Indian professionals on H-1B visas who move back home often focus on flights, housing, and new jobs. But the tax year doesn’t pause at the airport. According to analysis by VisaVerge.com, many returnees still have filing duties tied to the United States 🇺🇸 and India, and missing steps can affect future visa applications, bank access, or even family immigration plans. With the 2025 season bringing steady rules but sharper compliance checks, cross-border planning around U.S. taxes and Indian tax residency is now a core part of any return timeline.
Key takeaway
If you earned U.S. income before your move or kept financial ties that produce income, expect to file a return in the U.S., in India, or both. H-1B workers who are not U.S. citizens or green card holders may still have U.S. filing needs if income continues after departure. Moves that happen mid-year also create split years, which means dual-status filing in the U.S. and split residency in India. Filing in two systems without a plan can lead to double work, late forms, or lost credits.
Main income buckets to watch
VisaVerge.com identifies three primary income categories returnees should monitor:
- Salary earned in the U.S. before the move
- Taxed in the U.S.; generally not taxed in India if those earnings relate to work performed while outside India.
- Work performed in India for a U.S. employer
- Often taxed in both countries; requires careful allocation and treaty consideration.
- Rental income or interest earned in India
- Taxed in India and may affect U.S. reporting depending on residency status.
To reduce overlap, taxpayers commonly rely on:
– FEIE (Foreign Earned Income Exclusion) — excludes certain foreign-earned income from U.S. taxation when rules are met.
– FTC (Foreign Tax Credit) — credits foreign taxes paid against U.S. tax liabilities.
Which option is optimal depends on your year’s timeline and where the work was performed.
Green card holders: carry the right document
If you once held a green card, the way you leave matters.
- If you are leaving for good, formally surrendering via Form I-407 is the cleanest way to end ongoing U.S. resident tax status. Official instructions and filing details are available here: Form I-407, Record of Abandonment of Lawful Permanent Resident Status.
- If you skip a proper surrender yet stop living in the U.S., you can face residency questions and even future expatriation tax risk. Green card holders who do not surrender often must keep filing U.S. returns.
Policy and tax coordination highlights
Indian residency test
India uses a day-count test to set tax residency:
- More than 182 days in India during the financial year = resident (global income taxable in India).
- Fewer than 182 days = non-resident (only Indian-source income taxed).
This matters for H-1B returnees who move mid-year; your days in India can make you a resident from that year, changing whether foreign earnings are included in your Indian tax base.
Indian filing thresholds and thresholds
- Basic exemption limit for individuals below 60: ₹3 lakhs. If your income exceeds this, you must file.
- GST registration may be required if business turnover crosses ₹40 lakhs (or ₹20 lakhs in certain states).
- Usual individual return due date: July 31.
Treaty relief and DTAA
Because many H-1B workers keep U.S. employers after returning, the India–U.S. Double Taxation Avoidance Agreement (DTAA) can reduce double taxation risk. If tax is paid in the U.S. on income that India also taxes, India allows Foreign Tax Credit (FTC) — proper paperwork is key to claim it.
U.S. dual-status returns
A mid-year move can create a dual-status return in the U.S. — part-year resident and part-year nonresident — based on move date and income sources. Many people mix FEIE with FTC depending on where work was performed. VisaVerge.com notes that aligning payroll location with actual work location is essential; keeping U.S. payroll after you move can create payroll and withholding mismatches.
Warning signs that require immediate action
Address these promptly to avoid penalties, missed benefits, or future immigration complications.
- Do NOT stop filing U.S. returns if you still have reportable income.
- Do NOT ignore FBAR / FATCA — separate U.S. reporting rules for foreign accounts and assets.
- Do NOT forget capital gains on U.S. or Indian assets.
- Do NOT keep a green card without meeting residency — this can raise expatriation tax risk.
Practical steps and a first-year checklist
A smoother exit plan starts with tracking days for both systems. Keep a calendar and store boarding passes or travel records. If you were a green card holder planning a long-term move, consider formal surrender via Form I-407 before filing seasons slip by. Ask HR to update payroll location to India if you will be working from India — this aligns with withholdings, payslips, and tax documents.
Build and follow this checklist in your first year after returning:
- Track day counts for India and the U.S.
- Complete green card surrender with
Form I-407if leaving permanently. - Update HR payroll location to India for work performed in India.
- Keep U.S. online access to bank accounts and tax transcripts.
- Hire a cross-border tax advisor for the first year to avoid missed credits or wrong forms.
Benefits of clean compliance
Timely and accurate filings do more than avoid fines:
- Support visa re-entry and future immigration processing.
- Ease U.S. mortgage and bank checks.
- Help with family sponsorship or future citizenship applications.
- On the India side, secure refunds, ease bank checks for foreign remittances, and reduce hassles during investments.
Indian remittance documentation
When moving funds out of India, banks may request:
- Form 15CA and Form 15CB — these help the government track remittances and assess tax status for foreign payments.
Keeping tax filings current removes common obstacles. For official guidance on Indian tax procedures, deadlines, and e-filing portals, visit the Income Tax Department of India: https://www.incometax.gov.in.
Current outlook and planning advice
As of October 2025, there are no major new Indian tax changes specifically aimed at H-1B returnees. Still, split-year transitions can be messy even without new laws. A mid-year move may leave you with:
- W-2 income earned in the U.S.,
- Project income for work performed in India for a U.S. employer, and
- Bank interest from accounts in India.
That mix involves DTAA considerations, FEIE/FTC choices, and residency tests on both sides. A one-time planning session early in the year can prevent double filing chaos later.
Return migration also boosts India: thousands of professionals bring skills, savings, and networks back each year. Policymakers want that flow to grow, and taxpayers want clear rules. The best bridge is practical compliance: plan day counts, align payroll, and file on time to keep doors open in both countries and help families move freely between them.
This Article in a Nutshell
Indian H-1B returnees often face simultaneous U.S. and Indian tax obligations. Mid-year moves can create split-year outcomes—dual-status U.S. returns and Indian split residency—making income allocation and treaty benefits essential. Primary income categories to monitor are U.S. salary earned before leaving, work performed in India for U.S. employers, and Indian rental or interest income. Tax tools include FEIE and the Foreign Tax Credit; applicability depends on timing and work location. Green card holders should formally surrender status via Form I-407 if leaving permanently. Practical steps include tracking day counts, updating payroll to India, preserving U.S. account access, and consulting a cross-border tax advisor to avoid penalties and protect future visa or banking access.
