Backfiling Taxes or Streamlined Procedure for Indian bank accounts

[isacluv]

Hello - I realize this question has been posted quite a few times and I've read many of those posts. I'm trying to determine what is best for my situation which is described as follows.


Background


I moved from India to the US end of 2006 and have been a US resident since then. I was previously working in India and had a couple of bank accounts and equity linked investments there. The total value of these savings would have been around USD 40,000.


After moving to the US, between 2011 and 2012 I transferred all my US savings at that time (approx USD 400,000) to my India accounts. One was an old resident account and the other was a NRE account opened in 2012 . I had transferred this money to use for buying a property in India. However, the deal could not go through and my money was left lying in India - some of it as CDs, some of it in the checking account and a portion invested in mutual funds till the time I could use it for purchasing the property.


Current Situation


I realized recently that I had made a few mistakes not knowing about the US tax laws. I have been filing my taxes through turbotax and never understood the following three things


1) I was not aware that I was supposed to file US tax on that money in the India account. That is, the interest on the money sitting in the banks.


2) I did not know about filing FBARs for these India bank accounts


3) I also did not know I was not supposed to keep the resident account at one of the banks. In fact, my father has been filing India income tax returns for me on the interest earned on the resident account. On learning this, I have just converted this resident account into an non-resident account.


So at this point I have liquidated all my mutual fund holdings and left with two non resident accounts with a total value of around $450,000. My total earning on the principal in dollar terms has been minimal because when I transferred the money to INR in 2011/2012 it was at a exchange rate of around 49 INR and now it is 62 INR. However, I will need to go through the exact records to determine what the exact income earned has been.


Path Forward


At this juncture, I want to make sure I'm compliant on my US taxes and the FBAR filings. I also want to transfer all the money back to the US and do not intend to use it in India any more. And then will want to close all those accounts.


I'm trying to figure out what is the most effective way of going about doing it. I'm wondering if back filing for the past 6 years and filing FBARs for all those years is the right thing to do or doing this through the streamlined procedure is better. I just feel awful having to pay a penalty given 90% of this is post tax money I earned and saved in the US and needlessly transferred to India.