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should one report NRE accounts to IRS

Discussion in 'Tax, Social Security and Fin' started by RS_IL, May 24, 2005.

  1. RS_IL

    RS_IL Member

    It is past tax date but should one report bank balances and interest earned in one's NRE and FCNR accounts in India if the balance is more than $10,000. I have received conflicting advice.
    Thanks for your help.
  2. TheRealCanadian

    TheRealCanadian Volunteer Moderator

    Of course you must. You have until (I think) June 30 to file the TD92.21 form with the IRS in Detroit.
  3. qwertyisback

    qwertyisback Registered Users (C)

    I think, foreign earnings upto $$$(not sure how much , I guess 80K), is not taxable in US. Have you checked with accountant?? where did you get 10K figure?? Has somebody adviced you that foreign earning above 10K taxed in US??
  4. TheRealCanadian

    TheRealCanadian Volunteer Moderator

    Nice to see you back, qwerty. If you are a US tax resident, ALL worldwide income is subject to taxation. You're thinking of the foreign earned income exclusion. Last time I checked, interest and investments were NOT earned income.

    It's not a question of taxation, it's a question of declaration. If you have foreign accounts that total over $10K US at any time in the year, you need to declare them. If they make income that is subject to US taxation, you must declare the income, but that's a seperate issue.

    I have a Canadian RRSP that I must declare on the TD form, but it's not subject to taxation. An indian account probably would be subject to US tax.
  5. pv1976

    pv1976 Registered Users (C)

    Interests from NRE accounts are definitely taxable. In fact the banks would send you a tax statement (is that form 1099T..?? not sure) for filing purpose.
  6. pralay

    pralay Registered Users (C)

    Yes, interests/dividends in NRE account is by definition is taxable in USA - just like any other bank account in USA (read terms and conditions in NRE account). And 1099-INT/1099-DIV for filing return at IRS.
    Last edited by a moderator: May 24, 2005
  7. RS_IL

    RS_IL Member

    Yes. But this is a little complicated. The money was earned in UK before I came to the US. This money was deposited in the NRE account 5 years before I became GC holder and has been earning interest for the past 5 years.
    I only recently became GC holder.

    So lets get this straight, we need to report to IRS income that we earned in another country before I came to US that is now deposited in an NRE account and earning interest.

    Am I mistaken in this?
  8. pralay

    pralay Registered Users (C)

    It really does not matter where you earned your money. I guess you opened your NRE account in USA, right? If so, it adheres to US law. Bank is going to send you 1099-INT or 1099-DIV. If you got it, you should declare it in your IRS form 1040. Citi-NRE, ICICI, SBI all have same rule. If you did not receive 1099-INT/1099-DIV you should talk to your bank.
    Your H1/L1/GC status is irrelevent regarding this issue.
    Last edited by a moderator: May 24, 2005
  9. harvydonald

    harvydonald Registered Users (C)

    It does not matter how you earned the original money. The interest you earned after you started living in the USA and paying taxes needs to be declared.
  10. ceejay

    ceejay Registered Users (C)

    News to me

    I am totally ignorant about this matter. I have been living in US for the past seven years and never declared the interested rate earned from my NRE account in the tax return. I have never received any 1099-INT form from Indian banks.

    BTW, what do you meant by "opened your NRE account in USA"? I opened my NRE account at ICICI bank while I was visiting India. Is this different?

    I am anixious to know about this information. I am surprised to learn how I haven't come across about this info before. Also, will it be an issue since I haven't been declaring it so far?

    Your inputs will be highly appreciated


  11. tangohi

    tangohi Registered Users (C)

    This is quite puzzling. I know that if you are a green card holder all your income is taxed including that in India or elsewhere. I am not sure if that is true for interest income on H-1 B. I don't think that Indian Banks send any 1099 to US address. I am curious to know what the answer is to this question especially if you are not permanent resident. What if you pay tax on your iincome earned in India in India, how will that work out. An yclarification would be helpful.
    Last edited by a moderator: May 24, 2005
  12. pralay

    pralay Registered Users (C)

    I think I made mistake by stressing on "open". But rather it would be based on your earned NRI status on certain country (USA for your case) and the law of that country. I don't know how ICICI deal with 1099, but I have Citibank NRI account which I have opened in USA and I get my 1099-INT every year from India (by converting rupee amount to US$). Even if you don't receive 1099-INT from bank, you are still liable of declaring it.
  13. TheRealCanadian

    TheRealCanadian Volunteer Moderator

    Your immigration status is not relevant. If you are a US tax resident (by meeting SPT), then you must declare all worldwide income.

