1. What I am supposed to do right now? If I declared those accounts what is the tax implication? Will tax be levied on the entire amount I have or on the interest income generated in Indian accounts?
    2. Pretty much all the money in Indian accounts is what I have transferred from my after tax income in the US and I have document proof. Will this save from any tax liability?
    3. If today I transfer all money to my parents, what is the outcome?
    4. If today I purchase real state property using all this money, what will be the outcome? Do i still have to declare the property in current and future years? Will I need to pay taxes on that property in the future in the US?

    Please advise on the questions, once again thanks in advance.
    -Narayan

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I would suggest you to consult your CPA and analyze the voluntary disclosure option – Streamlined Compliance procedures.
      2. As you have NRO and NRE account, it is fair to assume that the account will be reported to IRS as the effective date of FATCA reporting is July 1, 2014. So transferring money now to your parents or to buy property or any other use and closing the account may not affect your situation now.
      3. As a US resident, you would need to report your world wide income. so if your investments generate any income – interest, or capital gain on sale of property, you would be required to report the income to IRS and pay tax on the same. Please note that you would get the credit for any tax you pay outside USA. Thanks.

  66. Kapil says:

    Hi Jigar,

    In Year 2015 I did’t had >$10000 in individual Indian account for any day but total value of my below accounts (1 to 3) was approx $10,050.

    1. NRE Account
    2.Resident Account
    3. Cash value of LIC

    I also have one more (4th) saving accounts as joint account with my father. It had approx 1 Lakh INR in year 2015.

    Please can you confirm if I can avoid to mention 4th account in Fbar since my father doesn’t have PAN and it’s required to mention details of other joint owner in FBAR.
    This account doesn’t have my PAN either.

    Please advise . Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Technically, it is your account and needs to be included. I would suggest you to remove your name as a joint holder and only keep your father’s account. you can be a nominee on the account. In that case, you don’t need to report the account to IRS/FBAR. Thanks.

    • Kapil says:

      Hi Jigar,

      Thanks for your response.

      In my above mentioned accounts ( NRE and Resident ) I don’t have any FD.
      I just earned interest aprox INR 800/- only in each of them in year 2015.

      Since I am mentioning these accounts in FBAR please advice if I am also required to mentioned accounts to IRS on tax filling or I can just pay tax on earned interest in India and not mention to IRS since it’s very less amount?

      Regards,
      Kapil

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        1. The FBAR threshold is $10,000. As you have only Rs. 800, you do not need to worry. Also, Indian government is going to report only if money in your account is more than $50,000, FATCA threshold. However, I would recommend to add the interest income of $25 in your tax return.
        2. I would recommend to inform your bank where you have resident account to change it to NRO. Thanks.

  67. Virendra Patil says:

    Hi Jigar ,
    Thanks for such an excellent article. May I know how all are eligible for FATCA?
    I mean how many at least days you should be in USA to file FBAR.

    Thanks
    Virendra

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Everything is governed by whether you are a US resident for tax purpose or not. If you have a greencard or citizenship, you are a tax resident evenif you do not stay in USA. For others, number of days to be calculated as per IRS rule. Please check IRS website for details. Thanks.

  68. kiran says:

    Hi Mr. Patel,

    How do you report cash value of annuity policy or life insurance policy on FBAR. Do you report accrued premiums each year or maturity value. for example if an individual is paying 2 lakhs/ year premium for 7 years and then policy pays you back 1 lakh for 10 years and then after 10 years lumps amount based on market value at that time. How do you report cash value each year on FBAR? Appreciate your response.

    Thanks, Kiran

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would take the Surrender value as the cash value of insurance policy and report accordingly. You would request the insurance company to provide the surrender value at the end of the year (Dec 31) and then report the same. Thanks.

  69. D. Nayak says:

    Jigar,

    Very informative discussion. I just discovered that I should have filed FBAR and reported interest income earned on a resident account back in India from 2012-2015. I started a FD back in 2011 and it has been accruing interest since then. I got my green card this year and now onward (2015) I will be reporting income (<2k) and my principal which is below 50K (both me and my wife).

    i have some questions:
    1. Since i have missed the years 2011, 2012,2013, 2014, what should I do?
    2. I read about delinquent FBARs. is it the way to go ?
    3. should I Amend all my return back from 2011 to report any interest earned on my back account.
    4. please give a best solution in this situation.

    Thanks,
    DJN

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would not suggest declaring prospectively i.e. going forward as it is considered “quiet disclosure” and it will not relieve you from previous obligations. I would not suggest to do it yourself but would request to contact your CPA and evaluate Streamlined Compliance procedures. Thanks.

  70. Kibo says:

    Parents became US residents in 2008. Have joint account at HSBC India with ~$65K total. They have not filed any tax papers in the US as they have had no income, no Financial accounts and were claimed as dependents. What is the best way to come into compliance?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Account with HSBC is looked upon as negative by IRS. Also, HSBC would have already shared information about your parents’ accounts. Account with HSBC India are considered as Foreign Financial Account. Also, they would have received interest income from that account, which is also considered as a Foreign Income.
      2. If they have $65k in HSBC bank, their income would be about $5000. I am not sure if you can claim them as dependents and if you are, whether you are including this income in your return. No matter what, they need to declare these accounts in FBAR.
      3. I suggest you contact your CPA and discuss your case in detail. Thanks.

      • Kibo says:

        Thank you Jigar. In regards to coming into compliance via the streamlined process … a) is the 5% penalty applied for each of the years in which one was not compliant or b) do you pay a one time 5% penalty in the year you go ahead and file for streamlined process? I am trying to understand how far one has to go to collect necessary data and what time frame applies when coming into compliance.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. The 5% penalty is to be paid only once on the highest balance of ALL account for which FBARs to be filed.
          2. I think tax returns to be filed for 3 years and FBARs for 5 years.
          3. I would not recommend doing yourself but consult your CPA as streamlined is only for non-wilful default. Thanks.

  71. Ashish says:

    Jigar,

    I wanted to know the FBAR mitigation guidelines which has been published by IRS, which limits the penalties.

    1.) Are they binding if the eligibility criteria are satisfied?
    2.) Are they even applicable if there’s some unreported income for the years FBAR was not filed
    3.)I have 3 years of non filing of FBARS(less than 50k every year, so I am on level 1) and some income(less than 2k). Assuming I start filing correctly my assets as well as income from this year and there’s an audit for past years, Will this mitigation guideline still apply to me ?
    4.) Are EPF (not PPF) also required to be reported under FBAR? Does it includes both mine and Employer’s contribution? Also for income , its very difficult to know interest. Is the interest required to be reported as income (even though I did not withdraw the EPF)
    5.) Also if gratuity is paid out by Indian employer because i resigned onsite, is that also considered income

    Request you to pls clarify on this

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I would think so.
      2. Not sure.
      3. I would recommend you to disclose under Streamlined.
      4. Yes, I would think so as it is a Financial Account. For FBAR, value is to be reported. I would report the interest as income as the interest rates are fixed and can be known.
      5. I would think so.
      Please consult your CPA in USA with details. Thanks.

  72. Sandip says:

    Hi Jigar,
    Thanks a lot for such a detailed and informative article. I have a question about my situation. Will be helpful if you can guide.
    I have a joint fixed deposits(amount > 50k USD) with my father & brother where my father is the principal owner (his name is the first name in the list). Do I need to declare those fixed deposits in FBAR? Also do I need to report interest on the fixed deposit in my US tax return?
    Thanks!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes. I would recommend you to remove your name from joint holder and become a nominee. Thanks.

      • Sandip Ghosh says:

        Hi Jigar – Thanks for your reply. Just a quick question – my dad is the primary owner of those fixed deposits in India(first name). Hence shouldn’t the interest will be associated with his income? My understanding is – hence I do not need to show fixed deposit interest on my US tax return. Is that understanding wrong? Thanks!

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          As you are the joint holder, it is also considered as your asset and you are required to report the same in your FBAR and FATCA (form 8938), if apply. My advise would be to remove your name from joint holder and become a nominee. Thanks.

  73. Preyas Shah says:

    Hi Jigar,

    I am new to all this complicated stuff. Please explain to me about what I am expected to do in this scenario: I am a resident alien in the US (Indian citizen still) with a recently opened NRE account in India (with <10k in balance). What all do I need to report/file? Thanks!

    Cheers!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would assume you do not have any other assets – resident bank account, FD, PPF, Shares, MF, etc. and if you do, the total investment in those accounts combined is less than $10,000. In that case you would not file FBAR or FATCA but if you have any income e.g. interest income on FD, you would include it as your interest income in form 1040 to IRS. I would suggest to get an interest certificate from the bank for calendar year to help you in reporting your income to IRS. Thanks.

  74. Rajesh says:

    Hi Sir,

    I am a OCI holder with US citizenship, moved to India couple of years ago. Plan to invest and work now. Somewhere in FATCA i read that US citizen or US address holder are considered as NRI.
    1. Can i open a domestic resident bank account; and demat account to invest in indian Mutual Funds?
    2. Is my taxing considered as NRI or local indian?
    3. My wife is a indian citizen, doesn’t work. Is there any limit to gift her to make any MF or Property investments on her name?

    Thanks,
    Rajesh

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. No. As you are living in India, you are an Indian resident for investments (under FEMA) and tax (Income Tax Act).
      2. you can ONLY only resident accounts. As you are a resident, you are not allowed to keep NRO, NRE or FCNR accounts.
      3. Resident – however, whether you are an Ordinary resident or Nor Ordinary resident needs to be checked.
      4. Any gift to spouse is considered as your assets/income and clubbed in your tax return. Thanks.

  75. Subit Das says:

    Very informative article. Can you pls help let me know:

    1. What about accounts active before June 30 2014?
    I have had an NRE account active till 2013 with balance
    more than 50,000$s. Will these accounts be covered under FATCA
    reporting now or in future?

    2. Are there any treaties to share yearly tax return information between India & USA?

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I don’t think it will be reported.
      2. Please check DTAA – Double Tax Avoidance Agreement between India and USA. While there is no blanket agreement (except FATCA), the information sharing has always been there as part of the DTAA for specific cases. Thanks.

  76. Debrag says:

    Very informative article. I have 2 questions Mr Patel if you could kindly advise:

    1. I understand the timeline for FATCA reporting is as on June30 2014 & any later date. Are you aware of if accounts existing before that time is reported as part of FATCA?

    2. I have had a NRE account with balance more than $50,000 which I closed in 2013 & purchased a property. I haven’t reported either the account or the property anywhere in US. What are my obligations here & any chance FATCA (either model 1 or future models) can ever report that as a “US Reportable” account.

    3. Can IRS approach individual banks in India or the Income tax department in India to seek details about a customer once he is being audited for an Offshore account?

    Thanks
    Debraga

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I don’t think so provided accounts have been closed before June 30, 2014.
      2. Real Estate is not required to be reported. However, when you sell the property, you would need to mention the date of acquisition and a question may arise how did you get the money to pay for the property.
      3. Can’t say for sure. Thanks.

  77. REGI says:

    “I am US resident (Green Card) and my father is a foreign (Indian) citizen. My father passed away on 12/27/2015. I am inheriting 2 types of real estate from my father. First type is my father purchased the property on HIS name and I am inheriting it thru a WILL. Next one is he bought the property on MY NAME using his (father’s) money. Do I need to report anything to IRS on my 2015 or 2016 return unless I sell those property ?”

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Only Financial assets are required to be reported under FATCA. There is no requirement of reporting of real estate. When you sell these properties and money is credited into your bank account, you would report the balance. Also, as both assets are owned by you, you would also report the capital gain on sale of property. The calculation of capital gain is different in India and USA as you would not get any indexation in USA. Please contact us if any help required for reporting of capital gain or transferring funds to your home country. Thanks.

  78. Paramhans says:

    Lets take a case of a A normal middle class Indian Resident who is retired and has always earned a salaried income on which a full tax deduction at source has been done. This individual and his family have nothing to do with US (or any other country) earnings etc.

    Are such individuals required to give a FATCA declaration? If so what purpose will that serve to US? This individual has had earnings in India as a salaried employee and has complied with all the taxes in India. He and his family have no remote linkage with US or any other country.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Unfortunately, you may be required to complete the FATCA declaration as there are a lot of NRIs who maintains resident accounts and invests as an Indian resident. To identify them, FATCA declaration would be required. It has now become a part of the KYC (Know your Customer) requirement to obtain the place of birth, nationality, etc. Thanks.

  79. Naeem says:

    Hello Jigar,
    Many Thanks for such an informative blog. I was so confused till now, but much clear now after reading your blog.
    I came to the US on H1 visa in Dec-2014 and I was in the US on L1 visa from Nov-2008 to May-2012 and I have filed my taxes in the US and India as applicable. After reading your blog I understand that we have only one option that is to comply with the new laws as applicable. My questions are as follows:
    1) I hold an interest saver current account in an Indian public sector bank. Against a home loan of Rs. 12lac, I have deposited Rs. 11lac in this account. Because of this I don’t pay any interest on those 11lac and my EMI is adjusted accordingly. So compared to the loan amount the net balance of the current account is negative 1lac (net loan outstanding). Do I need to report such account under FBAR?
    2) As per US securities act, a US resident cannot make investment in foreign stocks or mutual funds if they are not registered in the US. But can I make investments less than the threshold of $100,000 (FATCA) or at least $10,000 (FBAR) each year as I don’t need to declare it, or will it be illegal or prohibited?
    I read about NRI-Dmat and PIS, but when the banks & brokers in India come to know that I am a US NRI, they simply refuse to proceed further with investments.
    3) Can I continue to make investment in India through resident Dmat account or mutual fund accounts making sure that my investments stay below the reporting thresholds?
    4) If I hold investment in a mutual fund, which threshold will be applicable to it? The FBAR threshold of $10,000 or the FATCA threshold of $100,000 (married filing jointly).

    Regards,
    Naeem

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You would report you assets/account with positive balance. So if you have deposited 11L, you need to include.
      2. As per FEMA, NRI is allowed to invest. While some brokers may not accept US residents money, others are ready to accept. There is no restrictions by FEMA. The restrictions are from respective brokers only.
      3. As you are an NRI, you may invest through NRO -DEmat only. You are not allowed to maintain resident bank/Demat account.
      4. FBAR and FATCA requirements are different. You would include your MF investments to calculate your foreign financial accounts and assets to check if you qualify for both requirements respectively. Thanks.

  80. John Thomas says:

    Hi Jihar
    Very nice and detailed article and answers.
    I am residing in USA. My question is
    1. I am going to open an NRE account this year to get proceeds of my “inherited land” sale to an NRE account holder. The proceeds get transferred from NRE to NRE account. I guess, I do not have penalty when I file FBAR/FATCA.
    2. I also heard that there will be no tax for inherited property. My question is to how do I report it when I file FATCA ad FBAR in 2017 with out causing confusion for IRS. I plan to wire the money from my NRE to my account in the US
    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Sale proceeds of inherited land (acquired by resident fund) can only be credited in NRO account. Please also note that as you are an NRI, TDS would apply, I am not sure about FBAR/FATCA penalty. As long as you report your income and foreign assets/accounts, there is no penalty.
      2. You would need to pay tax on the capital gain. The cost of inherited land would be the fair market value on the date the property was inherited by you. Any gain (sale price-cost), you would have to pay tax in USA. If you have paid any tax in India, you may claim the foreign tax credit for the same. Thanks.

  81. sach says:

    I for the first time got a email from my bank asking me to fill the FATCA documents because my balance probably went beyond 50,000. Now they gave me 10 days. I want to file amended returns and use the amnesty program. Shall I fill the FATCA form or ask for extension till I apply for the amnesty program.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would recommend you to contact your CPA before submitting declaration. Thanks.

  82. Shav says:

    Hi Jigar,

    I am a US resident (working on H-1B visa). My wife is on H4. We file joint taxes in the US. Will appreciate your help with the following questions:

    1. If you earn any form of income in India and have regularly paid the required taxes in India, do you still need to report the income in the US tax returns and also pay taxes on that income in the US?
    2. If yes, to the above question, then do the taxes paid in the US on Indian income take in to account any foreign tax credit already paid in India? Is the credit 100% of taxes paid in India or some other amount?
    3. In case anyone has not disclosed their Indian income in the previous US tax returns, are you supposed to correct all previous US tax returns to reflect the income earned in India or only pay for any taxes (taking out the foreign tax credit difference) from the most recent tax year?
    4. If you file as joint tax return in the US, do both parties need to report any financial asset >$10K in bank accounts/investments, or only the spouse earning in the US? Does one have to pay taxes on non-interest generating foreign bank accounts (with >$10K)?

    Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes, you would need to report income in USA. However, you may not have to pay tax twice as you may get credit for tax paid in India.
      2. The foreign tax credit is available based on calculation /formula available in the form for the same.
      3. There are two voluntary disclosure schemes – OVDP and Streamlined for people who have not disclosed the assets/income to IRS. Please understand implications of both before making any decision. I would suggest you contact your CPA for the same.
      4. Any US resident HOLDING/ OWNING foreign assets needs to report. Whether earning or not does not matter. If owned in a joint account, both need to report. Thanks.

  83. bhagat patil says:

    hi,
    presently I am a Canadian citizen, born in india, working on H1B visa in USA, & I have FD in Indian Bank as in NRE account Approxi, 4,50,00,000=00
    I received letter from that bank that I have FD
    IF I submit Canadian citizenship passport to cure US Indicia, that will work,
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If you are in USA on H1B, you may also be a US resident. The declaration asks you to provide list of ALL countries to which you can be claimed resident. I would say you could be a resident of both USA and Canada. While you may only list Canada, but you would be taking a risk and you may also need to report this income in your Canadian tax return. Thanks.

  84. Worried NRI says:

    An NRI is having a couple of deposit accounts in India. On June 2014 and Dec 31, 2014, they totalled about $130K (12K + 118K in each account) using the exchange rate of Dec 2014 and not so far reported to tax authorities in US.
    How he has to report now and what would be the consequences ? Please kindly guide.
    Regards,
    Worried.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please contact your CPA and evaluate both voluntary disclosure scheme – OVDP or Streamlined and make declarations accordingly. Thanks.

