How To Report Indian Salary and Claim Foreign Income Exemption in USA?

R2IedMumbai2007 · Post by **R2IedMumbai2007** » Fri Jan 07, 2011 2:47 pm

I am USC moved to India in 2007. I have question regarding US IRS tax and India Tax on Indian Salary for the year 2010.

I have NO USA income and about $60K in Indian Salary. I am paying Indian Tax on this Salary.

1. How to report this Indian Salary in US Income tax return for the year 2010?
2. My income is below the Foreign Exemption level so I understand that I do not owe any tax taxes to IRS.
3. Can I also file Indian Tax return to claim refunds from Indian IT Authority?
4. In India income and tax statement (Form 16) is based on the period 1st April to 31st march. How to calculate exact tax paid for the calendar year for US tax purpose? Should I report Income and Tax from the Salary payslips for the year 2010?

kkassociate · Post by **kkassociate** » Fri Jan 07, 2011 6:54 pm

Hi,

To compute the salary per Calender year you will need the Payslips from Jan - Dec 2010, Convert the salary for every month in equivalent USD and report on your Form 1040. You have to file Form 2555 to claim the foreign earned income exclusion. You may not owe any US taxes as a result of it.

Are you MFJ and claim dependent on your US tax returns, if yes then you can optimize the situation, if you have not filed Form 2555 in 2009.

For more information and details email us at [email protected]

Regards,
KKA

SRK · Post by **SRK** » Sun Apr 17, 2011 4:28 pm

Hi KKA,

How to report the "Foreign Earned Income" in 1040? I mean, is it on line 7? I am using TaxAct for filing. It is not that straight forward to figure this out. Appreciate if you answer this promptly. Thanks in advance.

--SRK

Desi · Post by **Desi** » Sun Apr 17, 2011 7:15 pm

SRK;383304Hi KKA,

How to report the "Foreign Earned Income" in 1040? I mean, is it on line 7?

Yes, line 7.

SRK;383304I am using TaxAct for filing. It is not that straight forward to figure this out. Appreciate if you answer this promptly. Thanks in advance.

--SRK

Prompt enough? if not, sorry, next time will try to be much quicker.

suyog · Post by **suyog** » Sun Apr 17, 2011 8:42 pm

How do you guys take care of this? US tax is due before india tax. do you extend filing of US tax until india taxes are paid / returns are filled for every year?

mkngtrbl · Post by **mkngtrbl** » Mon Apr 18, 2011 10:34 am

suyog;383314How do you guys take care of this? US tax is due before india tax. do you extend filing of US tax until india taxes are paid / returns are filled for every year?

I went with an estimate based on earnings and tax deducted for the calendar year.

kkassociate · Post by **kkassociate** » Mon Apr 18, 2011 6:28 pm

Hi Suyog,

There is no need for a separate extension, any how tax payers staying abroad have an automatic extension upto 15th June. Also we report the income to the US IRS for the period Jan - Dec, for which most of the information is available before April 15th.

We provide assistance in both US and India tax filing from Pune. You can send us your details on [email][email protected][/email] or visit us at www.kkassociate.com

Regards,
KKA