Timing for moving money to India

r2ikolv · Post by **r2ikolv** » Wed Oct 06, 2010 4:47 am

Hi,
We are planning to R2I next year. Do we need to move money that we have in the US bank accounts as soon as we move or can we do this whenever we want ? Do we get dual taxed for money that was earned before R2I if we move this money later(3-4 yrs time)?

I know that there is something called RNOR period during which we dont get dual taxed for foreign earned income, but I am not sure if money that was earned before R2I has any dual tax issue if we choose to move it after RNOR period.

Thanks.

kkassociate · Post by **kkassociate** » Thu Jan 06, 2011 6:53 pm

Hi r2ikolv,

The RNOR period will start only when you return to India ( Assuming your status is Non resident for the India Tax purpose for now). You can move the money to India during the 2 years of RNOR period where the money will not be taxed in India, but you will be paying an early withdrawal penalty in the USA for the tax deferred accounts. You need to plan this in proper way so as to avoid heavy taxes in the USA by making withdrawals in phases. For money in bank accounts, it is been already paid, hence wont be taxed again in India. Only the income which you will earn by investing such money will be taxed. You will be eligible for Foreign tax credit and relief as per the DTAA between the USA and India.

We provide full range of tax preparation and tax planning services in Both USA and India. For more information you can email us at [email protected]

Regards,
KKA

dbs · Post by **dbs** » Thu Jan 06, 2011 7:50 pm

kkassociate;359947You can move the money to India during the 2 years of RNOR period where the money will not be taxed in India,

I believe that the earned money prior to R2I will not be taxed either during RNOR or later when the person is resident. I do not think that moving money during RNOR is critical at all. It is only the money earned (whether interest or capital gains) that will be taxed after the RNOR period.

I am not an expert, so I shall bow to the kkassociate's advice about the above if they say that I am wrong.
_____________________________________
What do you call a fish with no eyes? A fsh

Purujit · Post by **Purujit** » Thu Jan 06, 2011 8:04 pm

Pardon a dumb question: is the money taxable in India for a USC who has R2Ied?

Desi · Post by **Desi** » Thu Jan 06, 2011 8:07 pm

What "early withdrawal penalty" are we talking about?

US or India will not tax his bank account money as they are his assets. The OP has not said that this is his IRA money.

We must differentiate between what are assets and what is income and when earned to understand taxability.

OP, there are a lot of threads that discuss this - it would be a good idea if you peruse some threads or provide a bit more information including your status of GC, USC or NRA when you move to India. Also, I have this curiousity as to why you want to leave money at 1% in USA banks when you are going to India where you can get much more. Yes, India also has higher inflation but you are going to live there and not going to India for a vacation.

gwldaddu · Post by **gwldaddu** » Fri Jan 07, 2011 1:40 am

I would like to thank KKAssociate for volunteering to help us.

However, I will request and advice them to please read the member post before replying. Giving wrong information is worse then not giving any information at all. So, please do not give any information that misleads.

Please refer to following reply from kkAssociate. OP was asking about withdrawals from bank account. But kkAssociate is giving advice as if the money is in a tax-deferred account.

http://www.r2iclubforums.com/forums/showthread.php/21482-Timing-for-moving-money-to-India?p=359947#post359947

Where does OP say that that bank account is a tax-deferred account? If OP was not clear enough, then kkAssociate should have clarified with OP, instead of making assumptions.

Instead of mass-replying to posts, I would appreciate if a few serious/helpful replies are made by kkAssociate.

n/j/k

kkassociate · Post by **kkassociate** » Fri Jan 07, 2011 4:58 pm

Thank you. No excuses, will be careful while replying.

Regards,
KKA

aprabhu · Post by **aprabhu** » Tue Jan 11, 2011 10:57 pm

"The RNOR period will start only when you return to India ( Assuming your status is Non resident for the India Tax purpose for now). "

Does this mean that, if I return to India last week of Feb and start working in March 2011 (which means I file my Indian taxes for year end March 2011), it impacts my RNOR period??

Thanks

sks1974 · Post by **sks1974** » Fri Jan 14, 2011 4:42 am

Based on what you said, I believe you are considered NRI for period ending March 2011, and RNOR for the next two years

kkassociate · Post by **kkassociate** » Fri Jan 14, 2011 4:01 pm

SKS is right, your status will of Non Resident for the year ending 31st, 2011. For the next two years i.e. 2011-2012 and 2012-2013 you will be Resident Not Ordinary Resident (RNOR). A year before the start of RNOR period itself you need to start deciding on where you want to keep your money in investment accounts. After the completion of your RNOR period, you become Resident and Ordinary Resident (ROR) and your global income becomes taxable in India.

We provide assistance in 401K withdrawal strategies and tax planning along with tax filing for both USA and India. You can email us on [email][email protected][/email]

Regards,
KKA