      • NK says:

        My CPA in US chose to file as silent disclosure for last year (and not for previous year[s]). His view is that IRS do not have resources and IRS brought about the voluntary disclosure schemes during recession times in US in the past.
        How should I think about this? let me know.

        He has been my CPA for last 10 years.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          The Streamlined Compliance Procedures was introduced just 2 years ago and not during recession. the primary goal is to increase compliance. Also, the penalty is only 5% for non-wilful disclosure. About your CPA, no comment. It would depend if you are ready to take that risk. Thanks.

  85. vikas rathi says:

    im having a bank account in ICICI . i want to update US number ,should i give Decleration as per FATCA

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I do not understand your question. But, if you want to update your US contact number, provide the information to bank or submit a form to change your contact details as per bank’s requirement. FATCA declaration does not require phone number. However, I would think bank would also ask for FATCA declaration from you. Thanks.

  86. Hitender Mal says:

    Dear Sir,

    I have a small question related to your blog. It would be very helpful if you could please answer this:

    I am planning to transfer about 80K USD from my US bank account to my NRE/NRO Indian bank account using either Wire transfer or ACH transfer facility provided by popular remittance companies (like Remit2India etc.). Is there any obligation to notify IRS about this transfer? If yes, what form do I need to fill out for that?

    Please note that I already know about FBAR and Form 8938. These forms do NOT ask anything regarding money transfers.

    Sincerely,
    Hitender.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As the amount is $80k, I would recommend transferring through wire transfer and negotiating with the bank for better conversion rate. While you may have to pay about $40 for interenational wire, you could get upto 80 paise better rate than the rate offered by online money transfers or ACH so while you would pay $40, you could gain upto $900+ (Rs. 64000). As you would be transferring funds to your own account in India, you would not have to notify to IRS but would need to comply with the FBAR and FATCA (Form 8938) requirement and would also need to report any interest income in your income tax return 1040. Thanks.

  87. Karna Patil says:

    Dear Sir,

    I am very thankful to you for such an informative blog! Could you please answer this question of mine:

    I am a US Citizen. I have a PPF account in India since about 14 years. Is it okay if I pay the tax on the interest accrued in PPF account on its maturity? Or do I need to necessarily pay the tax on the interest annually?

    Thank you!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I think interest accrue on a yearly basis and is credited in the account on a yearly basis as well. So you may want to declare annual interest. However, as there is restriction on withdrawing, I suggest you check with your CPA. For simplicity, I would report interest and pay tax on an annual basis.
      2. I would suggest not to renew your PPF account as an NRI is not allowed to open or extend the PPF account. Thanks.

  88. Mohit says:

    Hello Mr Patel – I am a green card holder since 2011 and hold some assets in India. All Indian assets and income are duly declared in India with Non-Resident status. For the purposes of declaration under FATCA / FBAR etc, do I need to disclose some interest bearing loans that I have given to family members – i.e. do these constitute financial assets ? Also – I hold stocks in publicly traded Indian companies. Should these be declared at my purchase price or at current market value. Some of these stocks have appreciated significantly however I have no intention of selling them in the foreseeable future. Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I would include the loans in FATCA as it is generating interest that you need to report in your 1040 and also in foreign tax credit as TDS would have been deducted on the interest income. Please note that there are certain restrictions for loans from NRIs to resident and RBI rules would apply for term of loan, interest rate, use of funds. Also, TDS @ 30.9% will apply for any interest paid to NRI.
      2. An NRI can only hold stocks under Portfolio Investment Scheme – PIS of RBI and you need to have NRO-PIS or NRI-Demat account. For reporting you would report the balance of NRO demat account on Dec. 31 i.e. market Value of shares. Thanks.

      • Mohit says:

        Thank you for your responses. Most of the shares I hold in Indian companies have been held from before I became an NRI. These have been acquired from funds generated in India and the dividend / incone from them remains in India. Moreover, these are held in Demat accounts set up prior to me becoming an NRI. As such, does the requirement of NRI-Demat or NRO-PIS still apply ?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Yes. You are required to inform your DP when you become an NRI about change of your residential status in the same way you are required to inform your bank, income tax department and other institutions. On your informing DP, your demat account will be converted into NRO-Demat. You would need to open NRO PIS account with the bank. Thanks.

  89. R.SUBBARAMAN says:

    An NRI, aged 50 years is having a few deposit accounts in India with a total value value of around Rs.6,00,00,000=00 since the year 2004 but not so far reported to tax authorities in US, what is the implication. How he has to report now and what would be the consequences ? Please enlighen and guide.
    Regards,
    R.Subbaraman.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you have close to $1m, it will be reported to IRS. I would recommend to evaluate voluntary disclosure schemes – OVDP and Streamlined and regularize your accounts. The number of joint owners, amount of investment, type of account/FD, actual/reported residential status, etc. would also be important and considered for selecting the scheme or other options. Thanks.

  90. Raj says:

    Hi Jigar,

    I have one more question ( may be foolish one :) )- does the share certificates of co-op housing society(formed after ever one has taken possession – manly for society maintenance purpose) has any bearing on FBAR/FATCA reporting.?

    The reason I ask this is because share certificate states something like 1000 Shares totaling to amount Rs. 50,000. Pretty sur it does not have any market value outside of the society context but still wanted to make sure.

    Thanks for your time.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      FATCA/FBAR require reporting foreign FINANCIAL Assets/Accounts. I don’t think the shares in co-op housing society denotes FINANCIAL asset. It shows interest in a REAL asset. So it may not be reported. However, this is my personal view. Please contact your CPA. Thanks.

  91. Sejal Patel says:

    Mr. Jigar,
    I have several CDs in one bank but none of the CD amounts to more than $50,000. 1) Will this be reported by the bank to IRS? 2) Do I need to fill out FATCA? 3) I think I need to file FBAR, right? 4) If I close all these CDs and transfer all proceeds to my US account, do I need to fill out any forms or report anything? 5) My father who is a US Citizen and does not file tax return in the US has a CD in India for $44,000. Does he need to fill out FBAR?
    Thank you much.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The threshold is $50,000 so it may not be reported. However, your account would be treated as “US resident” account and it will be reported the moment value is more than $50,000.
      2. FATCA form i.e. form 8938 applies for foreign assets of $50k/$100k (MFJ). So please make a list of all your ASSETS and check if you need to fill the form or not. No matter the value, you would still need to include any interest income, even if it is $100 for the year in your 1040.
      3. FBAR applies for foreign financial accounts of $10,000 or more. So please check if you are covered.
      4. Only if you meet the FBAR/FATCA form requirements. If you transfer in 2015, As maximum account is to be reported, you would report in 2015 return/form. If you transfer in Jan 2016, you would also need to include the balance while filing your next year (2016) return and forms.
      5. Yes. However, if he has not done that, I suggest you contact your CPA and explain your situation and determine if your father needs to voluntary declare under OVDP or Streamline scheme under IRS or not report and take risk.
      Thanks.

  92. RAj says:

    Hello Jigar,

    Is FATCA limited to US resident only or to all NRIs?
    I have recently moved to Canada, do I have to declare my India earnings and assets?

    Thanks & Regards,
    -Raj

  93. Ajay says:

    Namaste Jigar ji,

    I am a US citizen and moved to india(in 2014) with family to work from India remotely to a US company. My salary and taxes are all paid in $$ in my US account. I have a NRE account since 2000 and amount is over $50k for which i get interest every year. Also, i have NRE FD’s on mine and two kid’s names which are over $50k separately; and ICICI ULIP plans over $50k. I opened a Demat account in 2014 on my wife(GC holder) name, as resident indian and invested in some stocks and MF’s.

    I was told that being my salary taxes are already deducted in USA, i don’t have to file Indian income tax returns. Also, I was not aware of US FBAR or 8938 forms so far until today.

    Pls. advice on the next steps that i need to follow to correct the above situation.

    Thanks,
    Ajay

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you have moved to India, you are an Indian resident for tax purpose. If you are an Ordinary resident of India, your global income is taxable in India. Being a US citizen, you are also considered a US resident for tax purposes and need to report your global income in USA. However, you would not get taxed twice for same income as you would get tax credit for any tax paid in other country.
      2. As you are performing your duties in India, the salary is deemed to be accrued in India and is taxable in India. The residential status does not matter as income earned in India is taxable in India for residents as well as for non-residents.
      3. As a US resident, you are required to report your Indian assets in USA. Currently, IRS has two voluntary disclosure programs – OVDI and Streamlined Compliance and each as its own pros and cons. I would suggest you to contact your CPA in USA to disclose your assets/income in India. Thanks.

  94. Mrs.Rao says:

    Sir,
    I can understand US citizens being taxed on their global income . But there are many H1B visa holders etc who may have an extended stay in the US but may eventually want to return to India but are undecided.. If they are taxed on their earnings in the US which a portion of it they may have invested in India also , fair enough.
    But India is a very family oriented society and many good hardworking Indian citizens , parents or grandparents gift or bequeath property to their children with rental income or stocks and shares etc for which they pay taxes in India honestly. What I do not understand is why these inherited Indian assets also can be taxed as global income from non US citizens by the US govt ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Persons on H1B/ L1 or any non-immigrant visa (except F1) visa are also considered as US residents and are required to report their global income in USA. That is the price to pay to be US resident. Therefore, it is very important for US based NRIs and their parents to properly plan investments in India for efficient tax planning, effective compliance and reporting and repatriation. Please contact us if you need any help.

      It is not only USA but almost all countries, including India, taxes Indian residents for their global income. Even I have to pay tax in India on the interest income even $10 from US bank, in India. Thanks.

  95. Ravi says:

    Hi Jigar

    Thanks for your informative blog.

    I’m an NRI (non-US) and my daughter is a US citizen. We both have NRE accounts in India. I have transferred substantial amount ( > $ 50,000) from my NRE
    account to her account during the course of last one year as a gift. The entire amount in her account is from my account only and not sourced from US.

    Can you advise, how the matter can be handled with least complications,

    Thanks

    Ravi

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you would need to make a FATCA declaration, both yours and hers account will be tagged as US resident account and if the balance is more than the threshold, they will be reported. If you have reported your Indian accounts to IRS and in FBAR, just report the gift to IRS as well. If not, I suggest you take professional guidance of an experienced CPA in USA. Thanks.

      • Ravi says:

        Hi Jigar

        Thanks for your response. However, I need some more clarifications.

        1. As indicated I have no connection with US either for employment or any other source of income. I have an NRE account as I was working in gulf.
        2. Only my daughter is a US citizen and has an NRE A/c in India and has not transferred any amount from USA.
        3. As a token of gift, I have transferred an amount (> $ 50,000) from my NRE A/c to my daughter ‘s A/c.

        As an Indian citizen , I have filed Tax returns in India and has no connection with IRS.
        Since the amount available in my daughetr’s account is entirely gifted to her by me, is it necessary for her to report the same to tax authorities in US or will it be ok I if she returns back the gift to me to avoid unnesssary complications?

        Please advise

        Ravi

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. As your daughter owns an account in India having more than $50,000, she needs to report the same in FBAR and to Form 8938, if apply. She also needs to include the interest income in her income tax return. Also, she needs to report the money received as a gift to IRS as well.
          2. For any accounts hold by you, I would suggest not to keep your daughter as joint holder -second/third/any.
          3. If she return the amount, it would not be considered as a gift but as a loan.
          4. Had you kept the money in your NRE account, it would be tax free for as gulf countries do not tax interest income in India. Thanks.

  96. Naresh Sharma says:

    Dear Sir

    I retired as Indian Diplomat in April 2015. My son is a student in the US. I have transferred all my NRE Rupee FDRs in his name thereafter. He has no other income in the US and therefore he does not file tax return. Since he will have income from NRE FDRs now on, amounting to roughly $ 10,000/- per annum, is he required to inform that to US IRA. He pays fee of $ 17000/- per semester as F1 student in a University. Your advise please.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Transfer to your son is considered as Gift and need to be intimated to IRS/IT department. Also, while on F1 visa, he may not be considered as US resident for tax purpose so only his US income would become taxable. When his visa is changed to H1 / L1 or any immigrant visa, he would become a US resident and would need to report and pay tax on his global income including NRE account.
      2. I would assume that you have become an Indian resident now. A resident is allowed to gift upto $250,000 only as per FEMA under LRS. Thanks.

      • Naresh Sharma says:

        It is much below US$ 250,000/-. Where it has to be intimated – in IT or IRS. My son was second party in all FDRs. On becoming Resident I deleted my name from all NRE accounts and he became the first party. Is it still required to be intimated to IT/IRS?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          In India, money belongs to the first holder. Any transfer to your son would be a loan or gift. Assuming gift, when you file your tax return in India, it is advisable to inform or note the same. Also, after gift, the money and income would belong to your son. As your son is not a US resident (provided he files his tax return in form 1040NR and not 1040), he is not required to inform IRS. Thanks.

          • Naresh Sharma says:

            Sir

            My query seems to have gone astray. I gave part of this money when I was still an NRI and part within six months of after I became RI. Therefore for all practical purposes this is a case where NRI father give NRE Rupees amount to his NRI son. Do I still have to inform IT office in India abt this. If so, I will do it without hesitation. Sorry to have bothered you !!

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            Dear Sir,
            1. I would recommend him to file 1040NR in USA. This is important as he will not be a US resident for tax purpose and his NRE interest income will not be taxed in USA. Also, he would not have to report his foreign assets (Indian bank account) or that he has received gift from his father.
            2. In India, when you file his tax return (if you do), you would inform that during the year, he as received gift from his father. Anyway, I would recommend to have a gift letter/deed documenting the gift given/received with PAN of both and signed by both for records. Thanks.

  97. Sarath says:

    Dear Mr Jigar,

    Thank you for the detailed information you have provided. As per my reading of the Model – 1 IGA between India and America, there are 3 classes of accounts that will be reported if the accounts are determined to have any US indicia ( US Address, Phone number , Standing instructions to send funds, US TaxPayer Identification , US Power of Attorney etc.)Also the financial institutions need not report any accounts less than 50,000 USD ( in individual accounts and not aggregate)

    1) Lower value accounts , each individual account containing a balance between USD 50,000 and 250,000
    2)Medium value accounts , each individual account containing a balance between USD 250,000 and 1 million
    3)High value accounts, each individual account containing a balance greater than 1 million USD

    These are for preexisting accounts before 30 June (or July ) 2014.Based on this , I’m curious as to how you can conclusively declare that resident accounts , which do not meet the criteria , for US indicia will be identified and reported to the IRS ( as you repeatedly mention sentences like “whether you have accounts or investments in NRO, NRE, FCNR, or Resident account;in foreign, private, nationalized, co.op. bank or Post Office or PPF;in single or joint name;as NRI or resident;have PAN or not have PAN;KYC compliant or not;with domestic or foreign mutual funds;with domestic DP or PIS account;with local or international brokerage firms; or with private insurance company or LIC”) , or (“Whether you have 1 account as NRI and other accounts as resident also would not matter as PAN on all account would be the same”)

    There is no reason that I can ascertain that the Indian government authorities would give over an Indian resident taxpayer’s information to the IRS, especially when that information has not been requested for. The IRS , like any other earthly organisation , doesnt have unlimited resources and time and would concentrate on the cream of the crop , IMHO.

    PS: Please , no offence meant.Was just curious and I’m also a stakeholder in this situation:)

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. India USA FATCA agreement does not mention anything related to medium value accounts. The $250,000 limit is for cash value of insurance contracts (e.g. endowment, traditional or ULIP plans) and are considered “Lower” Value accounts.

      2. I don’t think Indian authorities will be sharing any Indian resident’s information and I never meant that. I meant that If you are an NRI, there are many ways for Income tax department to find out your real residential status. If you are identified as an NRI, your investments and assets will be reported, even if you had been maintaining accounts as resident.

      Govt of India with the help of Income tax department has taken many steps to increase compliance. Few of the steps are as follows:
      a. Unique Customer ID in bank so only 1 residential status in all accounts. It will be implemented throughout all banks in India.
      b. Requiring Passport number while filing income tax return so anyone declaring himself as “resident”, even if he is NRI can be identified.
      c. KYC form is updated wherein a person is required to declare whether he is an NRI or not.
      d. PAN is being used as Common Identifier for KYC, financial accounts and all your investments.
      e. Black Money Act which requires all residents to report their foreign assets/income and if not reported, they would be considered as Black money attracting severe penalties.

      All these will make people to report or IT department to identify person’s correct residential status and if NRI, all accounts/assets/income will be shares with other countries, including USA. Thanks.

      • Sarath says:

        Got it , thank you. Now from what I understand , as a preliminary first step , all those individuals who can be conclusively identified as US persons and if any of their individual accounts exceed USD 50,000 , will be treated as reportable accounts and their information shared with the IRS.This is for all pre-existing accounts as of July 2014.

        Sure , eventually in 3-5 years time , there will be increased cooperation between the immigration , customs and tax authorities of India and America , so that the net will be drawn wider but tighter and compliance will be much more stricter.

        But , honestly , in my reading of the situation , a majority of the NRIs in this situation really don’t have to be worried to death because :1) The IRS, in the initial years , will be after the really big fish with at least 50k USD in each individual account

        2) The IRS , as mentioned above , does not have unlimited time , power and resources. They will prefer to concentrate 70-80% of their resources on the really big fish , (i define that as people having 1 million USD and above ) , 10-20% on the medium fish ( 250k-1 million USD) and 10% on the small fish (< 250k or 50k or however you define it )

        Of course , there will be increased scrutiny of anyone declaring foreign accounts and normal audits based on that as well. And there is every possibility of being selected in a random audit , based on IRS software settings.

        But I would like to point out 3 facts to everybody reading this blog :

        1) The IRS audited only 0.86% of all individual returns in 2014 . The chances of you being audited will be 2-4% in case of a foreign account or income

        2) The IRS does not just have Indian accounts to deal with. There is Israel , Switzerland , Cayman Islands, Indonesia , Nigeria etc. And there are small fish and very big whales in all of these ponds too.Any educated guess on whom the IRS will prefer to closely scrutinize

        3)All of the information given above is not meant to encourage you in any way to cheat on your taxes. I encourage everybody to fully abide by the law of the land. It is just that you needn't spend many sleepless nights or go through needless mental tension IF anyone amongst you haven't deliberately conspired for wilful tax evasion. Please do not give into scaremongering , analyse the facts and your situation and proceed confidently.

