US Tax question on foreign accounts

S

Siddharth1

Registered Users (C)
Hi,

In Oct 2003, I moved some money to an account in India for a period of 1 year. Now, the scheme that I put my money in has matured and I have made interest of X% if I convert it back to USD. This scheme is tax free in India. I don't plan to bring the money back in the US yet but perhaps at some other time.

Since I have not dealt with foreign accounts before, I would like to know if I have to pay taxes on this interest earned. Are there any other implications?

Any info will be appreciated.
 
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Does anybody have a site of link for accounts in India for people living out of India. Any comparision, what kind of a/cs, how does it affect taxing in India, and US, etc.
 
I am a little pissed that the US is charging tax for interest earned in other countries for people who are neither citizens or perm residents (like myself). My account is tax free in India but I guess I have to pay taxes for a foreign account to IRS for no apparent reason.

This will eat quite a bit out of my returns

:mad: :mad: :mad: :mad: :mad:
 
Siddharth--If you live here even part of the year, your taxes go to public services which are supposed to benefit everyone, citizen, LPR, or not. Federal money goes to education, healthcare, highways, police and fire safety, FDA, immigration, etc. U.S. citizens have to pay taxes on worldwide income if they live here most of the year; why shouldn't you if you're living here?
 
Firstly, I don't think I should because as a non-resident or non-citizen, the US doesn't have to give me unemployment/retirement benefits or public healthcare like that covered by medicare. It is another thing that it charges me for this. I did my primary education from India, so I wasn't a burden on the public school system here.

I cannot be considered a potential burden on the US (I'm a temp worker -- i'm supposed to leave when there is no work, not get unemployment benefits).

Now, since I work here and earn salary within the US, I pay my taxes. Even interest I earn in US bank accounts in the US I pay.


From my above points, I am a net giver (i.e. I give more money to the govt than I receive services for ) I don't see why I should pay even more.
 
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Siddharth1,

check out the instructions (http://www.irs.gov/pub/irs-pdf/i1040sa.pdf) for line 7a and 7b for foreign accounts in schedule B of Form 1040. if u had more than $10K in an account, you need to report it and follow the steps.


alren,

I am not sure I undertstand ur Q. But if u r looking to understand the different accounts a NRI can have and their advantages/disadvanteages...start with this link

http://sify.com/finance/nri/fullstory.php?id=13172937

it will give u a good refresher course.

If you were specifically looking for as to opening a FCNR or NRE account with Citibank or ICICI, etc and evaluating the pros and cons of similar investment banks, go to the respective websites of the institutions. also do a search on msn groups...i think there is one specifically for NRIs.
 
I agree with you siddharth that it's unfair that the US govt treats millions of H1's like citizen's for tax purposes and charging taxes on their worldwide income while at the same time making sure the green card process is made so excruciatingly slow that by the time it happens, a good 4 to 5 years of taxes are squeezed out of you. Why do you think the permanent residency process from H1B is so agonizingly slow ? Don't you think a country like US can expedite a process like this one if they really wanted to ? Majority of H1's return to their home country unable to wait so long and they get plenty of taxes out of you and free Hi tech services without having to invest in any educational costs. Those who are hell bent on residing there eventually get the green card only to wait a few more years before you eventually accorded citizen ship ( ? but then you are only a 'naturalized' specimen).

Even the money you do get in $ from US is in fact really the sweat and blood of the poor man in INDIA,AFRICA etc.. It's indeed a vicious circle (if you can trace it) as to how expertly the western countries spearheaded by the US are exploiting resources and sucking the blood out of the third world like leaches.

Every time we work in a foriegn country and pump their money into our country do you know how much you are hurting the comman man here and bringing down the quality of life ? check this out. The dumbest western labourer stands in front of the fries in a fast food place and is paid about 6+ bucks an hour. Pump that money into india and it's approx 300 Rupees. But you know a labourer in India has to toil all day doing cleaning drainage (That's big money in US almost $15/hr) or doing construction work (about $12/hr in cash in US) for 12 hrs a day and he can't make even half of 300 rupees. So his pay is like Rupees 10/hr or 20 cents/hr. WHAT ? Yeah and there's more. So what kind of a system is this ? How is the same work with inferior quality done by a lazy american worker putting on more airs than work, is worth exponentially more value than the same amount of work done by a patient, 2 rotis a day eating, obedient and persevering Indian labourer toiling at temparatures soaring over 45 degree celsius ? Who decided that digging a pit in US is of a exponentially higher value than digging a pit in India ?

if you are in your mid 30's do you see how the quality of life in india has gone down ever since the advent of foriegn funds and free market ? I remember when I was like 10 I used to buy a beautiful Chandamama for 2 rupees when all Indians could afford to buy enough fresh fruits grown in their own country with organic manures. Now all the best quality grains, fruits,clothes etc are all leaving to western shores. Our farmers don't even have access to their own seeds now which they had for thousands of years. These are now in patented by huge MNC Conglomerates invading from foriegn lands especially US. You know the many varieties of the divinely fragrant Basmati rice that was traditionally grown in the foothills of the Himalayas is no longer a product of India. And still the bottom less abysses of our politicians bellies are never filled.

