Complete Guide for American Expats Living in India Filing US Taxes in 2026

Living in India as a US citizen or green card holder doesn't eliminate your US tax obligations. The United States is one of only two countries in the world (along with Eritrea) that taxes citizens on worldwide income regardless of where they live. Whether you're working for a tech company in Bangalore, teaching English in Delhi, running a business in Mumbai, or retired in Goa, you must file US tax returns reporting all income—US and India sources combined.

Most American expats living in India owe little to no US tax through Foreign Earned Income Exclusion (FEIE), Foreign Tax Credit (FTC), and India-US tax treaty benefits. The challenge: navigating complex dual-country filing requirements, foreign account reporting (FBAR/FATCA), residency determinations in both countries, and coordination between US and India tax systems to avoid double taxation.

This comprehensive guide covers everything American expats in India need to know about filing 2026 US taxes: understanding worldwide income taxation, qualifying for and claiming FEIE, calculating Foreign Tax Credit for India taxes paid, reporting Indian bank accounts and investments, navigating India tax obligations, using treaty benefits, managing state tax issues, and avoiding costly mistakes that trigger audits and penalties.

US Tax Obligations for Americans Living in India

Citizenship-Based Taxation

US citizens and green card holders face tax obligations regardless of residence. This applies whether you're:

• US citizen by birth living in India
• Naturalized US citizen residing in India
• Green card holder (permanent resident) living in India
• Dual US-India citizen
• Accidental American (born in US to Indian parents, moved to India as child)

You must file US tax return if your worldwide gross income exceeds filing thresholds: $16,100 for single filers under 65, $32,200 for married filing jointly in 2026. Most expats exceed these thresholds and must file annually.

What Income Must Be Reported

All worldwide income gets reported on US return:

• India salary/wages from Indian employer
• Self-employment income from India business or freelancing
• Rental income from India property
• Interest from India bank accounts (NRE, NRO, savings, fixed deposits)
• Dividends from India stocks and mutual funds
• Capital gains from sale of India property, stocks, or mutual funds
• Pension income (India EPF, PPF, NPS distributions)
• US-source income (Social Security, pensions, rental property, investments)

Report income in US dollars converting INR to USD using appropriate exchange rates (average annual rate or rate on date received).

Filing Thresholds for 2025

Note: The thresholds below are for the 2025 tax year (returns filed in 2026). Final thresholds for the 2026 tax year will be confirmed by the Internal Revenue Service in late 2026 and may be adjusted for inflation.

• Single (under 65): $15,750
• Single (65+): $17,750 ($15,750 + $2,000 additional)?
• Married filing jointly (both under 65): $31,500?
• Married filing jointly (one spouse 65+): $33,100 ($31,500 + $1,600)
• Married filing jointly (both 65+): $34,700 ($31,500 + $3,200)
• Head of household (under 65): $23,625?
• Head of household (65+): $25,625 ($23,625 + $2,000)
• Self-employment net earnings: $400+ requires filing regardless of other income

Additional filing requirements:

• Foreign bank accounts exceeding $10,000 aggregate: File FBAR (FinCEN Form 114)
• Foreign financial assets exceeding thresholds: File Form 8938 (FATCA)
• Foreign corporations ownership: File Form 5471
• Foreign partnerships ownership: File Form 8865
• Foreign trusts: File Form 3520/3520-A

Forms Required

Primary forms:

• Form 1040 (U.S. Individual Income Tax Return)
• Form 2555 (Foreign Earned Income) - if claiming FEIE
• Form 1116 (Foreign Tax Credit) - if claiming credit for India taxes
• Schedule B (Interest and Dividend Income) - if over $1,500 or have foreign accounts
• Schedule D (Capital Gains and Losses) - if selling assets
• Schedule E (Supplemental Income) - if rental income or pass-through income

Foreign reporting forms:

• FinCEN Form 114 (FBAR) - if foreign accounts exceed $10,000
• Form 8938 (FATCA) - if foreign assets exceed thresholds
• Form 8621 (PFIC) - if India mutual funds or unit trusts
• Form 3520 (Foreign Trusts and Gifts) - if gifts from foreign persons exceed $100,000

Foreign Earned Income Exclusion (FEIE) for 2026

Maximum Exclusion Amount

Maximum Exclusion Amount

The 2025 FEIE limit is $130,000 per qualifying taxpayer. This represents a $3,500 increase from 2024's $126,500 limit.