        PS: No offence meant to you , Mr.Jigar. I am grateful to you for writing this blog article and helping out many people including myself.Much appreciated.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Mr Sarath,
          Thanks for your opinion and no offence taken. I always appreciate constructive criticism as it tests my knowledge. However, I do not agree to your 3 “facts” and my comments are as follows:

          1. The statistic that IRS audited 0.86% of individual returns in 2014 is irrelevant. It is like comparing apples with oranges as very few people will have offshore accounts. Think about how many tax filers living except in east coast or west coast states will have foreign accounts having more than $50,000. Even 2nd/3rd generation Indian immigrants would not have or care about investments in India or outside USA. I would think less than 1% of individual tax return filers in USA would have $50,000+ foreign assets. (No data available but this is my best guess on higher side). So 0.86% of total 100 would translate into 86% of 1. However, this is also not the right way to present either.

          2. IRS has developed a uniform format for reporting of foreign financial assets by ALL countries, including India, Switzerland, Cayman island, Israel, and any other countries and requires SSN of owners/account holders. (Even SBI in India has started requesting declarations and SSN of their NRI account holders). Once data is collected, IRS would need to match the data with the Form 8938 (FATCA) filed by the person with 1040 and identify the differences. Once differences are identified, issue the notices. Seriously, how many man hours or resources are required for the same? Your IT friend will be happy to answer that.

          3. IRS already has 2 voluntary disclosure schemes – OVDP and Streamlined – currently going on for people who have not reported assets/income and want to come out clean. I am not sure if IRS will cut someone any more slack. While it may take time but they will issue notices to all non-compliant tax payers.
          Thanks.

  98. Abhay says:

    Dear Mr. Jigar

    Kudos to you for creating an elaborate article with practical nuances. I have a query about the new FATCA compliance and how it affects NRI not based in US?

    I live in Sweden and the new FATCA form states that one must provide tax ID for the country where a person is usually resident? I have NRI account in India, the interest on which is currently tax free as per Indian tax laws.

    I am suspecting that since the government is collecting FATCA information, they will eventually start sharing the information with countries other than US and it’s possible that NRI A/c income that is not taxable in India may need to be reported and probably taxable in Sweden?

    Can you please confirm my understanding and impact on NRIs, who are not related to US.

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      For FATCA (US residents), the effective date is June 30, 2014. For other countries, India will be sharing the information from December 31, 2015. Thanks.

  99. Ganesh says:

    Jigar ji

    Thanks for such an excellent article. I have been pondering about these topics but finally found your blog.

    I am on my H1-B since last 7+ years in US. Before coming to India I had ordinary SB a/c and Demat a/c in India, which I have kept as is. Those 2 ordinary a/c’s (non – NRI a/c) have accumulated in value since then and value is close to Rs. 30,00,000 – Do these a/c qualify for FATCA and FBAR ? should I disclose those ?

    Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Any financial assets or account owned by you are covered by FATCA and FBAR and reporting is required. You are also required to report them and include any income in your US tax return. Also, as an NRI, you are not allowed to maintain resident bank account and/or the ordinary demat account but inform your bank and DP and change to NRO account and invest in shares through Portfolio Investment Scheme (PIS) of RBI only. Thanks.

  100. Sunny says:

    Dear Patel Sir,
    I have a query regarding NRI Mutual Fund KYC.
    My uncle is staying in Saudi Arabia from last 21 years.
    He has the overseas address proof of Saudi Arabia and he is holding a Canadian Passport and Overseas Citizen of India (OCI) Card. In OCI, his residency is mentioned as Canadian and his address of Saudi Arabia is mentioned in OCI.
    Can you let me know while doing the KYC which country will taken as residency.
    Also in Fatca declaration which Country’s Tax Identification no. should we mention because practically all taxes and related queries are taken care by Saudi Arabia.

    Thanks Sir

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The declaration asks countries where you can be claimed “Resident”. If your uncle can also be claimed as a resident of Canada as per Canadian tax laws, in addition to Saudi Arabia, he would also need to include Canada as a country of residence and provide the Tax ID no. Please consult your CPA in Canada. Thanks.

  101. RJ says:

    Hi Jigar,
    My wife is a US Citizen but lives in India and has no income (for employment that is) to report for 2015 since she is a homemaker. She has a couple of NRE account valued around $210K in total.
    1. Does she need to file form 8938?

    2. These accounts are Fixed Deposits that only paid interest in 2015 not before. Unfortunately we didn’t know about FBAR at all. Can she declare them now on FBAR and in addition file 8938 filing separately for the interest she received in these accounts?

    Thanks
    RJ

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As your wife has moved and lives in India and is an Indian resident, she is not allowed to maintain NRE account but can only maintain resident account. Also, the interest income would be taxable for her and she would also be required to file tax return in India as resident. As a resident, she would also be required to report her foreign (US) income and/or assets – 401k or IRA as well. However the correct residential status needs to be determined – whether Ordinary Resident or Not Ordinary Resident.
      2. If you only open account and transferred money in 2015, it is okay as you would report the income and file forms/returns only in 2016.
      3. If you had opened accounts earlier but had opted for “cumulative” interest; while you may not have received interest in earlier years, interest accrues quarterly but is paid only on maturity. As a result, she needed to report the interest income in the years it accrued. Thanks.

  102. sabina says:

    hello
    I have account in india nro ove 300 thousand and have not reported fbar I did not know I am single in usa living with parents have no income file taxes separately I have account over 20 years is my divorce money what should I do now how much penalty I have to pay

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If it was un-intentional, penalty is only 5%. However, you would need to pay the tax and interest. I suggest you contact your CPA in USA for the same. Thanks.

  103. Krishna says:

    You write “IF YOU OWNED ANY FINANCIAL ACCOUNT ON JUNE 30, 2014, EVERYTHING WILL BE REPORTED IF YOU MEET THE CRITERIA.”. This is for FATCA only, right ? What is the situation for CRS ? Is the situation the same ? My understanding is that India will start doing CRS reporting (CRS is for all countries except the USA) in 2017 about accounts hold in 2016. Is that correct ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes. For CRS the reporting will start from December 31, 2015. Thanks.

  104. vivek musale says:

    can you please inform as to what is the definition of WORLD WIDE INCOME as it taken by IRS. Is there any IRS circular to that effect

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Any income generated regardless of origin is World Wide Income. If you have a rent income from France, interest income from India and Capital Gain income in Singapore, all are considered as world wide income and you are supposed to report the same. The taxability of the income would be governed by the Double Tax Avoidance Agreement – DTAA between USA and respective countries. Thanks.

  105. Sam A says:

    Jigar Sir,

    I have gone through your blog which should open eyes of all NRIs to safeguard their future. However, many NRIs who are using the Turbo tool to file returns in the US feel that in their U there is no need to mention the income and assets in India, viz.

    If the balance in the financial accounts is less than US$10,000 and if the fianancial
    assets, including shares and mf, etc is less than US$50,000 as on 31st December or US$ 75,000 during the tax year and in case of married couple tax-payers US$ 100,000 and US$ 150,000 respectively then these details need not be declared in FBAR and Form 8938 .

    Sir, my questions

    1. Is the above understanding correct?

    2. Does US$ 10,000 mentioned under FBAR refer to the balance in the NRO/NRE Bank account
    at the end of Dec or the total amount received in the account during the year?

    3. Similarly US$100,000 and US$150,000 as applicable for married couple tax payers refer to financial assets like shares, mutual fund, etc. or it includes the bank account (NRE/NRO) into which there is income? Does the asset refer to the amount invested or the current market value?

    Would be much obliged for your guidance.
    Sam A

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Income from India to be included in 1040 even if $1. FBAR to be filed to Dept of Treasury if TOTAL of all financial accounts is more than $10,000. Form 8938 to be filed with 1040 only if financial assets above threshold as you mentioned.
      2. At any time during the year
      3. ALL financial assets including bank – savings, FD, shares/demat as well as mutual funds and any other movable financial assets as listed in my other blog and available on IRS website. Thanks.

  106. Arjun says:

    I have been in US since 2012 but I have had salary accounts in India since 2006. I have had account balances of >$10,000 since 2014 but I have never disclosed this on FBAR and I have also never disclosed by investment holding of shared and MF although I have been paying taxes in India.
    Do I need to amend my returns to file FBAR and disclose investment holdings?

    I had opened NRO/NRE account in 2015 which I am planning to disclose in 2016 return but do I need to disclose my Indian Mutual Funds, Shares, and FD’s which in total are close to $45,000?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You may want to consider the voluntary disclosure program or Steramlined Compliance. As your total financial assets is less than $50k, you may not need file form 8938, you would still need to file FBAR as foreign financial accounts (Bank, FD, Demat, MF, etc.) is more than $10,000. Whether you are required to file any form or not, any income even $1 needs to be reported to the IRS in your 1040. I suggest you consult an experience CPA in your area for the same. Thanks.

  107. R.V.Shah says:

    Jigar Patel ji,

    Grateful for your blog. My facts -

    * Working in the US since 2003 and filing my there. Got green card in 2014.

    Own a house in India since 2003 jointly with my brother and father with loan in joint name of me and my father. I am repaying the loan. Now since 2013 house is given for rent and I am getting around Rs.8,10,000 (around USD 13,000)per year into by bank account as rent after deduction of 10% TDS. I am also filing my IT returns as NRI and getting refunds.

    *Also hold stocks received under stock options present value around Rs. 80 lakhs, everything is long term gain now. But the demat account with non-banking depository participant is still under ‘Resident’ status. But the bank account linked to this demat is under NRI status.

    *Under the heading about Types of Foreign Assets and Whether They are Reportable on Form 8938 by US persons, I find in the link

    https://www.irs.gov/Businesses/TypesofForeignAssetsandWhetherTheyareReportableonForm-8938

    foreign real estate held directly is exempted.

    Under the circumstances, which options you suggest Sir?

    [1] Need not have to report both the immovable asset (house) and rental income in my US tax returns in Form 8938 OR start reporting the details in the US IT Returns in Jan 2016 OR Is it better to let the rent go to my brother?

    [2] As regards shares,report the status OR transfer them to my brother as I will not have the hassles to monitor or report & also close the NRO and NRE(balance Nil) accounts?

    R.V.Shah

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Real Estate investments is not required to be reported. However, you would need to report your rental income in USA. Also, as an NRI, while you can file tax return and claim refund of Income Tax, TDS should be 30.9% and not 10%. TDS rate of 10% is for residents.
      2. Your Demat account needs to be changed to NRO-Demat and you need to open NRO-PIS account for trading in shares. NRIs can invest only under PIS – Portfolio Investment Scheme of RBI. Please contact your bank and DP/Broker. Also, you would need to disclose your Demat account to IRS and also pay tax on the interest/dividend as well as short term/long term gain on the shares in 8938, FBAR/8621 and US income. Thanks.

  108. sam says:

    Dear Sir,
    Can you please confirm that accounts less than 50k will not get reported.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      While the notification asks for 50k+, unfortunately, I won’t be able to confirm anything as it is upto the bank as they may voluntarily decide to report lower value accounts. Thanks.

  109. ASingh says:

    Hi Jigar,

    Another Question.
    Does earning from FD i.e. interest would be subjected to tax here in the US.
    If we consider Double Taxation Avoidance Agreement (DTAA) between the US and India – in which case, there could be a case that the NRE FD interest may not be taxed in the US – since it stands subjected to the Indian tax laws (which happen to exempt it from Indian income tax!)
    Let me know if my above understanding is not correct.

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The DTAA between India and USA does not grant such exemption. I suggest you re-read the article related to interest. Thanks.

  110. ASingh says:

    Hi Jigar,

    Thanks for all the details. Your Blog is an eye opener for many of us.

    Still I have some specific Qs as below and would appreciate your response.

    I moved to US in May’15 with family. My wife was working back there in India and her account was converted to NRO. She is not working here in US. I am a tax payer here in US. My 2 Indian accounts are still as normal savings account.

    1. What is the best way to comply with all tax treaties and rules && still end up paying least to both the government(US and India).
    2. I am about to open NRE account with a bank in India and they are asking me to fill up W-8, W-9 and FATCA annexure. I think i need to fill W-9 only. Please suggest?
    3. I also plan to covert my existing saving account into NRO.
    4. Is only the interest earned on NRE saving account taxable here in US or the entire amount available in that account.
    5. What is the threshold for declaring this interest amount to IRS, if I just earned $100 still need to report to IRS?
    6. If the funds at some point cross $10,000 and I report it to IRS also does it mean it would attract some additional tax or it just a formal reporting of the account.
    7. What is this threshold of $50,000 referred to in the blog. Somehow it confuses me with this $10K and $50K thresholds.
    8.The income earned on the Indian NRO account(like rent, mutual funds tax free returns) should also be reported to IRS. I would be filing Indian Tax every year for these incomes here in India. Still should it go to IRS?
    9. Any other tip/suggestion you would give for saving tax in both countries would be most welcome.

    Thanks and appreciate your response.
    A

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Report all your foreign accounts in FBAR (no tax) or foreign assets and income in Form 8938 if applicable (pay tax on income even $1), include your income in your US tax return and you are okay. Also, update your residential status (NRI) with all your banks and financial institutions. Please note your income is not taxed twice as any tax you pay in India can be claimed as a foreign tax credit in USA. If you need detailed advice, please contact us. Thanks.

  111. Venkat says:

    Hello Jigar,

    Do you help if some one needs to streamline their Indian accounts to compliant with FATCA?

    Thanks,
    Venkat.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, we do. Please contact us if you have any question. Thanks.

      • Prem says:

        Hi Jigar,
        Indian student doing undergraduate studies in US, how are they to handle this ….what is the implication on them …can they maintain accounts in both the countries ….

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Students are considered as NRI under both FEMA and Income Tax act as they live outside India for more than 6 months. Students need to inform thier change in residential status to bank and re-designate their resident account to NRO account. They may also open account in the foreign country based on the requirement of the respective country. Thanks.

  112. sam says:

    Hi Mr Patel.

    I’m a US citizen (US Passport holder). In 2012 Aug, i quit USA and returned to India. For the next 1 year i never had any amount in my India bank accounts. From late 2013 (FY) i transferred substantial amount from my mother’s and my wife’s account into my account (domestic savings account). The banks have been deducting TDS periodically and i have been filling Tax returns in India. I have not filed any returns in USA (as i don’t intend to go back to USA). I had 2.5 lakhs in my NRI and NRO account (i closed that account couple of weeks back as i’m no longer a NRI). If i have erred, how should i go about fixing this? Do you have any offices or contacts in Karnataka state/Bangalore that i can approach?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You are right in closing your NRO and NRE account as you are no longer an NRI and can only have a resident account. However, as you are a US citizen, you are also considered a US resident for tax purpose. As a result, you are required to file your US tax return and report your income in USA as well as report your foreign financial accounts (fbar) and assets (form 8938) if balance if above threshold. We serve all client from our Ahmedabad office. Thanks.

  113. Rahul says:

    Hello,
    We have been in US for close to 3 years now and have saved money over the due course of time. We have been making FD’s in India from our savings here. 2 of the accounts in which FD have been made are normal savings account (opened 8 years back) and 1 is an NRE account (which was opened in April 2015). We have never withdrawn the interest that we got from the FD’s but instead have chosen to renew the maturity amount as FD again. We have also been investing in mutual funds through SIP over the last 3 years. These SIP were started much before(sometime around 2010) we arrived in US and then were renewed online when the SIP tenure were over.

    As we never redeemed our MF’s nor did we used the interest amount of FD, are we liable to pay any tax in US ? Just having FD’s and MF investment greater than $10K attracts attention or the income generated(e.g. interest, MF redemption) should be greater than $10K to become eligible to pay taxes in US ?

    Like many others, we were never aware of this rule and reading now has caught us off gaurd. Please advise us what our situation is and what should be done by us.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you are a US resident, you are liable to pay tax in USA of all your Indian income including resident FD, NRE FD, MF income and even your NRE savings account interest.
      2. As per FATCA requirement and CBDT notification, the reporting threshold of India to IRS is $50,000.
      3. You may consider Streamlined Compliance Procedure or Overseas Voluntary Disclosure Program or close account and forger about it. However, each option has its own risks and benefits and you are suggested to consult with your CPA for the same. Thanks.

  114. Swaroop Patel says:

    Your blog and comments on FATCA are very helpful. i have some questions which i wanted to clarify-
    1. As of today, collective holdings put together over USD 50000 in India have to be reported?
    2.Do you have to declare investments in FBAR where you are second holder? say resident indian parent is first holder. If yes, do you have to pay taxes on this in the US?
    3.Do you have to declare investments in FBAR where you are nominee? say resident indian parent is first holder. If yes, do you have to pay taxes on this in the US?
    4. Do you have to declare ULIPs? if yes does tax have to paid every year on growth? or only at maturity when you get the funds?
    5. Do you have to pay inheritance tax in the U S for inheritance received in India?

    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes, as per FATCA. As per FBAR, threshold is $10,000.
      2-3. Yes. Please check the FAQ on FATCA. I would suggest you not to be a joint holder but just be a nominee. So you don’t have to report in FATCA or FBAR or worry about paying taxes in USA.
      4. Yes. I would consider ULIP as investment in passive foreign investment company (PFIC) and related requirements will apply.
      5. Inheritance tax is on person who has died. If you are a recipient of inheritance, there is no tax. However, you need to report the same to IRS. Thanks.

  115. Harish says:

    Hello! Mr. Patel
    1. In order to get a Credit card with Axis bank, I had to open a RFC account. It has ZERO balance since I opened the account. But I forgot to add it to my FBAR that I file every year. Can I close the RFC account instead of applying for Streamlined Compliance?
    2. Does closing an account trigger FATCA reporting even though balance is less than 50K$ (In my case $0). Or do you recommend just leaving the account open and not do anything?

    Thank you in advance for answering my 2 questions. Regards. Harish

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes, I would recommend that.
      2. I don’t think so. For FATCA, $50,000 is the threshold limit. Thanks.

