I (resident alien) have a Public Provident Fund (PPF) account in India. Do I have to report this account and the interest earned in this account in my US tax return?

[sujoy-saha]

For information, PPF is a tax-free retirement account in India (like 401k in US), i.e. any interest earned in this account is considered tax free in India.

[pk]

sahababu, as I understand the providend fund scheme, it grows and is available to you only when you retire --- the earnings are tax free but only at distribution time.  By that logic, I do not believe you have to declare and / or pay taxes on the earnings in the USA. However, if your long term plan is to settle  down in the USA and retire here, it may be worth considering whether it is advantegous to you to declare the earnings now and get it out of the way.

Also note that  if the  amount is large  enough >= US$90K, and depending on your filing status, there  may be FATCA reporting requirement.

Is there anything else I can help you with ??---pk

[cjenkinscpa]

This answer is incorrect.  The US taxes on worldwide income.  Unless the vehicle is recognized by the Internal Revenue Service  as being the equivalent to a US tax exempt vehicle it should be reported on the US return. The Times of India had a very informative article on PPF's on November 16, 2017
<a rel="nofollow" target="_blank" href="https://timesofindia.indiatimes.com/business/faqs/provident-fund-faqs/FAQs-All-about-PPF-accounts-fo...>

[pk]

I agree that this is not compliant with US tax favored retirement account laws ( becauee it is constituted under the laws of India and as such was not intended for the Indian market )   and may  need to be treated  either as an ordinary investement portfolio. However as the article points out that absent rules on when to recognize the earned interest, one could choose consistemnt treatment  whether to recognize this annually or  at the time of withdrawal.    The fact that this does not comply with US retirement  / 401 rules  does not imply that it is barred from being treated as a retirement fund , especially since in  the source country it is. My view  is that absent any case law or a specific  ruling by the IRS to contrary, the  taxpayer to free to choose the most benficial interpretation as suggested by the article.  For example if a  taxpayer  ( a resident for tax purposes or a resident ) subsequently decides to give up the residency and reptriates to India, he/she may want to NOT recognize  the yearly  eanred interest  and  opt  for  recognition at  withdrawal.m  Let the taxpayer decide on the basis of max benfit vis-a-vis longer term plans