    I am also puzzled why some other folks in this thread think they don't need to declare interest income on money made before they came to the US.
  14. pralay

    pralay Registered Users (C)

    Being or not being permanent resident is irrelevent here. You are qualifying to open a NRI/NRE account because you are living in another country and paying tax in that country (USA in tis case). As per tax treaty between USA and India (to avoid double taxing), you must declare a certain income at one of the places - either India or USA. So it does not matter if you are US citizen, GC holder or H1/L1 visa holder. If you are on H1 visa and filing tax only in USA (therefore not filing tax in India), you must declare all interests of NRI/NRE banks in USA too. This tax treaty is for providing relief from double taxation. But that does not mean that you are not going to pay tax anywhere on certain income.

    See this article in immihelp.com:
  15. pv1976

    pv1976 Registered Users (C)

    It is true even if you are on H1-B or L1 or F1.... (of course it depends on the type of account that you earned the interest out of)

    - YES ...THEY DO SEND 1099 forms to US address.(again depends on the type of account you hold).

    - Doesnt matter. If you live and earn income in US then you are liable to pay tax on certain income abroad (like interest earned on NRE accounts).

    - Check the terms and conditions of the type of account that you have. interest income from NRE accounts are taxable in US (and not in India). Whereas income from NRO accounts or other CDs in Rupees are taxable in India and not in US. Here you do not have to file the return to IRS.
  16. pv1976

    pv1976 Registered Users (C)

    -- Not fully true.
    For eg: i am suppose to file with IRS, the interest income i receive out of my fully repatriable rupee accounts in India (example NRE accounts). These are exempt from Indian income tax but liable to US tax.
    Now there are certain other accounts like NRO accounts where i can fund thru dollar deposits as well as rupee deposits. These are non-repatriable accounts and the interest income is taxable only in India and not in US. I do not have to report this second income to IRS but only to Indian income tax department.

    Any new interest income are supposed to be declared (provided the conditions i mentioned above).
  17. In_durham

    In_durham Registered Users (C)

    There are two issues here. One is to declare to US treasury if you have interest in ANY overseas account that exceeds US$10k. Period no ambiguity there. If you use tax cut to prepare your tax returns it will ask you this question and then ask to fill in the form and send directly to the US treasury.

    The other is the interest earned for GC and US citizens. One HAS to report all income in US tax returns. Whether it is taxable or not anywhere in the world is immaterial. It being tax free in India is irrelevant to your US reporting schedule. If you paid foreign taxes you get credit for it in your US tax return just as the income is added on to your US AGI.

    That is my take on this topic. Any comments?
  18. RS_IL

    RS_IL Member

    Well so what should be done for the past 5 years when I was on H1/EAD but not PR and did not receive at 1099-INT from ICICI / Bank of Baroda and did not report it to IRS.
    Last edited by a moderator: May 26, 2005
  19. tangohi

    tangohi Registered Users (C)

    Thanks Pv1976 for your information. SO if I have a NRO account which I have not closed then on that income I pay taxes in India and on NRE account which I opened here I have to pay taxes here. I can file taxes at both places i.e US and India as long as I pay taxes on it somewhere.
  20. js123431

    js123431 Registered Users (C)

    I just talked to ICICI Bank representive just now and had no clue on 1099-INT. He kept on saying that we do send Quaterly and Annual Statements. My Question is I earned Rs.500 for last year and I just became PR. How should I let IRS know without 1099-INT while filing online?

    What will happen for past 2 years that I earned around Rs.600/-?


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