  116. layman123 says:

    Hi, Thanks for the informative post.

    I am in a little peculiar situation. I have been in USA for about 10 years and have never filed FBAR or reported interest income. I have maintained a resident account in India all this while in which for year 2011, 2012, 2013 I had balance >$10,000 but less than $20k. For the year 2014, the balance was less than $10k. A couple of months ago I transferred some money in my resident account making the balance $20k. I also converted the account to NRO account. I did not know about all these complications now I am planning to transfer all money to my relative’s account and close the account. My question is:

    1) shall I be worried about year 2011, 2012 and 2013? Shall I file FBAR for these years now? It seems like a lot of hassle and lots of money on lawyers. The balance was only <$20K. Do you think it's worth it? Note that it was a resident account then which was only recently converted to NRO. After conversion the balance has been <$10k.
    2) Starting July 2014, are they going to report the balance before 2014? After June 2014 my balance has been <$10k.
    2) Although I am closing the account, do you think I should file FBAR for year 2015 next year?

    Thanks!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As per FATCA between US and India and instructions issued by the Central Board of Direct Taxes, the income tax department is collecting balance and income of US based NRIs, provided the balance is more than $50,000. So I don’t think your account may be reported. That being said, you may close the accounts and forget about it or think about the Streamlined Compliance procedures or Overseas Voluntary Disclosure Program. Each program/decision has its own risks and benefits. I would suggest you to contact your CPA for the same. Thanks.

  117. Ravi Kumar says:

    Your blog is very informative and is a great pro-bono service to the community. I am a US citizen (with OCI) who moved from US to India a few years ago and started working in India. I have declared my salary account via FBAR ever since I started working in India. But I have an old domestic savings bank account with approx 10 lakhs. The bank account was opened as an Indian citizen several years ago with PAN number (account records are all Indian). At this time , if I simply close the acount, what risk do you foresee from FATCA and FBAR or any other IRS related issues? Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You are not required to report your salary in FBAR but the bank accounts and investments. You may report Salary to your tax return 1040 to IRS. Either you can amend your forms or transfer the funds, close the resident account and pray your bank does not report it to IRS. Thanks.

  118. We have a client who is a US citizen, who has brought money in India over 30 years. He has typically been careless with reporting his India income and assets. He has close to a million USD in Indian MFs even now. Can you guide me as to how should he go about his disclosures?
    He wants to distort the trail of this money by withdrawing it and reinvesting in other close family member’s names or by putting it in a trust and reinvesting it.
    I do not want him to compound his mistakes, please guide.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      June 30, 2014 was the deadline and if his status in his bank/MF/any financial account is NRI, the information will be reported. Transferring funds to relatives now won’t help him. I would suggest to consider one of the voluntary disclosure protram or Streamlined compliance procedures. Please consult a CPA in USA who has experience in such matters. Thanks.

  119. Kris says:

    Thanks for the informative article.

    For a US permanent resident (Indian citizen)
    1. Is a Central government pension from India (more specifically, family pension from the Central Government) reportable in Form 8938? If so, under what category does it fall? Is it a trust account? There is no disclosed value for the pension account I am aware of.
    2. How about a perpetual immediate annuity from LIC in India (Jeevan Akshay) where the principal is payable on death to somebody else? And if reportable in form 8938, under what category does it fall? Custodial account?

    My understanding is that the pension and payments from LIC are both taxable income in the US. Is that correct? Whether and how to report them in Form 8938 has me stumped.

    Regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. For 8938 is for your foreign financial assets. Pension is an income so while you may not have to report in form 8938, you may have to report in your tax return.
      2. Any cash porting of your life insurance needs to be reported in FBAR and Form 8938.

      As there can be difference of interpretation and/or opinion and reporting requireents, please contact your CPA for your queries. Thanks.

  120. Ravindran says:

    Dear Jigar,
    Kindly clarify on the following (with regard to India-US IGA and compliance):

    (1) Brokerage Houses (shares/securities trading) are custodians of the securities/sales proceeds till they are paid to the clients and they come under Custodial Services.
    The sale proceeds are FATCA withholdable payments , if the assets were acquired out of US Source Income.
    However, Brokers do not maintain the Securities Account with them as these accounts are maintained by the Depository Participants, Who maintain the shares in DMAT format on behalf of the customers as agents of Depositories like NSDL/CDSL in India.
    Now , the Account balances have to be reported by Depository Participants who maintain the details of shares with Market Value. But the Gross Proceeds ( Withholdable Payment) have to be reported by Brokerage Firm in respect of US Sourced Income.
    There may be US Account Holders ( US Tax Payers) maintaining Assets Accounts with Depository Participants and Trading Account with the Broker.

    In such as circumstances, whose responsibility it is to report to IRS ( Form 8966 – where the details like Account Holder Name and Address, TIN, Account Balances and Income Transactions ( Withholable Payments) are to be reported).

    In some of the Organizations, brokerage arm and the Depository Participant arm are controlled by a Single Expanded Affiliated Group ( Eg: Canara Bank Securities Limited (a subsidiary of Canara Bank) provides share brokerage services while Canara Bank provides Depository Services) . However, there are certain brokerages who perform only Trading Facilities to the customers.

    (2) The other point is that Entities whose shares are traded publicly in a recognized stock exchange are outside the purview of FATCA Compliance. In that event, whether the sale proceeds of such publicly traded securities in recognized stock exchanges will also become non withholdable payments. In that event, many of the brokerage houses & DPs in India may not come under FATCA Compliance, as they may be holding the securities accounts.

    Our understanding on this is that Entities (Non Financial companies whose shares are listed publicly like Reliance Industries need not report the details of US Owners (though they may get US Investments/US Source payments). However, Custodial Institutions like DPs and brokerage firms have to report the details of US Owners of these securities.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As per RBI laws, NRIs are allowed to invest in Indian equity market only through PIS – Portfolio Investment Scheme, which require opening a PIS account and related Demat account. NRIs are not allowed to buy/trade equity shares off-market. The demat accounts and equity holdings will be reported under FATCA. Thanks.

  121. Ali says:

    Hi Jigar,

    Thanks for the great article. I am uninitiated in this topic, and this was a great source of insight for me. I have a few specific questions.

    If i am a US resident on H1-B since 2011, and I have one NRE account in India since 2012, and I have never had a balance higher than USD 10,000 on that NRE account from 2012 till Dec 31 2014. But I did fund it with >10K but less than 20K USD in May 2015 (so not in Calendar Year 2014).

    1) As such, do (or did) i need to file under FBAR, or FATCA for the 2014 year, or previous years?

    2) If i didn’t report interest earnings on the above NRE account as i was unaware of the rules uptil now, is there a way for me to amend my returns and simply pay the owed taxes without additional penalty?

    3) My NRE bank is asking me for W-9 and other information for FACTA. Should i be taking any remedial steps in my situation before complying with the Bank’s request for my US tax ID and other information?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. No FBAR or FATCA for 2014 as your foreign financial account/ asset below threshold.
      2. Yes you can amend your tax return but you may also have to pay penalty. Please consult your CPA
      3. As you are not required to report your account balance, it is okay. Just make sure you report your income and file FBAR and comply with FATCA (Form 8938) and other requirement for 2014. Thanks.

    • Sebstin says:

      2) If i didn’t report interest earnings on the above NRE account as i was unaware of the rules uptil now

      —–>If you have NRE account, dont you get 1099-INT form with interest amount details every year?. Were u not including this in US tax returns?. This sis nothing to do with FBAR or FATCA.

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        1099-INT is being issued only by banks based in USA e.g. Citi bank. Other banks do not issue 1099-INT. In that case, you would need to request the banks to provide the interest certificate for the calendar year and report the same using the exchange rate published by the Department of US Treasury. Thanks.

  122. Srikanth says:

    Hi Jigar,
    Very informative blog!
    Which of the below are classified as PFICs for the purpose of USA tax filings?

    1.Provident Fund
    2. Public Provident Fund (PPF)
    3. India Mutual Fund
    4. Portfolio Management Service investing in indian stocks with Demat account
    5. Direct Equity purchased through an India Demat account
    6. LIC/ICICI Prudential Policy
    7. Tax-exempt corporate bond
    8. Fixed Deposits
    thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      PFIC is Passive Financial Investment Companies. Any investment made passively are classified as PFIC. I think in your case, it would just be Indian Mutual Funds (you invest in MF, which in turn invest in equity / debt securities). All others are direct investments. Thanks.

      • Raj says:

        Hello Jigar,

        First of all thanks for this blog. It’s very informative and to the point.

        I have question regarding the No 6. in the original post.
        6. LIC/ICICI Prudential Policy
        Ass per my understanding most of the life insurance policies are mix of insurance and investment(i.e. ULIP). Given this are they not classified as PFIC? ( I did not find any comprehensive answer about this on internet and Tax professional seem to have different opinions. )
        Another question -in case if someone has purchased ICICI Pru life insurance policy and has completed stipulated premiums before coming to US – then how that should be hanled and what are tax implications (US) for that. Maturity of the policy is on death of policy holder.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. Any policy that has cash value i.e. surrender value, needs to be declared. Also, ULIP polities would invest in a mutual fund so I would think that it may be PFIC. I suggest you contact your CPA in USA about reporting.

          2. Term life policy where only sum assured is returned only on death of person are not included. However, if it is used as investment vehicle (99 year ULIP/traditional/endowment,etc), they would need to be declared. Thanks.

          • Raj says:

            Thank you Jigar!

            Yes – its 99 year ULIP, currently well below FBAR threshold. (including other balances)

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            As it has a cash value, it would be covered and reported. Thanks.

  123. Narasimhan says:

    I had 100K USD in Indian Nationalized banks. I closed the accounts as of Dec 2013. I saw that the cut off date is 30 June 2014. Am I fine?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As per India-USA FATCA agreement, the information will be shared as on June 30, 2014 and thereafter. Thanks.

  124. Dr Brajanarayan Mohapatra says:

    Thank you very much for an extremely useful blog. One query, Sir. The NRE RDP is nontaxable in India. Should an US resident, having such a deposit in India declare and pay tax for the interest of the NRE RDP in India?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      There is no tax in India. However, as a US resident, you would have to declare and pay tax in USA. Thanks.

  125. Ketan Patel says:

    I had 2 NRE/NRO account in different banks in India which were closed on March 2014.
    I have not filed FBARS previously but have shown the interest income from one of the accounts on 1040 but neglected to shown the other account on 1040 or FBAR.

    Now that FATCA has been signed between India and US, is there any clarity on whether accounts having more than 50K USD and less than 100K USD and which were closed prior to July 1, 2014 (pre-existing accounts due-diligence as per FATCA) are going to be reported to IRS?

    Thanks for all your assistance.
    Ketan Patel.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As per India-USA FATCA agreement, the reporting requirement is from June 30,2014 and later. While there is no guarantee, but I don’t think any account that is closed before June 30, 2014 would be included in the reporting. Thanks.

  126. Pearl says:

    Hi Jigar,
    A very informative article indeed. As you might be aware there are a load of Indians who have worked in the US on H1Bs and have children who are Americans. Same is the case with us. We have now moved to India with our kids. As any parent would, we would love to save for our child. However, we understand that many schemes that might be tax free in India in the long term might not be the same in the US. Would love a blog from your end to understand:

    1. What might be options for investments that we can do for our child in India
    2. How we should declare this income for our child, in the US over time
    3. How the income (since this is not salaried income for the kid) from interests, specific child investment schemes etc. would be treated under the US taxation rules.

    Would appreciate if you could throw some light on this.
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I would suggest you to invest in your name than your kids. You may make a note that this funds are for them but invest in your name.
      2. Annual report to IRS and dept. of treasury.
      3. Any income is taxed in USA.
      4. I am not sure if you still are US citizen or has greencard. If not, invest in your name only and no need to report to USA as you are not a US resident. Thanks.

  127. Redington says:

    Hi Jigar

    Thanks a lot for helping everyone here. I was a student in the U.S. in the year 2007-2008. I then worked in the U.S. on H1B for 3 years. I had paid my taxes back in the U.S. I returned permanently to India in the year 2011. I had a balance of about US$ 30,000 when I returned to India in 2011. I did not close the U.S. bank account. I kept spending from that $ 30,000 and am now left with only $4000. There were no deposits in my account after 2011 from the day I returned to India. I plan to close my account in October, 2015. I have never declared in my Indian IT returns about this US account. Will my account be reported to the Indian government under FATCA. Should I now disclose my account under the window period or should I just close my account and forget about it. Request you to please advice. I am very tensed. Many Thanks…

    PS: I am an Indian citizen with no U.S. PR or Citizenship

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I don’t think so. Under the FATCA agreement, Indian government will report US residents’s financial accounts and transactions to IRS. Technically, as a resident, you were required to report your foreign assets to the Income Tax department in India since last 2 years. Thanks.

  128. Nk says:

    Hi Jigar,

    Thank you for the insight and so well articulated write up.

    I have a specific question, I have been living in USA since fall of 2010 till date. I am on my H1B visa and I do not have any Green Card or PR. However I do intend to file my GC in next 6 months.
    Questions:
    1. I have a resident account in India to which my H1B employer still credits basic INR salary. Account balance is less than $10k USD. I have written to my bank to convert this to NRE account. Should I be filing form 8938 for this account?
    2. I have NRE, NRO, NRE Home loan accounts with another bank. ONLY the home loan exceeds $50K USD towards borrowed loan availed in 2012, but the outstanding loan is less than than $50k USD. Since this is already an NRE account and as on date I do not have any permanent residency, am I still obligated to disclose this account in my US taxes? (form 8938??)
    3. In case if I am required to report all the above accounts, will it be good if I report for current year 2015 taxes alone or will I be expected to report starting 2010/2011 since the time I have been in USA.

    Sincerely

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The won’t be able to convert into NRE but your account will be redesignated into NRO account. You would include the account while calculating your total foreign financial assets -firm 8938 an foreign financial accounts – FBAR and include if it is over the respective threshold.
      2. Loan is not an asset but liability. As a result, I would not include it.
      3. Please consult with your CPA. Thanks.

  129. Mauj says:

    Thx Naresh for the insightful article & for patiently replying to all comments!

    Based on my experience, most people coming to US have resident bank/investment accounts (whose value may increase over time due to money sent back to India) and because of lack of awareness on US global income reporting, FBAR, etc. become non-compliant and after couple of years it becomes difficult to achieve compliance due to onerous IRS procedures & penalties.. and end up being in tricky catch-22 situation. Would u suggest ppl in this situation to bite the bullet, come clean with IRS and do needful (8 years of back-filing of missed taxes, FBAR submissions, etc. – which is a pretty daunting exercise)

    If resident bank/investment account in India still has local Indian address (i.e. bank not knowing u moved out of India), will it still fall under the purview of India-USA FATCA agreement and data shared therein? Or is the data-sharing applicable only to NRI customers (NRO/NRE accounts etc.), those with addresses in USA, etc.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      There is no standard answer as the solution depend on the situation and circumstances of respective person. I would also request you and others to consider Streamlined Compliance procedures (prove non-wilful) as well. Thanks.

  130. Sooraj says:

    hi Jigar

    Can you tell me whether FATCA provision will be applicable to stock broker in India
    Who is having US client
    Who is not having US client

    In which area stock brokers has to ensure compliance and how?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I think so but I think the reporting will be done by the Depositories (NSDL / CDSL) and not individual institutions. However, this is based on my logic and may not be correct. Only after the guidelines, it will be clear. Thanks.

  131. Amol Joshi says:

    Hello Jigarji… very informative…

    Learnt that in JULY 2015 the agreement between India & US is going to be signed under the MODEL 1… wherein the financial Institutions have to provide information to CBDT & the same will then be passed on to the IRS.

    Wanted to know how will the broking community get affected who are doing NRI activity thorugh the RBI PIS mechanism under which all the buying & selling of the stocks is reported to RBI on daily basis.

    In such cases how has the broker to deal & what information he has to provide & in what format.

    Can you pleas throw some light….

    Thanks & Regards,

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Broker may not as the reporting will be done by the institutions where you have Demat account. Brokers just trade on your behalf the assets are the shares and are reflected in the Demat statement. Thanks.

  132. Vinay says:

    Hi Jigar,
    Thanks for such a detailed article .It seems to have almost everything about FATCA.
    However ,i have a question.
    What would happen if a person who is already a NRI of another country doesn’t make changes regarding his addresses to his indian NRE accounts when he goes to USA and stops making any transactions to those accounts . How will the banks or financial institutions recognise him as US resident . ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Unless your relationship manager knows that you have moved to USA or you inform your bank about the move, the bank would not know and may not report. However, no guarantees. Thanks.

  133. Nachiket Khake says:

    Hello Mr Jigar,

    Can you help me I have tried to find and answer to this following question from many people but no one is sure about it.

    I had opeaned a students account with BOFA in 2007 used it till 2012 when I was workign on H1B , I left for India and did not close my bank account as I needed to transfer all funds to India thru remittance services. I opeaned my own outsourcing company where in I provide Pre construction services to Civil Industry and all my clients are in US, Now I have been paying taxes here in India since 2012.

    The account in US is still active and I have changed the address to India address, If I take payment from my clients into this account thur check will I be liable to pay tax or will I have to file for tax in US ? I just accept the payment in that account and wire transfer it to my India account in $ to save service tax. I am confused if I should file taxes in US too ? If you can help me answer this it would be very helpful.

    Thank You
    Nachiket

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The structure of your US operation would be key. I would assume you would have an entity in USA. In that case, the receipt in USA may be considered as US income and you would have to pay the tax on it. There is no double taxation. You can always get credit for tax paid in other country. But you would have to file your tax return. I would suggest you to find an experienced CPA in USA. Thanks.

  134. Sri says:

    Could you advise more on epf? if there is a PF withdrawal in India of all earnings from prior years while changing employer and if this happens during the year residing in US, what is taxable in US tax return?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The income (interest) on EPF is fixed so I would think the interest income would be added to your income on an annual basis. However, I would suggest you to contact your CPA in USA for the same. Thanks.