Only China stands as the last frontier, firm as a rock amidst the crashing ruins pummelled by western materialistic forces. And they will be stopped and pushed back by the great current of China.
 
skewed logic

of course I've already moved back to my country more than a year ago. I only go to US on projects only when the US companies request for my services. But who knows what the future lays in store ?

Also your defense of the US policies by the logical statement "Given the number of people who want to immigrate to the US, there must be something to the US way of life..." is like saying " Given the number of people who want to do drugs in the US, there must be something to the doped way of life...

Keep that brain churning. later
 
immiprtlbond said:
Only China stands as the last frontier, firm as a rock amidst the crashing ruins pummelled by western materialistic forces. And they will be stopped and pushed back by the great current of China.
Click to expand...

Having seen the pace of development, industrialization and hyperactive economic activity in China in the past quarter century, this is an amusing statement.
 
The future belongs to the East

You seem to misconstrue 'Development, industrialization and hyperactive economic activity in China' with throwing open the entire market indiscriminately to these marauding hordes of arrant capitalistic forces.

But there is a subtle variation here. I will not reveal it. Why do you think China strikes terror into the hearts of the powerful west ? I'l let you think about it. Or else just wait and time will demonstrate.
 
immiprtlbond said:
You seem to misconstrue 'Development, industrialization and hyperactive economic activity in China' with throwing open the entire market indiscriminately to these marauding hordes of arrant capitalistic forces.
Click to expand...

Actually, with the exception of currency convertibility the "marauding capitalistic hordes" have pretty much had free reign in China since 1980, hence the explosion in GDP and living standards.

Why do you think China strikes terror into the hearts of the powerful west ? I'l let you think about it. Or else just wait and time will demonstrate.
Click to expand...

China terrifies the west because they can play the capitalistic game better than the West can in areas where they can take advantage of large amounts of cheap labor.

To be honest, socialism was just a plot to keep Asians poor, stupid and uncompetitive. India and China frightened absolutely nobody until the marauding hordes started to ravage them.
 
Si fueris Romae, Romano vivito more, si fueris alibi, vivito sicut ibi.

( or in honour of JP2 its polish equivalent : Włażąc między wrony, krakaj jak i one.)

I am glad that I can pay taxes in the US bc it means I have WORK.

I am just sitting on my taxes, and just for hahas I ran my income through a tax calculator for my home country. It made me appreciate even more that I am here. While we like to bitch about the taxes, in reality the tax system in the states is fairly benign.

For all of you folks who are so upset about paying taxes here, there is a simple solution to that problem: DON'T WORK HERE.

The roads I drive on get paved (once in a while), the air-traffic controller gets paid, if I call the cops I don't have to pay them cash for the service, bombs get thrown on random countries on my behalf, there is cheap gasoline in my tank: I don't mind to pay taxes !


The US isn't the only country who is interested in your worldwide income for tax purposes. I don't know how india handles this, but if you are a tax resident (>180day presence) in many european countries you will pay tax on your worldwide income. (This is to catch people like Steffi Graf who moved some of her endorsement earnings into a company in the dutch antilles. Her dad was nice enough to take the rap for it and went to jail for a couple of months.)
 
hadron said:
The roads I drive on get paved (once in a while), the air-traffic controller gets paid, if I call the cops I don't have to pay them cash for the service, bombs get thrown on random countries on my behalf, there is cheap gasoline in my tank: I don't mind to pay taxes !
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First of all , You have not read the thread. No body is complaining about paying taxes. It's only a few oppressive tax policies that are being analyzed.
And nobody is denying that taxes do provide some temporary and limited benefits to foreign citizens although not as much to get on a high like you and sing a song about.

hadron said:
in many european countries you will pay tax on your worldwide income. (This is to catch people like Steffi Graf who moved some of her endorsement earnings into a company in the dutch antilles. Her dad was nice enough to take the rap for it and went to jail for a couple of months.)
Click to expand...

