@rm2701 , thank you for your response.
While you have two options to handle the US sourced income ( at least till you passed the SPT ( Substantial Presence Test ) , some time in June/July of 2024 ) i.e.
(a) include all US sourced income till SPT in your ITR for India ( i.e. Jan-March in 2023/2024 and April-June in 2024/2025) and then use the foreign tax credit for US purposes to reduce the double taxation bite )
(b) Do not include any of US sourced income on the India ITR for 2023/2024 tax year. Just pay US taxes.
Personally I stand behind the (b) path. My logic for this is :
1. Your start of US resident for Tax purposes in case of SPT, is the first full day present in the USA
" If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year."
See this page --> Residency starting and ending dates | Internal Revenue Service
2. US-India Tax treaty Article 4 ( Residency) --para 1 and 2 & Article 16 ( Dependent Personal Service) . Here it is generally stated that once you are domiciled or considered resident ( i.e. taxed on US sourced income by US ), then that income is taxed by the state of residence.
In conclusion and based on above, I suggest that you file your Indian ITR covering all earnings ( worldwide income ) for 23/24 from April 1st. 2023 till the day you became a US tax resident i.e. Jan 1st 2024). Thus you will have no double taxation to deal with. Nolte that by taking this position , you would be taxed on world income by the USA -- residency starting date of first full day in the USA.
A point also to consider is that this will also allow you to use the full standard deduction ( it is available ONLY for the full calendar year residency , else you have to use itemized deduction ).
On your lump sum amount , because it has been included on your W-2 for the year 2024 ( if that is what your employer does ) , you will be taxed on this for US federal, State and possibly for FICA) --- I am not sure that this handling is correct ( on your employer's part though. But that is a different matter and based on their accounting practices.
Does this cover your situation ? Is there more I can do for you ?
Namaste Rahul ji
pk