      • Sri says:

        Thank you Jigar!!! Could you please advise your thoughts on gratuity also? Is it treated the same way when it is paid at the termination of employment? Is the full amount of gratuity taxable or the interest portion in it?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          You did not pay anything in gratuity and it is all employer’s share so you would have to pay tax on it. Please check with your CA. Thanks.

  135. John says:

    I have close to $ 30k in Indian rupees in a NRE savings account. Do I have to report to IRS about this money under the FATCA implementation. Or since its under 50 k in total I don’t have to report.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You don’t have to report under FATCA i.e. Form 8938 but you still need to report in FBAR to Dept of Treasury as you have more than $10k. Thanks.

  136. Manish Kapoor says:

    Hi Manish,

    I have a question which is very specific. I had bought house in India and have a sought a loan to keep myself safeguarded from any cash crunch in future. I took 7.5 crore loan under Home Savor account on this property. I took this loan even when I did not needed it to be keep funds handy for any business opportunity in future.

    So what bank did they opened a loan account for me for 7.5 Crore. Then Also created another account called NRE current account and put those 7.5 Crore in that account. and this current does not bear any interest but what it does it takes every month EMI from this Current account and pays towards my Home loan automatically.

    If my balance in current account is same as my loan amount then I am not charged any interest on the loan nor is any interest given to me from that deposit. Current account is basically a zero interest account .

    However if my balance in the current account is less than the loan then I am liable to pay the interest on the difference as my interest in the loan.

    In this case will this current account be reported ? Even though is fully funded from the loan account. And if I ad loan account and this account my total funds will be ZERO or negative ?

    Do I need to report this current account as it has large amount of funds but they are from the loan account ?

    Thank you
    Manish

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would think so. The loan is for buying property so it would reduce your net investment in property. You are owner of the bank account and you are free to make investments in any other property – bank FD, mutual fund or other. I would suggest when you report your assets, you may also indicate the loan. Thanks.

  137. Manoj says:

    Thanks Jigar Bhai for the fantastic blog!

    I have heard India in principle have agreed to comply with FATCA, but hasn’t actually signed the treaty, that means they are not complying with regulations. I have heard the implementation is extended to Sep 1, 2015 , is this correct?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      No. If the implementation is extended for India, it is also extended for ALL the countries as it needs to be applied uniformly. Thanks.

      • Manoj says:

        If India hasn’t signed the treaty then how can they start implementing FATCA? Parliament has to sign it into law. I think banks are registered but actual implementation has not started till it becomes law. What do you think?

        • Manoj says:

          I think there is difference in implementing and exchanging information, you meant they have started implementation but exchange of information between the two govts can not start till it becomes law.

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            It is an agreement and not a law. The mechanism (registration of Indian financial institution as FFI with IRS and a section in Income Tax Act that require FFI to report certain information) is already in place. Thanks.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          FATCA is not a law but just an agreement to share information. India signs a lot of agreement and they don’t need to be passed by the parliament. The Union Cabinet of India has already approved signing of FATCA. Also, Income tax act has already changed a section relating to “Statement of Financial Transactions and Reportable Accounts” (previously Annual Information Report) indicating how it will be implemented. Also, 746 financial institutions – banks, mutual funds, insurance companies, etc. from India have already registered (and approved) with IRS as Foreign Financial Institutions as of April 27, 2015. So I think the mechanism is already in place. The waiting is only for actual signing of FATCA agreement and issue of official communication. Thanks.

  138. Mark says:

    Also do you know what is the agreement between India and US? Say I have $3k FD and I close it, does it get reported to US IRS? How about the checking and saving accounts? I know if the aggregate balance is over 50K then it becomes reportable event. What are some of the criterion for reportable events?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The agreement between India and USA would be same as any agreement between USA and any other country as FATCA is to be applied to all countries consistently and uniformly. The limit for reporting is $50,000. However, financial institution may report lower amount, which I doubt. Also, all accounts, whether savings, checking, FD, mutual fund,life insurance, etc. would be covered. The detailed guidelines and procedures are not final or known yet. Thanks.

      • Seeking Advice says:

        Hi Jigar,

        Thank you for the blog. I have a question regarding Life Insurance Corporation of India. I have a policy starting from 2011, for a term of 18 years with sum assured 5 lacs. I pay a yearly premium around 32000 starting from 2011. So by 2014 I paid around 1.3 lac. My question is when Life Insurance Corporation of India report under fatca, what will they report? For example, at the end of 2014, what is the balance that will be reported,
        1. the sum assured (that is Rs. 5lac) or
        2. the total of already paid premium(that is Rs. 1.3 lac) or
        3. the cash surrender value at the end of 2014 ?
        Thanks.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Only cash value (surrender value) of life insurance policy is to be reported on an annual basis. Thanks.

  139. Mark says:

    Do you have to report Life Insurance Policy even if it is term life Insurance? And what would you report ? the Maturity Amount?

    Was this a requirement earlier with FD22 form it is requirement after they have started FATCA?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Only life insurance that have cash value needs to be reported. The term life insurance does not have any cash value so not required to be reported. In Term life policy, maturity is only on death of person and is given to the relative, which is exempt from tax. Thanks.

      • jaggu says:

        How about money back LIC policies where you pay premium, after 5 yrs, you get some amount back, I believe maturity is upon death.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          If any policy has a surrender value, it would be included. As money back policies has cash value (money back) , it would need to be reported. Thanks.

  140. Rahul says:

    Sir, assume this scenario with OVDP process. What could happen if one enrolls in OVDP program, gets pre-clearance and also gets preliminarily accepted, all bank statements,documents,OVDI package,etc submitted to IRS and waiting on them to look into the case (or an agent to get assigned), but however in the meanwhile, due to FATCA, the banks/RBI started sharing all US persons’ account info to IRS (and IRS starts having info of ALL NRI people’s foreign accounts at its disposal). Would this result in the person becoming ineligible for OVDI and all his current OVDI process getting voided? Or would the penalty now become 50%? Please advise. Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I don’ think so but I would suggest you contact your CPA for the same. Thanks.

  141. Vijay says:

    Sir,
    I am grateful for your informative article.

    I have a question regarding my tax situation dating back to 2011. I traveled to US on a work visa on 15th November 2011 and stayed in US through the year. From January 1st 2011 till my travel to US, I was in India.

    I finished filing my taxes for 2011 in 2012. Since I was in the US only for 45 days during 2011, was FBAR applicable to me at that time?

    Thanks
    Vijay

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The question is “Are you a resident of USA”. If yes, it will apply. If not, it may not. I think it may not apply but suggest to consult a CPA. Thanks.

  142. Sam says:

    I have question about fbar and fatca-
    Since Indian banks will only report account balance post June 2014, and the time to file fbar for 2014 is upto June 30 2015, if one has accounts in India for number years where the aggregat amount at end of 2014 is less than $40K, if they file fbar for 2014 without filing for previous years or amending returns for past years or going in to OVDP what are the chances of being questioned about years prior to 2014 ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would say the chances would be higher if you have not transferred funds from USA in 2014. As per FATCA, the reporting would for balance over $50,000. Please consult your CPA. Thanks.

  143. Joy says:

    Hello Sir,

    Thank you so much for such a great posts. I have been searching answers for this . It would be of great help if you can throw some light on the following questions:
    1. My husband is on H1 and has been in US since 2013. He had few investments made while in India.Does he still have to declare his ppf and other FD accounts in India?
    2. I am on dependent visa and not working in US. I was working in India before moving to US. I had made a few investments in PPF,MF, FD and ULIP while I was in India. I received some money from my employer after I quit work and moved to US in my Indian account. I invested that in MF and FD. Should I declare all my investments as well? I have not received any capital gain from any of these yet.
    3. We haven’t opened an NRE account. But planning to open a NRE FD account. For eg, if we are planning to invest in a FD for two years, should we declare the interest after we receive it or while opening the NRE FD . We are planning to maintain less than 10k in NRE account. Should we still declare it?
    4. We are not planning to apply for Citizenship or GC . We are planning to return. So does all this apply for us too?
    5. If we have to declare, do we have to declare only when we have a certain amount invested in these schemes or do we have to declare it all immaterial of the amount. For eg, even if I have Rs.5000 in my Indian Bank saving account.
    6. Should we declare rents from Indian property? Even if the rent is only Rs. 50,000 a year?
    7. Should we declare ppf and other long term FD for 15 and 10 years respectively. Even if we haven’t taken any interest out of it because of the lock in period. In that case how will the tax be calculated in US?
    Thank you so much.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes. I would think so.
      2. Yes.
      3. $10k limit is all your financial accounts including resident, NRO, NRE, insurance, FD, ULIP, MF, etc.
      4. Citizenship has nothing to do with the requirement. The requirement is for “Residents” as per IRS (where you stay). As you are on H1B, file 1040, you are considered a resident of USA.
      5. ALL accounts
      6. Yes, all income to be reported even Rs. 50
      7. It is your decision to take interest on maturity. Interest accrue daily but you chose to receive on maturity. The interest for the year to be calculated and added to your US income on annual basis.

      I would suggest you to consult your CPA or experienced CPA for the same. Thanks.

  144. Devjani Sengupta says:

    My mum has and NRO and an NRE account to which I became a joint holder after my father died. I do not make any transactions as for all practical purposes the money belongs to my mum. Do I report this in my US tax, FBAR, FATCA just like my normal bank accounts. My mum already pays indian tax on them and claims them in her US Tax .

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you are a joint holder of the account, you would need to report all the accounts and pay tax. I would suggest you to remove your name and just became a nominee to avoid the hassle. I would suggest you to transfer all NRO funds to NRE to save Indian tax as there is no tax on NRE account. Thanks.

  145. Sailaja says:

    sir,
    whether income from house property to non resident of india should report on Form 8938. and whats the difference between FBAR and Form 8938.
    Thank you

  146. Mohan says:

    Thanks so much for this article! I had a quick question:

    I’m a US resident. I didn’t know about FBAR before 2011 and didn’t file them. I’ve been doing so since 2011. With FATCA coming in, will Indian banks need to report my accounts held in India before 2011 too? Or just accounts that are currently held?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The reporting will be as of June 30, 2014 and thereafter from July 1, 2014. Thanks.

  147. PK says:

    I earned 1 lakh interest in banks each of the years 2011, 2012, and 2013 In India
    Banks deducted 10% TDS each year.
    Until now I haven’t filed income tax returns in India to get tax refund. And I also haven’t show this income in my US tax returns.

    1) So am I supposed to amend my US income tax returns for each of these years and declare income of 1 lakh INR ( converted in $) and then claim foreign tax credit of INR 10K ( converted in dollars ) . Also when I am amending say 2011 US tax return with an additional 1 Lakh = ~1650$ , that makes me liable for a 30% tax( $560 ) – INR 10K ($160) = $400. Am I also required to calculate interest on this $400 which I did not pay originally in 2011 returns ?

    2) Or will it be correct if I file my pending Indian income tax returns this year , Apr 2014 , and then next year in the US FY 2015 returns I declare all the income together( 3 lakhs) and TDS together ( 30K INR of foreign tax credit ) .

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You are required to re-designate your accounts from Resident to NRO. TDS @ 30.9% will apply on the interest on NRO deposits. You are also required to report the interest income to IRS.
      2. You need to amend respective US tax return and file FBAR or other compliance. I suggest you consult your CPA about reporting of Income. Thanks.

  148. Kab says:

    Jigar Ji,

    Excellent article. I have been filing my FBAR for a few years. However, it came to my knowledge that I have accounts (I thought were no longer active) that have not been reported on FBAR. What are my options? The accounts have nominal value in them i.e less than $800 combined. Should I file an amendment to FBAR and disclose the accounts in previously unreported years.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would suggest you to close the account. However, please consult your CPA. Thanks.

  149. Misc says:

    Dear Sir,

    Thank you for this wonderful service. I have some questions that I am hoping that you will help me with.

    I have never had a GC or been a U.S. Citizen. I used to be on H1b from 2002 to 2005, and then again for a year in 2009. I relocated permanently to India in late 2009 and have no filed a tax return in the US from 2010 onwards as I wasn’t living in the US, had no income there.

    Does FATCA and FBAR apply to me?

    Thank you very much for your help in clarifying this matter.

    Misc

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      FATCA and FBAR only applies to US residents. As you do not have GC or US citizenship and you have not living in USA since 2009, you are not considered a US resident and these requirements do not apply to you. Thanks.

  150. ArunJS says:

    Dear Mr. Patel,
    Thank you very much for such an informative blog and deliberately answering all the questions.

    I have two NRE savings accounts in ICICI bank in India since 2000. I opened another NRE savings account in HSBC in India in 2007. Together in all accounts in 2014, I had balance between $10K -$11K and received interest of about $370. My wife also has two NRE accounts since 2001 but she never had total balance in all of her accounts over $5K. She had an interest of $45.

    We have been filing taxes as “married and jointly” since 2000 and never filed FBAR or FATCA 8938 because we never had total assets over $50K also not reported interest income because it was less than $100 in previous years.

    Three questions:
    1. Since I had assets over $10K in my ICICI accounts so I have to eFile FBAR this year and report all three NRE accounts? Honestly, I was eFiling taxes via HR Block online and not aware of FBAR (only thing we knew about Form FATCA 8938). How to find out about penalties?
    2. My wife does not have to eFile FBAR because she never had or have assets more than $10K?
    3. I had interest income from ICICI bank $370 so I should report it my taxes this year? My wife had only $45 interest, is that also need to be included?

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. If your account balance is not more than $10,000 there is no requirement to file FBAR so don’t worry about the penalty. As your balane is more than $10,000 in 2014, you would file FBAR for that year only. You start reporting your income in yor 1040 from this year.
      2. Yes, if assets not more than $10,000, your wife wouldn’t have to report FBAR. However, if she is a joint holder in your accounts and even as a joint holder, if her balance is more than $10,000, she would also need to file FBAR.
      3. Yes. Thanks.

  151. Ramesh Sharma says:

    Hi Jigar,

    I have few basic questions on FBAR and FATCA as below :
    1. Considering I have 2 accounts which have $10k maximum value(combined) at any point of time, which I transfer to and fro between the accounts. Do we need to show 2 accounts with maximum value as 10k or show only one account, since maximum value in both accounts was 10k at any point of time.
    2. I have a demat account, how should I show the maximum value within a year for that account ?
    3. I am married and file taxes jointly with my wife. Where do I mention that in FBAR. It just says individual while filling the form.
    4. Since, I am filing taxes jointly with my wife(she does not work) does the maximum account value for filing FATCA is still $50,000 or is it something else?

    Is there any way we can talk on this . Please let me know. Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes. both accounts with maximum balance in respective accounts.
      2. If you can’t determine, use year-end December 31 amount as maximum amount.
      3. Filing taxes jointly is not to be mentioned in FBAR. For jointly filing FBAR, certain conditions needs to be fulfilled. If not, you would file FBAR separately. If an account is held jointly and if you file separately, the account is to be added in both of your FBARs.
      4. Form 8938 (FATCA) limit for married filing jointly is $100,000.
      5. The ‘Contact Us’ page includes our contact details. Thanks.

  152. mahesh says:

    Dear sir,
    I have salary earned in US where federal tax, Social security tax and medicare tax is already levied in US. I was in US for 3 months and returned to india. while filing tax returns in india, can I get tax exemption for tax paid in US along with SSN and Medicare tax?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would only get tax credit for your federal tax. SSN and Medicare are not taxes. Thanks.

  153. Sriharsha says:

    Hello,
    I have a question about investing in mutual funds – SIP plan in India. I was told that I would not need to pay any taxes in India on those returns. But , do I have to pay taxes on those returns when I try to get that money back to the US ?
    Thanks,
    Sriharsha

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Only 2 mutual funds are accepting investments from US residents. The long term capital gain on equity based mutual funds is exempt. Any short term gain or gain on sale of debt based mutual fund will be taxable. Your MF investments in India are considered as PFIC and you would have to report income based on December 31 valuation and pay tax on the unrealized gain in the USA. The investment and gain is to be calculated in USD based on currency rates declared by the Department of Treasury, USA. Thanks.

  154. P. Menon says:

    Hi, Jigar Ji,

    Many thanks for your highly informative blog on the subject of Fatca.
    News reports indicate that the Indian Govt has recently approved Fatca IGA signing with the U.S.
    In this context, is it anticipated to have any likely revisions to be included for the timelines of implementation such as for due diligence and reporting schedules that may have to coincide with India’s Apr-Mar FY ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, the Cabinet has approved signing of FATCA in March 2015. However, I think the effective date would be the same i.e. July 1, 2014. As FATCA is to be applied consistently by ALL the countires in the world and as India already agreed substantively last year, I do not anticipate any revisions in the timeline. However, you never know. Thanks.

  155. priyesh says:

    Hello…Sir. I went to usa on student visa on 2001 and then came back in 2003 in india..During that time I had opened account with brokerage firm with 90000$. Do I have to report here or not and if not than what are chances that it will be reported in income tax authority by Fatca signing in September ..tks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you are an Indian resident, you would need to disclose your brokerage account as Foreign Asset in your income tax return. Also, as you are an ordinary resident, your global income would be taxable in India. If you have paid any taxes in USA, you may also claim the credit for taxes paid in USA in your Indian income tax return. Thanks.

  156. robert says:

    Thank you so much for your blog. I did not realize this reporting requirements till now.

    I did not realize my Mutual fund account had crossed the 50K$ limit because I had put in mutual funds that did really well. This happened in late 2014. I also have a NRE account ~25K$.

    a) Since banks are required to comply by FATCA by 2017 (I think), if I liquidate all my accounts will the bank still report to IRS.
    b) The mutual fund account doesn’t earn any interest. Its all capital gains. Maybe they give out dividends but I let it just re-invest in the MF. If I don’t earn any money on that am I still liable for penalities? I understand that I should have paid money on the NRE accounts but why mutual fund?