Married couples where both spouses qualify can exclude up to $260,000 combined ($130,000 each). Each spouse files separate Form 2555 and must independently meet qualification tests.

Note on 2026 FEIE: The 2026 FEIE limit (for returns filed in 2027) has not yet been published by the IRS. Based on recent inflation trends, the 2026 limit is projected to be approximately $132,000–$134,000. The IRS typically announces inflation-adjusted amounts for the upcoming tax year in October or November. Final 2026 amounts will be published by the IRS in late 2026.

Qualification Requirements

To claim FEIE, you must meet ALL three requirements:

1. Tax home in foreign country: Your regular place of business or employment must be in foreign country (India). Cannot claim FEIE if tax home is in US.
2. Foreign earned income: Income must be earned from services performed in foreign country. Salary, wages, self-employment income qualify. Investment income (interest, dividends, capital gains) does NOT qualify for FEIE.
3. Pass either Physical Presence Test OR Bona Fide Residence Test:

Physical Presence Test (PPT):

• Present in foreign country (or countries) for 330 full days during any 12-month period
• Days count: Full 24-hour periods spent outside US
• 12-month period can start any day (doesn't have to be calendar year or tax year)
• Can be in multiple foreign countries (India + Thailand + Singapore = all count as foreign)
• US days DON'T count (includes US territories: Puerto Rico, US Virgin Islands, Guam)

Example: Present in India 340 days during 12-month period from March 1, 2026 to February 28, 2027. You qualify under PPT for portion of 2026 and 2027 falling within the qualifying period.

Bona Fide Residence Test (BFR):

• Genuine residence in foreign country for uninterrupted period including entire tax year
• Establishing bona fide residence requires demonstrating intent to reside indefinitely (not just temporary assignment)
• Factors: Long-term housing lease, family relocation, language learning, community involvement, visa type, indefinite contract
• Temporary US trips allowed (vacations, business trips) without breaking residence
• More subjective than PPT—requires demonstrating "quality" of residence not just days present

Example: Moved to India in January 2024 with indefinite work contract, family relocated, signed 3-year housing lease, enrolled children in local school. You're a bona fide India resident for full 2024, 2025, and 2026 tax years.

What Income Qualifies for FEIE

Earned income only:

• Wages and salaries from India employer
• Self-employment income from services performed in India
• Professional fees for work done in India
• Bonuses and commissions tied to India work
• Housing allowances (can exclude or use for Foreign Housing Exclusion, not both)

Does NOT qualify for FEIE:

• Investment income (interest, dividends, capital gains)
• Pension and annuity income
• Social Security benefits
• Rental income (passive income)
• Gambling winnings
• Alimony

Calculating Partial-Year FEIE

If you qualify for only part of 2026 (moved to India mid-year or returned to US mid-year), calculate pro-rated exclusion:

Formula: ($132,900 × qualifying days) ÷ 365

Example: Qualified for 200 days in 2026

• Maximum exclusion: $132,900 × (200 ÷ 365) = $72,767

How to Claim FEIE

File Form 2555 (Foreign Earned Income) with Form 1040. Form 2555 requires:

• Identifying which test you qualify under (PPT or BFR)
• Listing days present in foreign countries
• Describing foreign residence and employment
• Calculating maximum exclusion based on days
• Computing excluded amount (lesser of foreign earned income or maximum exclusion)

Important: Once you claim FEIE, you cannot revoke it for 5 years without IRS permission. If you revoke, you cannot re-elect FEIE for 5 tax years. Choose carefully based on long-term tax situations.

Foreign Tax Credit (FTC) for India Taxes Paid

When to Use FTC vs. FEIE

You can claim Foreign Tax Credit for income taxes paid to India. This provides dollar-for-dollar reduction in US tax liability for foreign taxes paid.

