Returning to India - 2019 2020. Tax planning
Any experienced folks who have dealt with tax planning and asset vs income considerations when you are moving back to India . This is for visa holder , so for US tax purposes I would be considered as NRA - non resident alien. Assets 401K Roth IRA 529 plan House HSA Estate planning SSN eligibility if you are still NRA but completed 40 credits RNOR status for 3 years
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Anytime b/w Feb 1 - March 30 of any year is the ideal time to make a move because it keeps you as resident alien for US since you pass the substantial presence test of US and you get favorable tax rates. And in India the financial year ends in March so again you would be in lower income tax bracket over there. That is when you can take advantage of liquidating your funds because income-wise you would be in the lower tax brackets for both the countries.
@Sprung. Appreciate your response . I agree for the 1st part for resident alien tax benefits here . However for the 2nd part w.r.t liquidating USA assets or income , I read that RNOR status helps you in transferring of assets and income , without additional taxes in India . So the lower income bracket in India May not be overall useful due to progressive tax system in both countries . Pls let me know if you disagree on the 2nd part
That is correct but to get RNOR status you need to have lived outside India for 9 out of preceding 10 financial years of india. If you satisfy that criteria then yes you have 3 years to move your assets tax free from USA to India. But keep in mind you would become a non resident alien of USA if you don’t spend at least 31 days in a given year in USA and non resident alien gets taxed at a flat 30% rate on most of the investments. So it would be better to not wait for the second or third year to liquidate your assets because then you would be taxed higher by USA. Also before you go back to India you need to get an income tax clearance certificate from USA that you have fulfilled your tax obligations before departing the country. Think of it as an early tax return. You need that certificate because if in case you plan to visit USA sometime later in life and reapply for another visa then they would ask you for it to make sure that you did not evade any taxes.
Apply to a bunch of credit cards, withdrawal cash and flee to India.
India doesn't recognize tax free 401k accounts. So if you have gains in your 401k + Roth IRA investments sell them and park in cash before you leave. Once in India you will have to start paying investment tax on any gains made in US retirement accounts.
@Truldiot do you know if we can bring assets that includes cash, property , etc in home country , any time in future without any tax consequences ? Asset was earned while being in USA, so wondering if that should be withdrawn as is . I agree future income on those assets should be taxed
Don't want to give half baked advice. Please check with other sources
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