    Thanks so much

    • robert says:

      Still modification. My MF account is actually 47K US$. However the combination of MF account and NRE cash account is > 50K $

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        As total investments is over $50,000, if you file your tax return as single, you would also need to file form 8938 to IRS. Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      a. The FATCA compliance start from July 1, 2014. The banks/financial institutions have until 2016 to report your accounts/investments.
      b. Dividends are taxable in USA. you would need to include your dividend income in US and pay tax. When you select dividend or dividend re-investment option, you pay tax twice – Dividend Distribution Tax (paid by companies, bourne by investors) in India and tax on dividend income in USA. you may end up paying more thn 50-60% of gross dividend as taxes.
      c. Mutual funds are considered as PFIC and you would need to file Form 8621 and pay tax on the unrealized gain based on value of year ends (Dec. 31). Thanks.

      • averma says:

        Is below $25K MF amount also requires form 8621 ? I read this in one of the IRS pdf’s “an exception has been granted by the IRS from reporting when PFIC stock that is worth under $25,000 ($50,000 for joint returns) has been incorporated. “

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          You file 8621 for selecting the way how you want your income/taxes in PFIC to be calculated. MTM is the easiest/cheapest way to pay tax. If you do not file/elect, it will be taxed as per default method and you would have to pay more tax. I would suggest you to contact your CPA before making any decision. Thanks.

  157. Raj says:

    Hello Mr. Jigar Patel,

    My mother-in-law became a citizen last October. She has savings and fixed deposits in rupees in banks in India totalling about $80,000. Do I need to file FBAR for her? Also do I need to pay tax on the earnings on interest in the US when I file her taxes for 2014 in US. Please let me know.

    Thanks.

    Raj

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes. There is no tax on FBAR. If you do not file FBAR, penalty is huge. As she is a US resident, her global income would be taxable so I would sugges to include the interest income in her US tax return. Also, if she is filing single, she may need to file form 8938 as her foreign account balance is more than $50,000. Thanks.

  158. Sunildutt Madav says:

    Dear Jigar ,
    Once again i am looking fro your professional expertise in the below query .

    Query : one of My Client Indian Citizen and resident (50 years old) , was working for IBM in the US for over 6 years. He has got a pension fund from IBM and will be active when, he will about 60 years old. There is another pension amount too from IBM which he plan to activate later (~at age of 60).

    As any pension fund derived from Employer is Taxable , as the same will be taxable t him . Want to understand the benefit under DTAA if any , how he can plan to receive and pay the tax . Is any exemption available , dose he should file any global return ?

    Regards

    Sunildutt

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would need to understand the pension schemes and DTAA for determining the taxation. For determining if global income is taxable, please determine your client’s residential status whether Not Ordinary Resident or Ordinary resident. Global income is taxable for Ordinary residents. Thanks.

  159. Leena says:

    Amazing article. I really appreciate.
    I am USA citizen with a NRO account with FD in India.
    USA tax year is Jan-Dec but India Tax year is April-March.
    1. In India FD interest has TDS deduction when during a year and it becomes difficult to figure out the timing to file USA taxes. How does it need to handled when filing USA taxes
    2. Also if I need to take deduction in USA for Tax paid in Indian , again the tax year timing causes issues. How to handle that.

    Thank you again

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You may ask your bank to issue you an interest certificate for the calender year. Also, as the TDS certificates are issued quarterly so you would need to manually calculate the interest and TDS for the calender year. Thanks.

  160. Jay says:

    Hi Jigar,

    Your blog is really informative and very helpful. Thanks so much for providing this service for NRI community. I have a question regarding capital gain tax. I have sold my stocks in India and paid the tax, how to claim the tax credit here in the US for the same?

    For example if I had made 2 Lakh short term capital gain & 1 lakh long term capital gain, I would be paying 15% tax in India on short term capital gain, i.e. Rs30K and no tax paid on long term capital gain as it is exempted.

    Now when I file taxes in the US, here the tax for long term capital gain is 15%. Since I had not made any tax payments is India for long term gains , I will have to pay 15% on 1 Lakh long term capital gain.

    On short term capital gain, the tax in the US is 28% and since I have already paid 15% tax in India, I believe here in US I need to pay only 13% (28-15)? Is that correct?

    Also please clarify if we can get tax credit in USA on advances tax paid in India? Since the current FY is not completed in India, I was planning to make advance tax payment till Dec quarter and take the tax credit here in US. Please suggest if this is the right approach. Thanks in advance for your help.

    Regards,
    Jay

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Your understanding about the taxes and credit is correct. Also, You would need to re-calculate the gain and taxes for the calender year. You would not get any credit for advance tax. However, being an NRI, TDS would have been deducted from your income. You may use the TDS certificate as a proof for paying taxes in India and claim rebate. Thanks.

      • Jay says:

        Hi Jigar,

        Thanks so much for clarifying. I’m in US on H1B visa since 2012, as I was not sure of the duration of my assignment in US, I continued my resident accounts (both bank & demat) in India and hence do not have TDS certificates. Is there any other way to claim tax rebate when I file tax in US? Please help. Thank you.

        Regards,
        Jay

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Once you leave for employment, you are an NRI under FEMA and you would need to change your status from resident to NRI with banks, Demat and other financial institutions. Anyway, if there is no TDS, you would have filed your tax return in India. If you paid any tax, you may use that for your foreign tax credit. If you did not pay any tax i.e. income below basic exemption limit, you can not claim any tax credit as you have not paid any tax in India. Thanks.

  161. Raj says:

    Dear Jigar,

    If one’s Employees Provident Fund (EPF) account be reported, should it be reported as “Other” in the account type and explain it as “Retirement” or “Pension”?

    What address should be given for this account? Should it be the head office of EPFO, which is in New Delhi?

    Thanks!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would think EPF as retirement account and not pension account. For address, please contact your employer’s HR department. Thanks.

  162. Tandhiri says:

    Hi. This blog is A-M-A-Z-I-N-G. You are doing such a great service to NRI community. Thanks a lot for your time.

    We spoke to you a few days ago. Just a quick question:
    Our balance is $20-25K during 2009-14. It is UNDER the threshold of $50K.
    Hence, it may not be reported under FATCA.

    Is there even a slight chance that the ‘less than $50K highest balance’ information may be transmitted to IRS; and IRS subsequently contacts us about FBAR violations (no 8938 reporting requirements).

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      It is voluntary on the financial institution to provide more info than required. If your bank or income tax department in India or RBI so chooses to report, it will be transmitted. I don’t think so but there is no guarantee. Thanks.

  163. Karthi says:

    Hi Jigar,

    I have LIC policy of 75 lks and 50lks for both my kids (paying in INR every yr). I’m a green card holder. Do I need to declare these policies? Do I need to pay additional taxes when it matures? Will I be able to get money in USD without trouble? (LIC says that they will deposit in any country accout when it matures). Or would you adivce to move my LIC policy to Gulf coutries policy which pays back in USD? Please advice. Thanks in advance.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Cash value of insurance policies needs to be included and reported. The taxability would depend on the policy and tax laws. Moving LIC policy to Gulf country or receipt in USD may not change the taxability of the policy as per IRS laws. Thanks.

  164. Sabby says:

    Hi Jigar,

    Nice article and thank you for replying all these follow-up queries.

    I have a specific question.

    I came to US in 2012. I haven’t filed FBAR then for 2012 and for 2013. Now I am planning to go for the streamline offshore process to comply.

    I have couple of resident bank accounts in India as joint account with my parents. When we calculate the 5% penalty computation, the entire balance is considered or only my share of the total balance is considered? I have $20K in the account and the account is jointly owned by myself, my father and my mother. Should I pay the 5% penalty of $6.6K ($20k/3) or on the $20k itself. I am the primary holder of the account (first name is mine).

    regards,
    Sabby

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I suggest you not to do it yourself and hire an experienced CPA having experience of streamlined process before making any decision. Thanks.

  165. suresh says:

    i am US residence and have INR account in indian bank, for the calender year 2014, if i had $51000.00 at any point of time but at the end of the 2014 if i have only $9000.00, will my account be reported to IRS under FATCA provision.

    Thank You

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I think the account would be reported if your balance was over $50,000 as of June 30, 2014 as pre-existing account/balance. However, India has not signed the FATCA agreement so this is based on the FATCA agreement signed by USA with other countries as FATCA is to be applied consistently to all countries. Thanks.

  166. Satya says:

    Great article & following Q&A – would help if you could write an article on what IT professionals transferring to US on H1-b, L1 etc. should keep in mind when planning their transfer.

    My question which I am hoping you can answer is
    1. I will move to the US on L1 visa and also to US payrolls of my company from April 1, 2015 – would income (salary, capital gain, rent) earned by me from Jan-Mar 2015 in India become taxable in the US for the 2015 year?
    2. As my transfer is not for a definite period, if I close my EPF account which are tax free in India as I have been with my org for >5 yrs, will the proceeds to my salary account be treated as taxable income in India? If yes, from what point?
    3. I have some systematic transfer plans into Equity MFs from liquid funds in India – these were started by me as a Indian tax payer – when I become a “US person” should I inform the MF houses to discontinue these STPs or can they continue?
    4. I know NRIs cannot open PPF accounts – but can I open one while I am an Indian resident and continue to contribute it after being classified as NRI? Is interest earned by the PPF account taxable on yearly basis in the US?

    Request your input on these queries.

    Thank you
    Satya

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes. However, you will be able to claim the foreign tax credit on the tax you paid in India.
      2. Only the interest portion in USA.
      3. You need to change your KYC. Also, you would need to report your assets to IRS, file Form 8621 and report income and pay tax on unrealized income for notional gain as on Dec, 31 of every year.
      4. Yes, interest would be taxable in USA. I would suggest to invest through NRE account than to open PPF as interest is higher, interest on both tax free in India and more liquidity or use of NRE funds. Thanks.

  167. Mallikarjun ch says:

    Hello,
    I have been staying in US on H1b for the past 2 years and have been filing tax returns and FBAR every years. However, I forgot to report interest earned on my NRE FD accounts. I am bit panic now that IRS finds it if my FBAR gets audited. I need your suggestion on what could be done in order to avoid the risk of penalties.

    Thanks,
    Mallik

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please revise your income tax returns for last 2 years and pay tax/interest/penalty, which won’t be very high as you have filed FBARs. The penalties for non-filing of FBARs is severe but it does not apply to you. Thanks.

  168. raj says:

    Hi Jigar ji,

    Is it ok to have a property in India with rent being taken in a relative’s name and therefor not paying tax on it in US?

    For rental income, are there no deductions given in US laws. afterall any income would have a cost associated with it. The interest on housing loan is that cost.
    Thanks,
    rajesh

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. It is not okay as your intention is not to pay tax in India or in USA or comply with RBI/Income Tax/IRS/Treasury department rules and requirements.
      2. If you have taken a housing loan, as per FEMA, ALL of your rent income should go to service the housing debt, even if it is higher than your EMI.
      3. As you are an NRI, the person who is paying you rent needs to deduct TDS @ 30.9% on the rent any pay you only after tax amount to you.
      4. While you need to report your rent income in USA, you may claim the TDS/tax paid in India as credit in your US tax return.
      5. You may have to report your assets/bank account in FBAR or Form 8938 if it is over the threshold as specified by IRS or Department of Treasury. Thanks.

  169. Rao says:

    Hi Naresh,
    can you please throw some light on capital gains declaration to IRS.
    How do capital gain calculation works for NRIs?
    I live in USA, own a property in India before coming to USA. Sold property after 5 years. I pay capital gains taxes on the property after deducting depreciation etc. to Indian IT department.
    How the capital gains is calculated for reporting to IRS ?.. How do sale – purchase price is calculated for IRS ? can I take depreciation credit for the property in India ?
    Can I take credit for the tax paid to Indian IT ?

    I bet lot of NRIs falls in this kind of situation.

    Also I have question about holding Cash.
    Neither 8938 nor FBAR forms does not enforces reporting of Cash held overseas. Where else we need to report the cash held in our house with parents in India ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would need to convert your cost and sale price in USD and add to your other income and calculate the tax on your global as if it were a US property. From the total tax payable, you may deduct the tax you paid in India as foreign tax credit in your 1040 and reduce your tax liability. Yes, there is no reporting of physical cash, however, you would need to prove the source of the cash in case of any inquiry by the income tax department. Thanks.

  170. Priya says:

    Hi Jigar,

    1) I will be filing Form 8938 & FBAR for 2014. This will be my first year. Can I report by customer ID in both Forms since there are numerous FD’s?
    2) Do I have to report both ICICI Demat & ICICI Online Share Trading Account or only the shares? How do I find out the maximum account value of shares? I sold all shares in March 2014 & closed my Demat & Online Share Trading Account
    3) Do I have to report the Debit Cards and Credit Card that I held. Credit Card was linked to my FDs?

    Regards,

    Priya

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes
      2. Trading account would not have any balance as you would use it just to settle the transactions so it is always net 0. The investments are held in Demat account. If trading account is not net 0, you may have to report.
      3. Credit card is not an account but a facility to use the account.
      Thanks.

    • Neeraj says:

      So Priya/ Jigar sir

      How do we report ?

      I have 10 FD’s and 1 saving account in a bank…

      Do I report 1 customer id for all 11 (FD and saving account) ?

      Also How do I calculate maximum balance? From monthly statements suming the balances of all 11 accounts and grabbing a monthly statement which gives maximum of all 11 ..

      OR I have 2 declare 2 accounts here ?
      1 with customer ID for all FD’s
      and 1 with a saving account number ?

      This would be my 1st time FBAR. Any help would be highly appreciated. Thanks.

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        1. I would think the customer ID on FDs and savings account would be the same.
        2. You have two options to report as follows:
        A. You may report by account number: You would report 11 accounts separately and you would individually calculate the highest balance for respective account number.
        B. You may report by Customer ID: You would add all the account balance and report highest balance in aggregate. Thanks.

        • Neeraj says:

          Thanks a lot Sir ..

          • pandit says:

            Hello ,

            I have couple of questions for FBAR and FATCA :

            1) Does home loan account with indian bank needs to be declared on any of these forms? I doubt as we dont earn anything on that but infact we pay interest on it.

            2) Is gold in the indian bank locker reportable ? I believe it is directly owned although it is kept in the bank. Bank doesnt insure it anyway?
            ( I read on the IRS website that safety deposit box and jewelry is not reportable being non financial account and precious metal asset but just want to make sure from your experience in this domain)

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            1. Loan is not an asset so not required.
            2. Only Financial accounts and assets are to be reported. Gold is not required to be reported. Thanks.

  171. Sudesh says:

    I am an NRI based out of Dubai and will be transferred by my company on an L1-A visa to our US office in May 2015. My NRE savings to date are invested in NRE FDs, mutual funds in INR and USD, physical gold and some real estate in India.

    I do not pay any taxes now in India, except maybe what is deducted as TDS directly, so am quite concerned on the move to US as I understand as a U.S. resident, all my global income is liable to be taxed under U.S. laws.

    Some queries as below
    1. If I am moving to the U.S. in May 2015, at what point in time do I have to declare all my accounts, investments and sources of income to the IRS?
    2. If I liquidated a portion of these investments today and invested in some Indian real estate, do I have to report it in future in the US if I do not earn any rental income on the same?
    3. Would it make sense to use up my NRE savings to buy a house without loan in the US on arrival or take a loan for funding this purchase?
    4. I also have multiple NRE accounts with various banks over the years, and most are still active, so is it advisable to consolidate this into just 1 or 2 accounts?

    Really appreciate your kind advise on the above.

    DS

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As your stay in USA would be more than 182 days, you would start reporting all your income and/or accounts from 2015.
      2. Any and all income needs to be reported and tax to be paid. If you keep investments, pay tax on interest or capital gain; if buy property, pay tax on rent.
      3. It would depend on what you plan to do or goals in life. Never make any life decision based solely on compliance requirements.
      4. While I like to have minimum number of accounts; for compliance or taxation purpose, it does not matter, except that you would have multiple account numbers and entries; the total amount would still be the same. Thanks.

      • Sudesh says:

        Dear Jigarji,

        Thanks for your immediate reply and do appreciate the advise as provided on my earlier mail.

        I had one more query on carrying personal gold jewelry or gold bullion with us when we arrive in the US as a family, on the L1/L2 visa later this year – is there any restriction / limit / reporting for physical gold that can be brought by individuals and their families into the US? Will I have to pay taxes or customs duties on arrival?

        Similarly for USD transfer from my USD NRE accounts in Dubai to the salary account I would need to open in the US, is there any restriction on incoming funds transfer?

        Thanks & Best Regards,

        DS

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          I don’t think if there is any restrictions on gold jewellery. However, I would suggest to check US Customs Department website for details. Also, as long as you can prove your source of funds, there is no restrictions on wire transfer out of NRE account to USA. Thanks.

  172. Sundar says:

    Dear Shri Patel,
    I never had $10000 in my Indian NRE accounts until Nov-2014. So I never had to report either FBAR or 8938 so far. We are US citizens and are planning to India for good around June-2015. Nov-2014 my wife transferred $70K to her NRE account.
    (1) I am NOT joint holder of her account. But we are filing jointly taxes. I guess therefore 8938 Joint filing limits $100K / $150K applies to us and therefore we need not report 8938 correct?
    (2) However, my wife need to report FBAR (because of $10K limit) – by June-2015 – correct?
    and we need to report nothing along with our 1040 – correct?
    (3) Once we return to India and earn there – Should we continue to file 8938 and/or FBAR?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      For 2014, you would need to file FBAR. Yes, $100K limit will apply for Form 8938. But you still have to report any interest income in your tax return. As you are a US citizen, you would still need to report FBAR and/or 8938, if applicable, even after your return to India. Thanks.

  173. raj says:

    Hi Jigar,
    Thanks for all the good work. I plan to relocate to USA shortly and have some queries:
    1. Is the insurance premium paid in India treated differently and are there any deductions on it? Same for Mutual Funds.
    2. How are the investments made in equities directly i.e. having stocks in DP account treated by IRS for taxation and reporting?
    3. IS there a deduction on home loans to reduce net rental income from house property?
    4. What are the drawbacks of keeping cash in a bank account and reporting it to IRS (if the interest earned is very low)?
    5. Is the income earned in a foreign country for a say 3 months taxed in USA if the person relocated in say, April?
    6. A typical NRI would have insurance, property, housing loans, stock accounts etc. How can he prepare for FATCA and FBAR before leaving for USA?
    7. Is the Exit tax applicable only after 8 years? Any implications if someone leaves US in less than 8 years (green card holder)?
    Thanks for your help.
    Raj

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. No deduction for insurance premium paid in India for US taxes.
      2. Yes, it is considered a Foreign Financial Account and you would need to report to IRS and Department of Treasury.
      3. Only in India
      4. No. Only, you would have to pay tax on the interest income in USA
      5. Yes as the residency is for a year. USA follows calender year so you would have to report whole year’s income.
      6. If possible gift to your relatives before leaving. However, seek professional help for the same to avoid any legal complications.
      7. Exit Tax is on US citizenship. So if you leave as greencard holder, I don’t think you are covered. However, it may change in future. Thanks.