FEIE vs. FTC decision:

Use FEIE when:

• Foreign earned income is below $132,900
• You live in low-tax country (India's effective rates often lower than US rates at moderate income levels)
• You want simple calculation (FEIE is straightforward)

Use FTC when:

• Foreign earned income exceeds $132,900 (FEIE doesn't cover excess)
• India tax rate on income exceeds US rate (credit covers full US tax)
• You have passive income (interest, dividends, capital gains) that doesn't qualify for FEIE
• You're self-employed (FEIE doesn't reduce self-employment tax, but FTC can)

Combine FEIE + FTC:
Most expats use BOTH. Exclude first $132,900 with FEIE. Claim FTC for India taxes on income above $132,900 and on passive income (interest, dividends, capital gains).

How Foreign Tax Credit Works

FTC allows credit for income taxes paid to India. Credit amount cannot exceed US tax on same income.

Creditable India taxes:

• Income tax paid on salary/wages
• Tax Deducted at Source (TDS) on interest, dividends, contract payments
• Advance tax payments
• Self-assessment tax paid with return

Non-creditable India taxes:

• Goods and Services Tax (GST)
• Property tax
• Wealth tax
• Penalties and interest on late payments

Limitation: Credit limited to US tax on foreign-source income. Cannot use India taxes to reduce US tax on US-source income.

Example:

• India salary: INR 5,000,000 ($60,000)
• India tax paid: INR 750,000 ($9,000 at 15% effective rate)
• US tax on same $60,000 (after standard deduction): $5,500
• Foreign Tax Credit allowed: $5,500 (limited to US tax amount)
• Excess credit $3,500 can carry back 1 year or carry forward 10 years

Calculating Foreign Tax Credit

File Form 1116 (Foreign Tax Credit) with Form 1040. Form 1116 requires:

• Separating foreign income into categories (passive income, general income)
• Converting India taxes paid from INR to USD using exchange rate on payment date
• Calculating limitation (US tax on foreign income)
• Computing allowable credit

Multiple Form 1116 needed: If you have both passive income (interest, dividends) and general income (wages, self-employment), file separate Form 1116 for each category.

Carryback and Carryforward

Excess foreign tax credits (India tax exceeds US tax on same income) can be:

• Carried back 1 year
• Carried forward 10 years

This helps when India tax rates fluctuate or you have high-income years with excess credits.

Foreign Housing Exclusion or Deduction

In addition to $132,900 FEIE, you can claim exclusion or deduction for foreign housing costs.

How Housing Exclusion Works

Base housing amount: 16% of FEIE limit = 16% × $132,900 = $21,264 for full 2026

Excluded amount: Qualified housing expenses minus base amount, subject to maximum limitation.

Maximum limitation: Varies by city. IRS publishes annual limits for high-cost locations. For most India cities not on high-cost list: Maximum is 30% of FEIE = 30% × $132,900 = $39,870.

Qualified housing expenses:

• Rent for apartment/house
• Utilities (except telephone and internet)
• Property insurance
• Repairs
• Parking rental
• Residential parking fees

Non-qualified expenses:

• Mortgage payments
• Home purchase
• Lavish or extravagant housing
• Domestic help (maids, cooks, drivers)
• Furniture purchases
• TV cable/streaming subscriptions

Calculating Housing Exclusion

Example: Living in Bangalore

• Annual rent: INR 1,200,000 ($14,400)
• Utilities: INR 120,000 ($1,440)
• Total qualified expenses: $15,840
• Base amount (16% × $132,900): ($21,264)
• Housing exclusion: Cannot exclude (base exceeds actual expenses)

Example 2: Living in Mumbai (higher rent)

• Annual rent: INR 2,800,000 ($33,600)
• Utilities: INR 150,000 ($1,800)
• Total qualified expenses: $35,400
• Base amount: ($21,264)
• Housing exclusion: $14,136

Housing Exclusion vs. Housing Deduction

Housing exclusion: For employees with employer-provided housing allowance or reimbursement. Reduces gross income.

Housing deduction: For self-employed individuals paying own housing. Reduces adjusted gross income (below-the-line deduction).

Both calculated on Form 2555 (same form as FEIE).

Combining FEIE and Housing Exclusion

You can claim BOTH in same year:

• Exclude up to $132,900 under FEIE
• Exclude additional amount for housing costs

Example:

• India salary: $150,000
• FEIE: ($132,900)
• Housing exclusion: ($14,136)
• Remaining taxable income: $2,964

India Tax Obligations for US Citizens

India Tax Residency

Your India tax obligations depend on whether you're resident or non-resident for India tax purposes. This is separate from US tax residency.

