IRS Tax Filing Guide for Indians
Filing taxes in 2026 is no longer a “one-form” process. With the implementation of the One Big Beautiful Bill (OBBB), several new credits such as the $12,500 Overtime Deduction have changed how Indian professionals and students calculate their liability.
Follow this step-by-step roadmap to ensure you meet all IRS requirements for the 2025 tax year.
Step 1: Determine Your Tax Residency
Before you pick a form, you must know if the IRS views you as a “Resident” or “Non-Resident.”
- The 183-Day Weighted Formula: Total your days in the U.S. in 2025, plus of your days in 2024, and of your days in 2023.
- The “5-Year Rule” for Students: If you are on an F-1 or J-1 visa, you are generally exempt from counting days for the first 5 years. You will almost always file as a Non-Resident (1040-NR).
- H-1B/L-1 Professionals: Most will pass the test and file as Resident Aliens (1040), meaning your global income (including India) is taxable.
2. Step 2: Gather Your “Global” Documents
Unlike U.S. citizens, you need documents from two countries:
- U.S. Side: W-2 (Wages), 1099-INT (Bank Interest), and 1099-DIV (Stocks).
- India Side: Form 26AS/AIS (for TDS on Indian interest), NRE/NRO bank statements, and PPF/Fixed Deposit summaries.
- New for 2026: If you earned overtime, keep your final 2025 paystub to claim the new Overtime Compensation Deduction.
3. Claim Your Treaty Benefits (Article 21 & 25)
Indian citizens have a unique advantage. Even as a Non-Resident student, you can often claim the Standard Deduction ($15,750 for 2025) under Article 21 of the U.S.-India Tax Treaty.
- Action: If you are filing Form 1040-NR, ensure you attach Schedule OI to claim these treaty benefits.
4. Calculate New 2026 Credits & Deductions
The 2026 filing season introduces several specific breaks:
- Qualified Overtime: Deduct up to $12,500 ($25,000 if married) of overtime pay from your taxable income.
- Trump Accounts: If you have children with a valid SSN, you may be eligible to report contributions to these new retirement vehicles.
- Tips Deduction: If you work in a service industry, up to $25,000 in tips may now be tax-exempt.
5. File the “Hidden” Disclosure Forms
If you are a Resident Alien, your filing is incomplete without:
- FBAR (FinCEN 114): If your Indian accounts totaled >$10,000 at any point.
- Form 8938 (FATCA): If your foreign assets exceed $50,000.
- Form 8843: Mandatory for all F-1/J-1 students, even if you had zero income.
How KKCA Secures Your Status
The IRS has upgraded its systems to “AI-First” compliance in 2026. At KKCA, we act as your human shield:
- Dual-Report Reconciliation: We bridge the gap between India’s April–March cycle and the U.S. Jan–Dec cycle.
- Treaty Positioning: We draft the legal disclosures required to claim the $15,750 Standard Deduction for Indian students.
- Overtime Optimization: We review your paystubs to ensure you get every dollar of the new 2026 overtime tax break.
Contact
Looking for personalized tax services about your specific tax situation, please contact us. We are here to help you with your specific tax matters.
Disclaimer
This blog is intended for informational purposes only and does not constitute legal or tax advice. Please consult a qualified U.S. CPA or tax attorney for guidance specific to your situation.