  174. Naresh says:

    hello sir,

    I have a NRE account since 2012 over threshold amount but never filed an fbar or 8938. I am planning to file delinquent fbar from 2012. also if I close the account in march 2015 and transfer the money in my relatives account in india, will it have any complications for me. can the IRS ask me where the money went if I closed the account. am I supposed to transfer the money back to USA.
    I appreciate your kind guidance.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I suggest you contact your CPA and take professional advise. If you are planning to file delinquent forms and pay tax, there is no need to transfer money and close accounts. Else, while you may transfer funds and close account, you may be taking a risk of IRS not finding out your accounts. You need to plan properly after evaluating all available options. Thanks.

  175. Ramesh K says:

    Hello,

    Thanks for this detailed information. I am in the U.S since last 3 years. A PPF account was opened in my name by my father much before when I was in India and to which he was contributing. This was closed last year and the amount withdrawn. Is the interest earned during the period I was resident in the U.S taxable in the U.S.?

    For considering the interest, do I take the interest amount credited each year for the last 3 years together and add that in my U.S returns in the absence of 1099-INT.

    Does the maturity amount of PPF have to be shown in Fincen 114 under the PPF account or under the NRO account in which it was deposited as it is the same amount

    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I suggest you to contact your CPA for declaring and/or filing previous years returns or forms. The forms and returns are to be filed every year for annual reporting. You may not combine it in one year. If amount matured in 2014 and transferred to NRO account, you would need to report both accounts in Fincen 114 – FBAR and Form 8938. Thanks.

  176. Priya says:

    Hi Jigar,

    If there are 25 Fds in one customer id which are renewed during the year, should we report the maturity value of the closed fds and add the highest balance of the renewed fds to it?

    Regards,

    Priya

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would follow the reporting consistently. As Foreign financial accounts need to be reported, you may choose the customer ID as an identifying number and report all the balance information in aggregate. However, if you have reported the investments/FDs individually in previous years, you may want to continue the same as you would have reported by the FD number in your last year’s forms. If the account was not closed last year, the system may flag that FD number as not being reported in current year. And, in case of an inquiry, you may need to follow up, reply and explain the same to the IRS. Thanks.

      • Priya says:

        Hi Jigar,

        I became NRI in 2014. I will be reporting by customer ID since there are numerous fds. So if my Fds have matured in June 2014 and I have renewed them in the same month, I will have to add the maturity value of closed fds in June and the balance of renewed fds as on December 2014 to report the maximum account value. Am I correct? Kindly note the renewed fds will have new account numbers.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          As this is your first year, you may report by your customer ID. Please contact your CPA for any detailed clarifications. Thanks.

    • Amit says:

      Jigar:
      Thanks for the information. Couple questions.
      Do i need to file fbar for a 50k usd ac for fdr e or s with my mother as primary?
      Also, i have never had a pan no as this a/c was opened before pans came into being – do i need to create one to efile past FBARs?
      Interest income on e or s belongs to primary holder, so should not have impacted my tax returns in us – is that correct?
      Thanks – amit

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        As you are joint holder, you would need to include it in the FBAR. The limit for FBAR is $10,000. The limit for Form 8938 is $50,000. Also, PAN is not required for FBAR. Thanks.

  177. Hari Iddamsetty says:

    Hello,

    Thanks for the detailed information. I am green card holder since 2011 and I moved to US back in 2002. Since then I haven’t acquired any property or opened any account in my name in India. However prior to 2002 my mom did have my name as a joint account holder in SBI. There is nothing more than Rs.3000/- in this account as of date. Other than this my mother purchased a 1 acre farm land under my name in 2005 in India. In 2008 I purchased a insurance policy from LIC for a premium of Rs.24 lakhs for which I pay Rs,120,000 yearly. My mom also purchased a LIC policy ( Rs 11 lakhs) on my name and she pays Rs44,000 annually towards it from her savings.

    So far I havent declared any of these to the IRS while declaring my taxes. So which of these should I declare now. Please advise.
    a ) Should the 1 acre farm land be declared ?
    b) Should the SBI account be declared ?
    c) Should the 2 LIC policys ( totalling Rs 35 laks) be declared ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The foreign real estate property is not required to be reported in FBAR or 8938.
      2. Insurance policy with cash value needs to be reported if it is above the threshold of the respective requirements.
      3. When you calculate the threshold, you would also need to add the SBI balance. The reporting requirement is only if it is above the threshold.
      4. You are above the FBAR threshold of $10,000 and may be above the 8938 threshold – $50,000 for single and $100,000 for MFJ.
      5. If you have not declared the same, you may want to consider reporting and voluntary disclosing the accounts by paying penalty or redeeming and transferring the balance to your mother. Please contact your CPA. Thanks.

  178. N says:

    Jigar,

    Do you offer phone or in-person consultation? How does one go about setting that up?

    Thanks,
    N

  179. Dexter says:

    Dear Mr Jigar,

    Thanks for the useful information. Appreciate it.

    I wanted to get your opinion on whether you think resident bank accounts that one had before moving to US should be declared even if the legal name in US and the name on the bank accounts do not match (last name is not expanded in Indian account). These banks are not aware of the fact that I have moved to the US. My father is a joint account holder with me and transacts on my behalf.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would think all the bank accounts that you own or have signatory interest needs to be reported. If not, I would suggest you to close it or remove your name as a joint holder and become a nominee of the account. Thanks.

  180. Ramesh says:

    If a person is nominee for financial assets is it necessary to report under new requirement? Is it necessary to give foreign addresse in form 1040?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Nominee does not mean ownership so if you do not have any signatory authority, it is not required to be reported. Yes, if the account is with a foreign financial institution you need to give foreign address. Thanks.

  181. Venky says:

    Thanks Jigar for the information. I have closed all my NRE accounts in Govt banks as of 2013. I heard the cut-off is in July 2014.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The date for identifying and reporting pre-existing accounts is June 30, 2014, assuming India-US agreement is singed in the present form. Thanks.

  182. Nitin says:

    I have NRE and NRO accts totaling $24000 for the last 2-3 years.. I have never reported these as of now. I’m visiting India at the moment. What are my options? Should I close the accounts, file the related FBAR and FATCA forms and amend all previous returns? IF SO, what forms? How many returns do I amend?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You need to evaluate all your options, understand the pros and cons of each option and then make a decision. If you have not done, you may amend old forms, start reporting or close your accounts. Thanks.

  183. Priya says:

    Hi Jigar,

    1)For considering maximum account values should we consider the Jan-Dec period or as on June.
    2) Also If I am a nominee/2nd Holder (Former or Survivor Basis) to fixed deposits, do I have to report that?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Maximum balance is the highest balance during the reporting year e.g. 2014. June 30, is just the deadline for filing the form.
      2. All joint accounts are also required to be included. Thanks.

      • Priya says:

        Thanks jigar…..do I have to report the bank accounts where I am nominee…?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Nominee have no signature authority to transfer/withdraw funds and not required to be included. Thanks.

  184. Ashok says:

    Dear Mr Jigar:
    1) Would an Indian FI report an account above 50K if it has an Indian address, Indian phone number and PAN card, and no other US indicia?
    2) The due diligence is to be done for the balance on June 30, 2014. How about the balance after June 30, 2014? If the balance on June 30, 2014 is less than 50K, and the account is closed before March 31, 2015 – would it be reported if the balance between June 30, 2014 and March 31, 2015 was above 50K for a short period of time?

    In an earlier blog you wrote:
    Due Diligence for identifying Pre-existing Accounts:
    (a) Account balance or value upto $50,000 – Exempt unless FFI elects otherwise

    (b) Account balance or value between $50,000 and $1,000,000 – subject to only electronically searchable data that indicate US status of an account holder such as:
    (i) Identification of account holder as a US person
    (ii) US place of birth
    (iii) US address
    (iv) US telephone number
    (v) Transfer of funds to an account maintained in the US
    (vi) POA or signatory authority granted to a person with a U.S. address
    (vii) US “in-care-of” or “hold mail” address

    (c) Account balance or value more than $1million – review of electronic and non-electronic files e.g. inquiring account relationship manager.

    3) From this it appears that if there are no electronically verifiable US indicia in an account above 50K on June 30, 2014 – it should not be reportable. Could you please clarify?
    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The information / blog was written based on studying FATCA agreement with other countries. US-India FATCA agreement is not signed but I would assume it would include similar provisions/requirements. However, it may change.
      1. If your balance is between $50,000-$1 million as on June 30, 2014, and you do not have any US indicia, it may not be reported. However, if your bank relationship manager knows of your status, he may inform the bank and bank may report.
      2. for any account opened thereafter, I think every bank/financial institution specifically ask you to fill the details if you are a US resident before opening the account. Thanks.

  185. Randy says:

    Dear Mr Jigar:
    My mother had me as third joint holder after my father in one of her accounts for many many years way before I moved to the US. I never knew of the account and I never used it even once in my life. After reading your blog, I asked her to check if my name was on any joint account and even she didn’t remember but on checking she found my name as third joint holder. The balance on the account is less than $10,000 but she has wired money to me from this account in the past. Is this a problem? What should I do?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If the balance is less than $10,000, it is not required to be reported. If you are not operating the account, it is advisable to close/remove yourself from being a joint holder. Thanks.

  186. krishna says:

    I have closed all my NRI accounts as 2013. Will there be still a issue.

  187. arvind says:

    we are an Indian entity having only domestic sales and promoters are indian. do we still need to sign FATCA form w8

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I don’t think so. It is only for banks or financial institutions that maintains accounts or investments of US residents. Even if you export to US, I don’t think it applies to you. Thanks.

  188. Randy says:

    Dear Mr Jigar: If possible could you please clarify how due diligence is to be done in India:
    1) Will the FFI look at all accounts they have with $50,000 or more on or after June 30, 2014 and then determine from their database if these accounts have US indicia.
    2) Or, will the FFI then ask for new KYC information from these account holders that have more than $50,000?
    3) Or, will the FFI first look at accounts having US indicia and then look at the balance and report if greater than $50,000?
    Many thanks for the clarification. Thank you!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The detailed procedures or guidelines have not been issued so I won’t be able to say for sure. Thanks.

  189. TNRao says:

    Hello Sir
    Thank you for helping on FBAR. I got below questions.
    1> I have couple of ICICI bank accounts and one is used for sending money from USA to INDIA for a property loan EMI purpose. Another account is for DEMAT transactions and have stocks worth of Rs 6 lakhs in ICICI demat account. (stocks bought 5 years back and now the value is Rs 6 lakhs).
    I filed FBAR paper copy for the year 2011 with all these details once. I did not file after that that for the years 2012/13. Do I need to file the FBAR every year for the above?
    2> Do I need to include ICICI prudential insurance taken for my son (worth of Rs 1 lakh per year) in FBAR $10k limit?
    3> Also sending money to family members (parents and brother who reside in India) thru my ICICI account, are required to show in FBAR?
    4> Is the $10,000 limit is total transactions (in and out) per year or balance in accounts?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. FBAR is and annual requirement and needs to be filed by June 30 of next year and no extensions.
      2. FBAR needs to include all your bank and investment account (including Demat) as well as cash value of YOUR insurance policy. If insurance policy / investment is in your son’s name and you are not a joint holder, it is your son’s asset/financial account.
      3. Sending money to your family members is a gift/loan. If your gift over gift tax limit, you need to report to IRS.
      4. Yes, $10,000 limit is for YOU. If you have 10 accounts with $1500 totalling $15000, all your 10 accounts need to be reported. Thanks.

  190. Randy says:

    Dear Mr Jigar:
    I shall be grateful if you could let me know if the following account would be reportable:
    a) No US indicia at all
    b) balance on June 30, 2014 less than $50,000
    c) balance in Jan to March 2015 more than $50,000 but less than $ 100,000
    d) account closed in April 2015
    Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If there is no US indicia, it may not be reported in your case. However, as the agreement is not yet signed and guidelines not issued, I may not be able to confirm or deny anything. Thanks.

  191. mo says:

    Jigar ji:
    Is the FBAR filing threshold doubled for married filing jointly, i.e., $20,000 as opposed to $10,000?
    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      FBAR requirement is per person. No double threshold for married filing jointly. Technically, they both own $20,000, i.e. more than 10,000. Please read the FBAR FAQs for details. Thanks.

  192. Shamin says:

    Hi Jigar,

    I’m a US citizen and my mother is resident in India. If I’m the 2nd holder (under ‘Anyone or Survivor’ holding status) on my mother’s mutual fund accounts in India, do I have to report these accounts in the US under FATCA? The 1st holder on these accounts is only my mother.

    Thanks very much.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you have a signature authority on the account, you need to report. Please check related FAQs and you would know. Thanks.

  193. Rajesh says:

    Hi Jigar,
    Thanks for sharing all this info. I am already an NRI but will be shifting to US in a few months and have some questions. Request your response.
    1. What steps can I take now if I have bank deposits outside India? Can I break them to below 50k?
    2. I include income from interest and house property (rent) in my Indian tax return but eventually the total income after deducting interest on housing loan is not in the tax limit. Would I then have to pay tax on the entire income at US tax rates despite DTAA?
    3. Would income on sale of immovable assets also need to be reported and will be taxed in US?
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The US requirement is not related to balances or deposits outside India but related to accounts or deposits outside USA.
      2. The tax exemption is as per the Indian laws. As a US resident, you are eligible for standard deduction and personal exemption. Any income more than that would be taxable. You would convert all your world income in USD and report all your income in USA and then pay tax accordingly. If you have paid taxes in India, you may get credit for the taxes paid.
      3. Yes. ALL your world income for a US resident is taxable in USA. Thanks.

  194. Alok says:

    I work in the usa and am currently on H1b visa. i pay state and federal taxes and file returns as mandated.
    I have parents in India and I occasionally send some money (1000-2000 usd) to them for support. Maximum I have sent in this calendar year is around 7000 usd
    This money is sent by bank transfer to father”s. bank account in a nationalised bank like SBI,PNB,BOI,etc
    What is my reporting obligation. and what is my parents reporting obligation?

    Will FATCA deter me from sending money or will there be tax implications to my parents?

    regards

    Alok

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Your reporting obligation is only if the value in YOUR account is more than $10,000. Also, as a US resident, you are allowed to give gift of up to $14,000 per year to any person during the calendar year. If you transfer $1,500 per month to your account and amount not withdrawn, you would have reporting obligation after the balance exceeds $10,000.
      2. As your parents are not “US resident”, they do not have any obligation. However, if they are filing tax return in India, it would be prudent to report/mention that he has received gift from their son during the year with amount. Thanks.
      3. FATCA does not deter anything. It only increase reporting and compliance with laws. Thanks.

  195. Milind Kulkarni says:

    Jigar,

    I am in US for last 3 years. Before that I was working in India. Few questions:
    1. When I discloses the assets/funds to IRS to comply with these laws, will these funds be taxes by IRS?
    2. Do I need to pay taxes in US for the funds saved in India by me for so many years i.e. till 2011? Those are post-tax funds and hence should not be taxed in US, right?

    Regards,
    Milind

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As a US resident, your worldwide income including any interest or capital gain income from India, is taxable in USA. So you should have disclosed this from the year you became US resident as per their income tax laws. Your immigration status and residential status are two separate requirement. Even if you are on H1B, or L1, you are a US resident as you live in USA for the whole year.
      2. There is no tax on income you earned while you were Indian resident. The tax is on income while you were US resident i.e. interest, capital gain or rent income during last 3 years. Thanks.

  196. P. Menon says:

    Hi Jigar,
    This blog of yours is a great contribution that is earning kudos from its NRI readers in USA for clarity and precision. Congratulations!
    My wife and I are GC holding nris residing in U.S for last 10 years. Prior to becoming u.s residents we had enrolled in an equity based growth MF of G.I.C India in 1994 – subscribing to two accounts in our joint names for Rs 3 lakha and 2 lakhs initial value. As this mutual fund was steadily losing value we did not pay any f/up attention on it for several years. In 2008 the fund was taken over by Canbank MF into one of its open ended equity diversified growth plans. It thereafter had remarkable gains in NAV resulting in crossing of the Fatca threshold on Jun 30,14 in combined value on aggregation of both our joint accounts. Please note that no divident was ever distributed and that we never did redeem fund units at any time. Also no reporting to IRS has been made.
    I am very concerned on how to presently deal with the above situation while Fatca is looming high. Any suggestion in this regard and also your valuable comments on the following will certainly be of great help:
    1. Whether proceeding with full redemption of both the accounts asap would be helpful in any way to minimize risk of Fatca reporting considering likely delays and various procedural choices that might be involved in the due diligence process?
    2. I presume once the accounts are redeemed that the gains are to be tax filed in u.s per the complex PFIC regime.
    3. In view of the long term lack in updating our accounts are presently not linked to any PAN or currently valid bank acct number. In this situation what could be the impact of adopting a ‘do nothing’ policy on fatca reporting?
    Thanking you for the service you are rendering to nri community in u.s, and
    With regards.
    P.Menon

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. FATCA is here to stay so with “do nothing”, you are not solving the problem but are postponing it and increasing the risk.
      2. As a US resident, you need to report all your income and pay tax. If your investment crossed $10,000 FBAR limit this year (2014), I suggest you sell it this year, close your account, report the same to IRS and file FBAR to department of treasury, remit the funds to USA and close the matter before December 31, 2014.
      3. I also suggest you to talk to your CPA who would be in a best position to guide you. Thanks.