India resident if you meet ANY test:

• Present in India 182+ days during financial year (April 1 - March 31), OR
• Present in India 60+ days during financial year AND 365+ days during preceding 4 financial years

Exceptions reducing the threshold:

For Indian citizens and Persons of Indian Origin (PIO) working abroad:

• The standard 182-day threshold is relaxed to 120 days IF:
• You are present in India for 120-181 days during the financial year, AND
• Your India-sourced income exceeds 15 lakh during the financial year
• If your India income is 15 lakh or less, you qualify as non-resident even if present 120-181 days
• If present 182+ days, you are a resident regardless of income level

Most American expats living and working in India are India tax residents (exceeding 182 days), requiring filing of India tax returns reporting worldwide income.

India Income Tax Rates for 2026 (FY 2025-26)

India offers a choice between the old tax regime (with deductions) and the new tax regime (without deductions, lower rates). The new regime became default in 2024, but taxpayers can elect the old regime annually.

New Tax Regime rates (FY 2025-26):

The Section 87A rebate threshold has been increased to 12,00,000. The maximum rebate available is up to 60,000, or the total tax payable (whichever is lower), effectively making income up to 7 lakh tax-free under the new regime (after standard deduction of 75,000 for salaried individuals).

Old Tax Regime rates:

Section 87A Rebate (Old Regime): If total income does not exceed 5,00,000, a rebate of up to 12,500 is available, effectively making income up to 5 lakh tax-free.

The old regime allows deductions including:

• Section 80C: 1.5 lakh (EPF, PPF, life insurance, ELSS, principal repayment on home loan)
• Section 80D: Medical insurance premiums (?25,000-?50,000 depending on age)
• Section 80CCD(1B): Additional 50,000 for NPS contributions
• HRA exemption for house rent paid
• Home loan interest deduction under Section 24(b)

The new regime has lower rates but no deductions except standard deduction of 75,000 for salaried individuals.

Surcharge and Cess:

Health and Education Cess: 4% applies on (tax + surcharge) for both regimes

Surcharge rates differ by regime:

New Tax Regime Surcharge:

Old Tax Regime Surcharge:

Important: The new regime caps surcharge at 25% regardless of income level. The 37% surcharge applies only under the old tax regime for income exceeding 5 crore.

Effective Tax Rates (Examples):

New Regime:

• 6 lakh income: 0% effective rate (Section 87A rebate applies)
• 30 lakh (~$36,000) income: approximately 10-12% effective rate
• 1 crore (~$120,000): approximately 23-25% effective rate
• 3 crore: approximately 28-30% effective rate (including 25% surcharge cap and 4% cess)

Old Regime:

• 4.5 lakh income: 0% effective rate (Section 87A rebate applies)
• 30 lakh with 3 lakh deductions: approximately 15-18% effective rate
• 1 crore: approximately 27-30% effective rate
• 6 crore: approximately 39-42% effective rate (including 37% surcharge and 4% cess)

Which regime to choose:

• New regime generally better for: higher incomes with few deductions, those not claiming HRA or home loan interest
• Old regime generally better for: those with substantial Section 80C/80D deductions, HRA claims, home loan interest deductions

Most US expats working in India with moderate to high incomes and minimal deductions find the new regime more beneficial..

India Tax Filing Requirements

Due dates:

• July 31 following financial year for most individuals
• September 30 if requiring audit
• October 31 if requiring audit (certain cases)
• November 30 if requiring transfer pricing report

Forms:

• ITR-1: Salary income, one house property, other sources (most expat employees)
• ITR-2: Capital gains, multiple properties, foreign assets/income
• ITR-3: Self-employment/business income

Foreign Asset Reporting: India residents must disclose foreign assets in Schedule FA (Foreign Assets) of tax return, including:

• Bank accounts held outside India
• Financial interest in foreign entities
• Immovable property outside India
• Capital assets outside India
• Signing authority on foreign accounts

Tax Deducted at Source (TDS)

India employer deducts TDS from salary monthly based on projected annual income. You receive Form 16 (TDS certificate) showing annual salary and TDS deducted.

