DABU:
Thanks for this question. Considering that you will/have filed taxes in INDIA to reclaim your TDS, I have few followup for you:
Say you earned Rs. 1000 as interest in your INDIA account, and TDS of Rs.300 (30% plus education cess) got deducted at source in 2020. Usually INDIA tax refunds will be in following year i.e 2021. Will you show the full amount of Rs. 1000 on your US 2020 taxes OR will you show Rs. 700 for 2020 and Rs. 300 (refunded by INDIA) in your US 2021 taxes? In short, the refunded TDS is taxed in US in which year?
In the past, I have used the approach of showing the full amounts (e.g Rents I have received) as income on my US taxes in the same year, as if the TDS never happened. Then when I file my INDIA taxes, usually I get my entire TDS back.
I am trying to see what others usually do and if the had any experience checking with tax experts on this? Please share your experience.