  197. navin says:

    Hi,

    I move from India to US in Dec’13. Have withdrawn my PF to an account which was normal resident account in india in Feb’14. Now in Nov’14, I have few questions on this :
    1. Do I need to pay tax to IRS on PF?
    2. Haven’t converted my account to NRO yet. Will converting to NRO mean, the bank will report PF as income to IRS?

    Thanks for your help?

    Navin.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Only interest on PF from Jan-Feb (until you withdrew) would be considered as your income and you have to pay tax on the same.
      2. Converting resident to NRO is just re-designation of your account for RBI to track. As India has not yet signed FATCA and procedures not final yet, it would be premature to speculate but I think whether you have resident or NRO should not matter as your PAN would say you are an NRI.
      Thanks.

  198. Hyderabadi says:

    If India signs then the one who will be hurt the most will be India. India will lose all the taxes on US investments in India. India could just adopt whatever is earned in India is taxed in India while whatever is earned abroad is taxed abroad. Its a win win situation for both. FATCA is not win win situation as it is where US gets everything and India loses everything. India shouldn’t have high hopes for black money abroad with FATCA as black money with in India easily equals the amount of black money abroad and white money in and outside of India combined.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      India does not lose anything. India has been deducting taxes on the income already. I think India will benefit as USA will also share information of Indian residents abroad now or in future. Only people / investors who have not been disclosing and paying taxes would lose. India is trying to increase the tax net and reduce loopholes. Combining IT (Information Technology) with IT (Income Tax), India as a whole will be able to increase the tax revenue and find people who have been avoiding taxes or not/under reporting income. Thanks.

  199. Peter says:

    I am an Indian citizen living in India but have accounts with brokerages in the US where I hold my employee stock options and also other stocks that I have bought / sold etc. What will be the impact on withholding tax on dividends and gain from sale of stocks – 1. if India signs the FACTA and 2. if India does not sign FACTA

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you are an Indian citizen living in India, your global income is taxable in India so you would need to declare your income and pay tax, if any, on the income in India. You may also need to report foreign investments/securities to the Income Tax department in India. India will sign FATCA agreement but you need not worry as it is for US citizens not reporting their income in the USA. Thanks.

  200. sudarsan says:

    do investments in land in India need to be disclosed under FBAR

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      FBAR only required investment in foreign financial accounts. Investment in India in any immovable property is not required to be disclosed in FBAR. However, if you are paying from a bank account in India, that bank account needs to be disclosed in FBAR. Thanks.

  201. Murthy says:

    I am a USA citizen living/working in India (as Resident) since 2005.
    One of the Indian Brokerage/trading firms through which I invested in some Mutual Funda, suddenly stopped taking new investments in to the Mutual Funds siting FATCA as the reason. Is there anything in the FATCA that prohibits USA citizens living outside USA to invest in Indian Mutual Funds?
    I do report the Capital gains/losses in my USA, Indian tax returns.
    Thanks for clarifying.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      US residents are only allowed to invest in securities approved by SEC – Securities Exchange Commission. RBI allows NRIs, and PIOs, including Indian residents to domestic mutual funds in India. FATCA requries foreign financial institutions (FII) accepting US residents money to report certain information (amount of investment, income, etc.) to IRS. However, there is no clarity as India has not yet signed the agreement. That is the reason, while some mutual funds stopped accepting any new money, whereas other stopped only lumpsum but still accepting SIP and there are some which still accepts and no one has refunded any money to investors. This is a precautionary measure or steps taken due to ambiguity or unknown implications.

      If you have moved to India and living/working since 2005, you are considered as a Resident both under FEMA for investment purpose and under Income Tax Act for taxation purpose. As a US citizen, you are also considered a resident of the USA for tax purpose. Thanks.

  202. Sri says:

    Hello Jigarji – I am amending my 2013 tax return (1040) now because I didn’t report foreign interest income generated in SBI savings account in 2013, which was Rs 34000. I am using the exchange rate provided on the US treasury website which comes to $578.

    Although, I didn’t report the interest income earlier this year, I did file FBAR in June 2014 for the first time as the amount in bank in India was > $10000 for 2013 tax year (but less than $50k).

    As I amend my 2013 tax, I am filling out Schedule B form indicating that I submitted FBAR. Do I need to file form 8938 as well? I don’t have any other assets to my name in India. Just a savings account that generates interest. Please let me know if I am missing anything else before I submit an amended return.

    Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      For amending return, you would file 1040x and explain the difference/reasons and follow instructions in the form. You do not need to file 8938 if it is not applicable. Please consult an experienced CPA. Thanks.

  203. Jignesh says:

    My us citizen Son in law has bank accounts in india worth $ 41000 as on 30th June 2014 & my daughter who lives in usa with him has worth $ 43000 as on 30th June 2014.
    Under FACTA agreement with india, is indian bank report their accounts to IRS THROGH INFIAN INCOME TAX NEXTYEAR?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Currently, India-USA FATCA agreement is not signed. Also, while the Finance Act No. 2 amended the section related to collection of statement of financial transactions and reportatble account, the rules or procedural requirement is not available. In this light and on review of other FATCA agreements which included the threshold for the reporting foreign financial account of $50,000, it may not be reported. Thanks.

  204. Deep says:

    Jigar,
    Thank you for breaking this down little better for those of us who aren’t tax professionals. I’ve tried reading/researching FATCA in relation to “Foreign-issued life insurance” (Form 8938) but unable to fully understand it. I’m hoping you might be able to help me with it.
    1) I’ve an NRE account opened in 2008 which always had balance less than $5K.
    2) I’ve an active LIC life insurance policy (commenced in 2008), Sum Assured Rs. 2100000 with premium paid annually.

    My question do I need to report or worry about the filing/compliance requirements? Any advice how do I figure out or obtain the cash value of the policy? My understanding has been that since the assets value is below the threshold and I’m not in the higher tax bracket I don’t need to report it.

    It is unfortunate that while there is fairly enough information on FATCA compliance from IRS, there is very little communication or information coming from my bank and insurance company in India.

    Again, thank you for putting this out for us.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The cash value of life insurance policy is equivalent to a surrender value of the policy. Please contact your LIC agent to provide the surrender value of the policy as on December 31 every year. If your total assets in India do not exceed the threshold, you do not need to file form 8938. Thanks.

  205. Mohan says:

    Excellent presentation on a subject which is of great concern to NRIs in USA. You have done great service to all of us. I would like to seek professional consultation regarding OVDI scheme for my NRE (FCNR) deposits amounting to about $30,000 in Nationalized Banks in India. How do I contact you?
    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please contact through email or phone as mentioned in the “Contact Us” page. Thanks.

  206. Aniruddha says:

    Jigar,

    Thanks for the informative and comprehensive blog. I am a US citizen, resident in India for a few years. I have been meticulously reporting my income in India as well as filing TDF-90 since 2004. However, I have not reported about PPF account in TDF-90 as this was the advise that I got from someone in US. This account was opened well before I had any connection with US. I would like to know if it is necessary to report about PPF account in TDF-90 (FBAR) and/or 8938.

    TIA !

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would think all the foreign financial accounts, including PPF, need to be reported. Thanks.

  207. N_J says:

    Hi Jigar,

    I am US Citizen. I have opened NRE/NRO account back in 2008. All I have is Fixed Deposit (Mainly NRO) in these accounts. Bank Deducts ~33% from the interest I am receiving from NRO FDs. Between two accounts, I have about $100K.

    I have recently transferred money from NRO to NRE by filing 15CA/CB form.

    Eventhough I am paying 33% taxes in India on NRO account, I have never declared this income while filing taxes in USA. What exactly I am suppose to do now?

    I do not have any hesitation declaring all the income, as I am paying taxes anyways but do I really have to go back last 6 yrs or so?

    Thanks for your advice.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You may want to consider OVDI (Overseas Voluntary Discrosure Initiative) or the Streamlined Filing Compliance Procedures to come clean and comply with the rules and regulations and follow procedures specified in the respective schemes. If question, please email us. Thanks.

  208. Mohan says:

    Thank you so much for this excellent article that clarifies a lot around the FATCA act. Hope you can advise me as I’ve moved to the US from India on a L1 visa on the 4th of May 2014.
    I’ve always kept my savings of around $125K (in INR of course) in liquid funds in india and linked to my residential local account. Do the same rules of FATCA compliance apply to Mutual fund houses? Also, how do mutual funds (or banks) decide on criteria for accounts to be reported to RBI (and then to IRS). Especially if accounts are local and the PAN card is not required of in the US. Thank you again for your time

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you will become resident in 2014 only, you do not have to worry as long as you comply with the US rules and regulations from this year (filing in 2015). If your status is resident, the bank or other financial institutions would not know that you are a US resident and may not report. As per FEMA, you are supposed to inform the institutions of your change in status from resident to NRI. Thanks.

  209. Jeetu says:

    Thank you Mr Patel for the informative article.

    My balance in ICICI account did not exceed $10k in 2013. I have however received inheritance money in the account in June 2014 amounting to ~ $60k. I did not fill up FBAR form before June 30 2014. Will I be in trouble?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You are okay as the FBAR deadline of June 30, 2014 was for 2013 calendar year only i.e. Jan 1 2013 – Dec 31, 2013. You would report your financial accounts of calendar year 2014 by June 30, 2015. Thanks.

  210. Ramesh says:

    Mr. Patel – this is one of the most informative post that I have found on this very confusing topic. If you could help with a query – I’m a US citizen, but before coming to the US, my father had put me as a nominee or joint holder on a number of mutual funds while in India in the 1990s. We are seeking to redeem these funds, but they now need a PAN card for all the nominees and joint holders. I already have a PAN number which I got in 1999 while in India but have no physical card – this PAN is already linked to NRE/NRO accounts with a total holding of less than $10k. If I apply for a duplicate card using US address and US citizenship, will RBI or CBDT be obliged to report under FATCA on all accounts referenced by this PAN?

    From my reading of FATCA model 1, the requirement is on the bank or the financial institution to make a compliance report to CBDT on all accounts held by US persons. My concern is if CBDT decides to go one step further and sweep all 170 million PANs issued till date and determine US person PANs and report on all holdings “referenced” by these PANs.

    My intention is not to skim any tax. My father will redeem these funds (probably over $200k) and will hold/use the proceeds and pay taxes in India on the gains. My concern is on my FBAR or FATCA reporting requirement in lieu of 1) getting duplicate PAN card as a US citizen, 2) reporting this PAN to the financial institutions to enable my father to redeem these funds in India. The funds are not aware of my US residency.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. No PAN is required for redemption.
      2. Having two PAN is illegal and not allowed. You may change your PAN with updated information.
      3. I would thing RBI would report and not CBDT as all financial accounts – Bank, Demat, Equity, MF, etc. are to be reported to IRS.
      4. While CBDT already combining information for its use (through Annual Information Report), I do not think they would report to IRS. This is compliance, i.e. you are doing it because it is agreed/required. Who will do more for others? CBDT/RBI may use it for own purpose (identify all NRIs and enforce compliance as NRIs still have 2 PAN, invest like residents, have PPF account, etc.) and not for reporting to IRS for only US based NRIs.

  211. Nanda says:

    Namaste!
    Here are my details: I have less than $10,000 in big Indian bank with overseas branches in a NRE account and $168000 equivalent in rupees in FD in a local cooperative bank. The original account in cooperative bank was opened 30 years ago before I left India for US. I don’t believe my cooperative bank knows if I am a US based individual.

    My question is should I be reporting my account in the local Indian cooperative bank to IRS? Also, should I be reporting the interest to IRS on my NRE account from big Indian bank?

    Thank you
    Nanda

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Personally, I do not recommend putting so large amount with a co-op bank.
      2. Legally, you are supposed to inform your bank that you are now NRI and bank would re-designate your account as NRO.
      3. You should be reporting all your income and your accounts – resident and NRE to IRS. By not reporting, you are taking a risk and hoping or praying that IRS won’t be able to track your investments or financial accounts. If they do, there could be severe penalties.

  212. krishnan says:

    Jigarji Namaste !

    Thanks much for such an enlightening piece.
    Just a clarification, am I to understand a US citizen living outside USA and having bank accounts balance of less than $200,000 doesn’t have to worry about FATCA ?

    Your reply will be much appreciated.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      If you have bank account with foreign bank of over $ 50,000, it would be reported to IRS. If you have filed your taxes showing interest on this account, file FBAR and also file 8939 if applicable, you wouldn’t have to worry. Else, you may have to. Thanks.

  213. Suresh says:

    Dear Sir :
    I am 63 years old. No job right now. Instead of declaring investment and income in India and paying taxes and penalties, I prefer to surrender the USA passport and come back for good. I have house here and money in bank around 100K.
    Please guide me what should I do? and how ?
    Should I sell the house and transfer all money before I surrender the passport ?
    I am confused. I have about 100K in Indian bank.
    Thanks.
    Suresh

  214. Surendra Dhir says:

    Very helpful analysis!

    Can you please comment on the following.

    I opened a special five year fixed deposit in USD with SBI in November 2013. I will receive the interest only at maturity. The account can not be closed prematurely. So, in FBAR reporting, should I report the original face amount in succeeding years or perform my own calculations to add on the interest because SBI statement shows only the face amount or the amount at maturity.

    The face amount on this deposit consists of my base amount plus nine times the base amount in the form of a loan from SBI. So, under this special scheme a base amount of $10000 becomes a total face amount of $100000 where the $90000 along with the accrued interest is paid back to SBI at maturity after five years. The interest on the fixed deposit is about 5.6 % but on the loan it is about 4% thus the actual return on the base amount at maturity becomes about 13%.

    So, the other question for FBAR reporting is whether account value is $10000 or $100000 where $90000 actually belongs to SBI?

    Thanks for your comments.

    Surendra

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. In India, usually, interest accrues and compounded on a quarterly basis. Only that you choose to let it accumulate and be paid at the end of the term. That is your choice and does not affect taxation. If you ask for a statement from a bank of your FD, the statement would show the interest accumulated as well.
      1. In FBAR, you report your foreign financial accounts. Whether they are leveraged or not (loan taken or not), it may not matter.
      2. For IRS, your income matters, so while youwould show 5.6% on your $100k investment, you can claim the interest paid on loan @ 4% and only net will be taxable. Thanks.

  215. Surendra Dhir says:

    Very informative and helpful indeed.
    Would banks like SBI start issuing something similar to 1099s to make it easier for US tax payers to report the overseas income?
    How would tax payers report annual income from long term FCNRs when they receive the entire interest amount only at maturity?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Currently, there is no provision in FATCA that would require SBI to report in 1099 or similar form to investor or tax payers. That taxpayer is supposed to do themselves. FATCA would only require SBI to identify and report the transactions to RBI, who will then consolidate the amounts and report to IRS. In future, it may be introduced. Thanks.

  216. GAURAV says:

    Account details :

    - Opened NRO account in August 2011 with FD deposit of $215k @ the rate of Rs 46 per USD/Interest rate 9.25%. As of Dec 2013 the USD rate was approx $62. So I was losing on this transaction overall.
    - I was also paying 15% tax on this FD as part of DTAA agreement.
    - In Feb 2014 I cancelled my NRO account and made NRE FD by filing 15 CA/CB form. I paid TDS on the interest I earned in NRO for the year 2011,2012,2013 @ 15%.
    - Currently that account has approx $240k in there in NRE account.

    Questions :

    - Will my previous NRO account opened in 2011/2012/2013 be reported as part of the FACTA agreement or only the current NRE account with open date of Feb 2014 reported to IRS.
    - Does me paying the 15% according to DTAA agreement help
    - Should I close the account. What to do with the money. Should I xfer it back.
    - What other option do I have?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. According to FATCA agreement, your balance as on June 30, 2014 to be reported if it is over a threshold ($50,000). Countries/bank may voluntarily report more information, which I doubt.
      2. TDS at DTAA is related to IRS only. Also, if you are in the higher tax bracket, you may have to pay tax in the USA as per IRS rules.
      2a. As your investment in foreign financial accounts is more than US $ 10,000 you would file the FBAR form to the Department of Treasury and as your investments are $240,000, you would also need to file Form 8938 with your 1040.
      3. You may want to disclose and come clean under OVDI scheme.
      4. Please call to discuss. Thanks.

  217. R. Narayanan says:

    Very nice and comprehensive article, indeed
    I have a query. Would NRI investments in Fixed deposits or debentures of companies (not listed) be reported under the proposal? I presume listed debentures, tax-free bonds etc. would be reported by the concerned Dep. participant

  218. Kal says:

    Jigar,
    Thankyou for the very good analysis. I have been reading details about FATCA and had a question regarding your statement : “IF YOU OWNED ANY FINANCIAL ACCOUNT ON JUNE 30, 2014, EVERYTHING WILL BE REPORTED IF YOU MEET THE CRITERIA.”
    As I understand/have questions:
    1. Reporting will happen for year 2013 onwards. Not sure if this is applicable if the FII is a signatory in another year (say 2014)
    2. Closed accounts will be reported too.

    Kindly share your interpretation of the above items.
    Thanks
    Kalpendu

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The requirement will be consistently apply to ALL countries/FFIs as there is a separete article in the agreement that specifically mentions that any benefit given to any other jurisdiction, will also be given to the country. So even if UK signed agreement in 2013 with an effective date from January 1, 2014. Because the reporting/effectie date was extended to July 1, 2014, it would automatically apply to UK and UK FFI will report from July 1, 2014. Now with 56+ jusrisdictions already agreed for July 1, I doubt it. India has already agreed for FATCA in April.

      2. I do not think so but there is no guarantee. The mandatory requirement is of accounts as of June 30, 2014 with balance over US$ 50,000 but FFI/country may report lower or closed accounts if they so choose. Thanks.

  219. Jeev says:

    Jigar ji
    Thanks for such an excellent article. I read recently that Indian MFs will start dis-allowing US NRI mutual fund investments due to the cost of compliance with FATCA.
    This must indeed be a great loss to NRIs.

    Please share if you know of such an agreement being planned by UK with India.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      While most MFs have stopped, there are few MF houses that do accept MF investments from US based NRIs. Currently the FATCA agreement is one-on-one i.e. USA and UK or USA and India. However, I expect in few years, it would expand and would be among all countries i.e. USA and UK, India and USA, UK and USA. Thanks.

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