TDS also applies to:

• Interest income (10% TDS if exceeding ?40,000)
• Dividend income
• Rent payments (above thresholds)
• Professional/contract fees

TDS paid counts as advance tax. Any excess gets refunded when filing return.

Permanent Account Number (PAN)

All India taxpayers need PAN (Permanent Account Number)—10-digit alphanumeric identifier issued by India Income Tax Department. Apply through NSDL or UTIITSL website.

US citizens can apply using passport as identity proof (instead of Aadhar which is for India citizens/residents).

India-US Tax Treaty Benefits

The India-US Double Taxation Avoidance Agreement (DTAA) prevents double taxation and provides benefits.

Treaty Relief for Specific Income Types

Salary/Employment Income (Article 15):
Taxed in country where services performed. If you work in India, India has primary taxing right. US can also tax (citizenship-based taxation) but you claim FTC for India taxes paid.

Business Profits (Article 7):
Business profits taxed only in residence country unless business has "Permanent Establishment" (PE) in other country. US citizen doing consulting from India: Profits taxed in India if India is tax residence or if PE in India.

Dividends (Article 10):

• Paid by India company to US resident: India can withhold up to 25% (reduced from normal 30%)
• Some situations allow 15% (if beneficial owner holds 10%+ voting stock)

Interest (Article 11):

• Interest paid by India to US resident: India withholding limited to 15% (reduced from 30%)
• Some government bonds may be exempt

Royalties and Fees for Technical Services (Article 12):

• Royalties: India withholding limited to 15% (reduced from 30%)
• Fees for technical services (FTS): Taxed at 15% withholding

Capital Gains (Article 13):
Gains from sale of immovable property (real estate) taxed in country where property located. India property sale taxed in India primarily. Gains from sale of shares/securities generally taxed in seller's residence country unless substantial ownership (25%+ by seller in past 12 months).

Pensions (Article 21):
Private pensions taxed in the country of residence. Social Security taxed in the paying country (US Social Security paid to India resident is taxed in US, not India).

Limitation on Benefits (LOB):
Treaty contains anti-abuse provisions. To claim treaty benefits, must be "qualified person" under Article 24 (typically met by bona fide US citizens residing in India).

Claiming Treaty Benefits in India

To get reduced withholding rates under treaty:

• Provide Tax Residency Certificate (TRC) from US (IRS Form 6166)
• Submit Form 10F to India payer
• India payer applies reduced withholding rate
• If excess TDS withheld, claim refund when filing India return

Claiming Treaty Benefits in US

Attach statement to Form 1040 explaining treaty provision claimed, income type, treaty article, and reason for exemption/reduction.

For FTC purposes, ensure the treaty doesn't prohibit the US from taxing income. If the treaty gives exclusive taxing rights to India, the US cannot tax and FTC may not apply.

FBAR and FATCA Reporting from India

FBAR (FinCEN Form 114)

Who must file: US persons (citizens, green card holders, residents) with financial interest or signature authority over foreign financial accounts exceeding $10,000 aggregate at any time during calendar year.

"Aggregate" = total of ALL foreign accounts combined. If you have:

• India SBI account: 5,00,000 ($6,000)
• India ICICI fixed deposit: 4,00,000 ($4,800)
• India HDFC NRE account: 1,50,000 ($1,800)
• Total: ?10,50,000 ($12,600) → Must file FBAR

Reportable accounts in India:

• Bank accounts (savings, current, NRE, NRO, FCNR)
• Fixed deposits
• Recurring deposits
• Mutual funds
• Demat accounts (holding shares)
• Life insurance policies with cash value
• PPF (Public Provident Fund)
• EPF (Employees Provident Fund) - debatable but conservative approach is report
• National Pension System (NPS)

How to file: Electronically through FinCEN BSA E-Filing System at https://bsaefiling.fincen.treas.gov/

Deadline: April 15, 2027 for 2026 calendar year, with automatic extension to October 15, 2027 (no form needed for extension).

Penalties:

• Non-willful: Up to $16,536 per violation
• Willful: Greater of: $100,000 (indexed) or 50% of account balance
• Criminal: Up to $250,000 and 5 years imprisonment for willful violations

FATCA (Form 8938)

Who must file: US taxpayers with specified foreign financial assets exceeding thresholds.

