Educating the community on US tax laws
HOUSTON – The Indo-American Chamber of Commerce of Greater Houston (IACCGH) and the Houston Chapter of Global Organization of People of Indian Origin (GOPIO) joined hands on January 22 to educate the community on US tax laws.
There is a general misconception among Non-Resident Indians (NRIs) and People of Indian Origin (PIOs) that their tax-free income from investments, bank deposits and real estate in India is also tax-free in the United States. There is also a widespread misunderstanding that if they have paid taxes on their income in India, they do not have to pay taxes or report that income in their US tax forms.
IACCGH and GOPIO Houston-Chapter brought together a team of eminent Certified Public Accountants (CPAs) to address a community gathering at India House about US tax regulations. The panelists were Ajit Thakur, Swapan Dhairyawan, Kershaw Khumbatta and Rimple Mashruwala. The seminar was attended by a large number of Indian-Americans as well as several other CPAs from the community.
The panelists emphasized in their speeches and in a question-and-answer session later that the US tax laws were different from Indian tax laws and the two should not be confused. Any assets or income that was tax-free in India was not necessarily tax-free in the United States and must be reported accurately in US tax returns. They also highlighted the need for community members to consult a tax consultant or CPA in case of any confusion.
Ajit Thakur, who is also the President of IACCGH, set the tone of the meeting by saying “I am proud to be Indian, I am proud to be American, and I am proud to be a good taxpayer.” He said the South Asian community had done very well in various professions and it was important for them to take care of their taxes.
Rimple Mashruwala gave details of Form 8938 for US taxpayers holding specified foreign financial assets with an aggregate value exceeding $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. For married taxpayers filing jointly, the threshold is $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.
Kershaw Khumbatta highlighted the need for filing Treasury Department Form 90-22.1 every year if a tax payer has any foreign bank accounts or other types of financial accounts based outside the United States. This is to be reported separately from the income tax return and the deadline for this form is June 30.He also pointed out the need to file Form 8300 if your business has received $10,000 in cash in one or more transactions.
Swapan Dhairyawan said the IRS focus was shifting from wealthy individuals to all taxpayers and mentioned Foreign Account Tax Compliance Act (FATCA) passed in 2010. He gave the background of the Offshore Voluntary Disclosure Initiative (OVDI) by the Internal Revenue Service (IRS) in 2009 and 2011. Billions of dollars of hitherto unreported assets have been disclosed under the two iniatives. He said the 2012 OVDI, announced on January 9, was different from the previous initiatives as it did not set a deadline for filing the disclosure.
Earlier, Mahesh Shah, President of GOPIO-Houston, gave a brief introduction of the organization which has 48 chapters worldwide. There are about 20 million Indians living in different countries. Shah said that GOPIO was trying to unite the diaspora, utilize the skills of Indian professionals and prepare a database which could benefit everyone tremendously.
GOPIO-Houston had organized a similar tax seminar last year.
Jagdip Ahluwalia, Executive Director of IACCGH, explained the benefits of Chamber membership and urged the community members to join the organization which is helping local businessmen create local jobs.
He said India was one of the world’s largest markets and IACCGH was also encouraging the local businesses to do trade with India, whether in goods or services. The Chamber was also focusing on the education field, promoting local colleges as viable institutions for Indian students coming to US.
Ahluwalia said the Chamber had organized the tax seminar for the community at large. It also organizes a wide range of events throughout the year for businessmen, entrepreneurs, young professionals and women-owned businesses.
IACCGH is exploring the possibility of hosting a web-based seminar on Indian tax laws with the participation of chartered accountants based in India.