Transitioning form US to India taxes

[Vijay256]

Hi All. After working in the USA for 10+ years, I moved to India permanently in August 2024.  I just received my last payroll and also moved all my savings out. I will not have any income in the USA after September. I am currently taking a break and haven't found a job yet. 

First Question: So far I am reporting my Indian income—interests from my NRE savings account and fixed deposits in my US tax return sch b and filing fbar.  At some point I have to stop reporting my Indian income in US and start reporting/filing my Indian return. According to my Indian tax preparer, he's asking me to report everything till September in the US and everything starting October in India. India tax year is from April to March with a July filing deadline.. Trying to figure out when I should transition from us to India for reporting income.

Also, second question: since this is my final tax return, do I have to file anything differently and whether I can handle the tax situation/return by myself online next year or better to go through some tax preparer in the US?

I am an Indian Citizen and I was on H1b visa for last 10+ years and visa expired now. No Green card. 

Thanks for your time and appreciate your help 

[rjs]

If you are a U.S. citizen or resident alien you must continue to file a U.S. tax return and report all of your worldwide income, no matter where the income is from. You must do this even if you also file an Indian tax return. @pk will give you more details.

[Vijay256]

I am an Indian Citizen and I was on H1b visa for last 10+ years and visa expired now. No Green card.  Sorry forgot to provide this information in the original post. Thanks

[pk]

@Vijay256 , Namaste ji

Based on your post :

(a) Do you have any assets in the USA ( bank account, house, equities,  employer pension plan, 401(k) and/or similar tax advantaged account)  ?

(b)  Did you the requisite paperwork  with the IRS showing that you have left the USA ?

(c) When did you come to the USA with H-1B and when exactly did you depart ?  Was this your only US residency ?

I ask for these  bits of info because as a long-term resident of US ( usually  10 years or more ) there are some "exit" tax implications.

Very generally  please note the following ( I will follow up once I hear back from you :(

1. Till IRS accepts that you are not a resident for tax purposes any more and/or do not have substantial financial connection with the USA, you have to file a return as a resident and be taxed on world income.

2. Assuming that you can show that  your connection to India  is pre-dominant post your departure ( date TBD ), you will still have to file a US tax return recognizing any US sourced income.

3. Most likely scenario ( assuming  that  that is soi when you answer my question s )  for your 2024 would be dual status filer ---- Form 1040 showing all your world income till  the day of departure ( note that you would  have to use itemized deduction ) and form 1040-NR for the rest of the year and recognizing ONLY US sourced income.

 Does this make sense ?  I will circle back once I hear from you --yes ?

Namaste ji

pk

[Vijay256]

Thanks for the response.

(a) Do you have any assets in the USA ( bank account, house, equities,  employer pension plan, 401(k) and/or similar tax advantaged account)  ?

i have couple of bank accounts (checking - No Interests) with some emergency fund around 15K if needed for paying any taxes owed and refund purposes. I don't have any other equities, pension, house, or 401k or any other accounts

(b)  Did you the requisite paperwork  with the IRS showing that you have left the USA ?

No This is the first time hearing about it

(c) When did you come to the USA with H-1B and when exactly did you depart ?  Was this your only US residency ?

I came to US in June 2008 and departed on August 2024. was on H1b all these years. yes this is my only US residency

Thanks

[pk]

@Vijay256   thank you for the information you have provided.  Rather than my own writing a response, I would very strongly recommend the following page from the IRS:-->

Departing alien clearance (Sailing Permit) | Internal Revenue Service (irs.gov)

Of course  if you have more questions on this , please feel welcome to add to this thread or you can  PM me and I will do my best to help.

Also for 2024 filing,  you should be able to do this on TurboTax -- for the  1040 portion . But for the  1040-NR portion ( especially if you have had no US income  post your  departure from the USA ), you could  download the form 1040-NR -- it is a fillable pdf -- , print sign date and mail-in along with the 1040 form.   You  put the  1040  first , write :  " DUAL STATUS  FILER  "  on the first page of the 1040, attach the 1040-NR behind this  and  mail this whole  package  using Fed-Ex or similar service with delivery tracking.  The address to file the return is  shown at the IRS 1040 filing page.

Note that you may also  have to file a return for the State where you resided while working in 2024.

Does this help ?   If you need more support , feel free to add to this thread and/or PM me.

Namaste ji

pk