Thresholds for expats living abroad (higher than US residents):

• Single: $200,000 on last day of year OR $300,000 at any time during year
• Married filing jointly: $400,000 on last day OR $600,000 at any time

Reportable assets (broader than FBAR):

• Foreign bank accounts
• Foreign stock and securities not held in financial account
• Foreign mutual funds and unit trusts
• Foreign partnership interests
• Foreign pension plans (EPF, PPF, NPS)
• India real estate if held through foreign entity
• Foreign-issued life insurance contracts with cash value

Filing: With Form 1040 by regular tax deadline (June 15, 2027 for expats, or October 15 with extension).

Penalties:

• Initial: $10,000 for failure to file
• Continuing: Additional $10,000 for each 30 days after IRS notice (up to $50,000)
• Underpayment: 40% penalty on understatement attributable to non-disclosed assets

FBAR vs. Form 8938: Both Required

Many assets require filing BOTH forms. Example: India bank account with $250,000:

• Exceeds FBAR threshold ($10,000): File FBAR
• Exceeds Form 8938 threshold ($200,000 single): File Form 8938

India Mutual Funds = PFIC Nightmare

India mutual funds (HDFC, ICICI, SBI funds) are classified as PFICs (Passive Foreign Investment Companies) by IRS. PFIC taxation is punitive:

• Taxed at highest marginal rate (37%) instead of preferential capital gains rates
• Interest charge on "deferred tax"
• Complex calculations requiring Form 8621

Solutions:

• Avoid: Don't invest in India mutual funds while US taxpayer
• Redeem: Sell India mutual funds before becoming US tax resident
• QEF election: Elect Qualified Electing Fund treatment (requires fund cooperation—most India funds don't provide necessary statements)
• Mark-to-Market: If fund is marketable, elect MTM (report annual gains/losses even without selling)

Consider US-based India funds or ETFs (like INDA or INDY) instead—these are US corporations, not PFICs.

US Tax Filing Deadlines for Expats in 2026

Automatic 2-Month Extension

Americans living abroad on regular filing deadline (April 15) receive automatic 2-month extension to June 15, 2027 for filing 2026 tax return.

Qualifies if on April 15, 2027 you are:

• Living outside US and Puerto Rico, AND
• Main place of business or post of duty is outside US and Puerto Rico, OR
• In military service outside US and Puerto Rico

How to claim: Attach statement to return explaining you qualify for automatic extension. No Form 4868 needed for this 2-month extension.

Payment deadline: Tax payment still due April 15, 2027. Extension is for filing only, not payment. Underpayment interest accrues from April 15 on any unpaid balance.

Additional Extension to October 15

If you need more time beyond June 15, file Form 4868 (Application for Automatic Extension) by June 15, 2027. This extends the deadline to October 15, 2027.

Key Deadlines Summary for 2026 Tax Year

Estimated Tax Payments (2026 Tax Year)

If you owe US tax exceeding $1,000 after withholding and credits, must make quarterly estimated payments:

2026 estimated tax payment deadlines:

• Q1: April 15, 2026
• Q2: June 16, 2026 (June 15 is Sunday)
• Q3: September 15, 2026
• Q4: January 15, 2027

Safe harbor: Pay at least 90% of current year tax or 100% of prior year tax (110% if AGI over $150,000) to avoid underpayment penalty.

Many expats don't owe estimated tax if using FEIE and FTC, but if you have investment income, rental income, or self-employment income, estimate quarterly.

State Tax Considerations for Expats

Moving abroad doesn't automatically end state tax obligations. Many states continue taxing former residents living internationally.

Establishing Non-Residency

Two types of state tax residency:

Domicile: Legal permanent home where you intend to return. Continues until you establish domicile elsewhere with intent to stay permanently.

Statutory residency: Physical presence in state exceeding threshold (typically 183 days).

To establish non-residency:

• Declare domicile change (file Form 8822 with IRS)
• Sever residential ties (sell home or rent it out long-term, cancel lease)
• Get India driver's license
• Close local bank accounts, move to national/online banks
• Cancel state health insurance
• Register to vote in India (if allowed) or declare non-resident status
• Update addresses with all institutions to India address
• File part-year resident return for year you moved

States With Particularly Aggressive Policies

California: Particularly aggressive pursuing expats as residents. Maintains domicile based on ties even after moving abroad. Safe harbor: Establish domicile in another state before moving abroad. If moving directly abroad from California, prepare for potential challenge.

