Did you know that working remotely on an H1B visa during the pandemic could impact not just your job but also your taxes — even after returning to India? This situation can be quite complex, particularly for Indian nationals who were employed in the US and then opted to work from home in India.
Here’s the situation: if you held an H1B visa in 2022 and 2023 and received your salary from a US employer, your income remained subject to US tax laws. Even if your employer didn’t operate in India, your visa status meant you were still considered a US taxpayer, which requires you to report your earnings for both years. Ignoring your US income is not an option.
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The tax scenario becomes even more intricate once you’re back in India. Many people think they can evade US taxes or benefit from the Double Tax Avoidance Agreement (DTAA), but here’s the catch: the US won’t acknowledge your change of status unless you follow the correct procedures. Without a Tax Residency Certificate (TRC), your friend cannot claim the DTAA benefit, even if she hasn’t set foot in the US since 2024.
Additionally, her interest from Indian fixed deposits isn’t exempt either either. Although the interest might seem minimal (under 2.5 lakh), she still needs to report it on her Indian tax return, and neglecting to do so could lead to bigger issues down the line. Skipping this now to dodge a small tax bill could haunt her later when she applies for loans, visas, or even when dealing with routine paperwork.
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Considering the idea of pretending to be unemployed and not filing taxes until she secures a job in India is a risky move. Taxes don’t care about your employment status; they focus on where you’ve been and what you’ve earned.
This approach might provide temporary relied, but once she files her return with any future employer or for a vias, the gaps in her financial history could surface, resulting in penalties and interest.
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In the end, it’s wise to tackle this now, even if it feels like a hassle. Reporting all income might appear to be an added burden, but it’s the best way to prevent her from getting into a bigger mess down the line. It’s about being proactive and ensuring her financial records are accurate and tidy.