Yes this is primarily meant to catch people from moving their earnings into companies in other countries where they cannot be easily tracked, like steffi graf etc.. In her case she was moving the entire endorsement money(gross income) away which means that the US is denied even basic taxes on that amount. (only 2 months jail term for that? That probably because they are European and also high profile). But you see, in the case of H1B all taxes have already been paid. But still they are free to tax any Income earned from the US even though it's been moved to a foreign country. It's fair in atleast so far. But trying to tax me for earning a few thousand dollars equivalent of money from my own country long before I entered the US is just downright exploitation.

You get the point now /
 
> You get the point now

No, I don't get your point.

Unless you company took you, tied you up in a carpet and shipped you to the US to work for them, you are here by your own free will. The peculiarities of the US tax code are open for anyone to know about, if you don't want to deal with it YOU DON'T HAVE TO WORK HERE.

If you have signinificant offshore holdings: Don't become a tax resident of the US. There are plenty of people doing business in the US on E and L visas who are very careful not to exceed the allowable time so they can maintain their tax residency in the Bahamas or other locations.

If I understand it correctly, the OP was in the US at the time he 'moved some money to india'. He made a profit on it, and I think it is entirely reasonable if he has to pay taxes on it. After all, if he had made the investment in a US account he would have had to pay taxes on it, wouldn't he?

The only person on a high horse is YOU with your retarded anti-capitalistic rants.
 
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hadron said:
>No, I don't get your point.
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Then it's too bad and reveals a stand that is incapable of logical review.

Unless you company took you, tied you up in a carpet and shipped you to the US to work for them, you are here by your own free will. The peculiarities of the US tax code are open for anyone to know about, if you don't want to deal with it YOU DON'T HAVE TO WORK HERE.
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Ha ha . Your logic reminds me of a story. A man and his wife entered the gates of a house that said 'Private Property'. The owner of the house says to the man, " This is my house and I am gonna beat your wife. If you don't want to deal with it YOU DON'T HAVE TO BE HERE.'
This type of logic sure doesn't provide for any civilized solution.
If you have signinificant offshore holdings: Don't become a tax resident of the US. There are plenty of people doing business in the US on E and L visas who are very careful not to exceed the allowable time so they can maintain their tax residency in the Bahamas or other locations.
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Not H1B's buddy. I don't know where you come from but H1B's got to remain on the client site for the entire duration of the project and its not possible nor is there any need to hide out in the Bahamas like you suggest.
If I understand it correctly, the OP was in the US at the time he 'moved some money to india'. He made a profit on it, and I think it is entirely reasonable if he has to pay taxes on it. After all, if he had made the investment in a US account he would have had to pay taxes on it, wouldn't he?
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I am not sure if you have a reading problem, but I had already mentioned that these taxes are quite acceptable in my previous discussion.

The only person on a high horse is YOU with your retarded anti-capitalistic rants.
Click to expand...
I am not on any horse nor am I horsing around. I am not against capitalism as a whole, but if it's carried to an extreme (like US and allies), It will surely have a distructive effect on the whole world and eventually it's own propagators as well.

I may not know if I am retarded but I do know that it takes one to know one.

later. keep that brain churning.
Jay
 
> tax free in India

The chances are - it's tax free because it is a dollar denominated account. The reason it's tax free is because US will tax your income.

~T
 
No, I don't want to beat your wife. But if you are a guest here, don't p** into your beercan and chuck it out the window bc this is how you do it at home.

You are in the US voluntarily, they have some house rules here, just stick to them.
 
immiprtlbond said:
The owner of the house says to the man, " This is my house and I am gonna beat your wife. If you don't want to deal with it YOU DON'T HAVE TO BE HERE.' This type of logic sure doesn't provide for any civilized solution.
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Your analagy fails because unlike assault, worldwide taxation of income is perfectly legal. The US government has the absolute right to determine what income it wishes to subject to taxation.

Not H1B's buddy. I don't know where you come from but H1B's got to remain on the client site for the entire duration of the project and its not possible nor is there any need to hide out in the Bahamas like you suggest.
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The point hadron was trying to make was that taxation is one of the ground rules you have to be aware of. Since you don't have the luxury of a Bahamian residence to avoid SPT, then you need to weigh the taxation consequences of becoming a US tax resident, based on the amount of income you have from external sources.

I am not against capitalism as a whole, but if it's carried to an extreme (like US and allies), It will surely have a distructive effect on the whole world and eventually it's own propagators as well.
Click to expand...

Out of curiosity, what capitalistic nations would you consider to not take things to "an extreme?"
 
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