Virginia: Taxes non-residents on income from Virginia sources. If working remotely for a Virginia employer while in India, Virginia may claim the right to tax.

New York: Maintains residency for those keeping permanent homes available in state (even if living abroad). Statutory residency: 184+ days in New York triggers full resident taxation.

South Carolina: Exit tax on those changing domicile—includes special accounting for deferred compensation.

No-Income-Tax States

Moving from one of nine states with no income tax makes establishing non-residency easier:

• Alaska
• Florida
• Nevada
• New Hampshire (taxes dividends/interest only)
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

If your former domicile was Texas or Florida, you generally have no state tax obligations while abroad.

Filing Part-Year Resident Returns

Year you move abroad, file part-year resident return for your former state:

• Report all income while state resident
• Report only state-source income while non-resident
• Prorate standard deductions and exemptions

State-Source Income While Abroad

Even as non-resident, you owe state tax on state-source income:

• Rental property in former state
• Business income from state operations
• Wages from state employer (remote work complications)
• Partnership/S-corp income from state business

File non-resident return reporting only state-source income.

Why Choose NSKT Global

NSKT Global specializes in US tax preparation for Americans living in India. We understand the unique challenges of dual India-US taxation, not generic expat situations.

India-US Specialization: We prepare hundreds of returns yearly for US citizens in India. We understand India tax system, INR-USD conversion requirements, India-US treaty provisions (salary, dividends, interest, capital gains), India account reporting (NRE, NRO, EPF, PPF), and India retirement plans (EPF, PPF, NPS).

Complete Dual-Country Service: We file both US federal returns (Form 1040, Form 2555, Form 1116) and state returns (resident, non-resident, part-year). We also provide India tax filing (ITR-1, ITR-2, ITR-3) and handle coordination between countries.

Foreign Account Compliance: FBAR and Form 8938 preparation included. We report India bank accounts, investments, and assets correctly. For clients with unreported prior years, we handle Streamlined Filing Compliance Procedures minimizing penalties.

FEIE vs. FTC Optimization: We model both scenarios showing which strategy minimizes total tax (US + India combined). We don't default to FEIE—we analyze your specific situation.

PFIC Remediation: If you have India mutual funds, we handle PFIC reporting (Form 8621), QEF elections where possible, and exit strategies to terminate PFIC positions.

State Tax Navigation: We establish state non-residency, file part-year returns, handle domicile changes, and defend against aggressive state challenges (particularly California and New York).

Year-Round Support: Tax planning throughout the year, not just return preparation. Estimated tax calculations, India tax credit optimization, foreign account reporting guidance, treaty benefit claiming, and investment structure advice.

IRS Representation: If you receive IRS notice (unreported accounts, FBAR penalties, FEIE disallowance, FTC adjustment), we represent you through examination and resolution.

Pricing: Fixed fees starting $800 for employees with FEIE, $1,200-$2,500 for FEIE + FTC combinations, $2,000-$4,000 for self-employment or complex investments, and $3,000-$6,000 for multi-year catch-up or PFIC situations.

Final Thoughts

Filing US taxes as American expat living in India in 2026 requires navigating citizenship-based taxation, qualifying for $132,900 FEIE or claiming Foreign Tax Credit for India taxes paid, reporting foreign accounts under FBAR/FATCA, understanding India tax obligations and rates, applying India-US treaty benefits, meeting June 15, 2027 expat filing deadline, and establishing state non-residency.

Whether you're working in the Bangalore tech industry, teaching in Delhi, running business in Mumbai, or retired in Goa, specialized India-US tax expertise pays for itself many times over through tax savings, penalty avoidance, and compliance peace of mind. The question isn't whether you can afford professional help—it's whether you can afford the $10,000-$100,000+ cost of non-compliance, missed opportunities, and dual taxation.

NSKT Global ensures you file correctly in both countries, claim every available exclusion and credit, stay compliant with all reporting requirements, coordinate India-US taxation optimally, and maintain flexibility for future life changes.