U.S. tax filing for NRIs begins long before April 15. The quality of your filing depends on the documents you gather upfront. Missing or misunderstood forms often lead to errors, delays, penalties, or missed planning opportunities.
For NRIs, documentation plays an even larger role because income, assets, and compliance span multiple countries. Below is a clear guide to the most important U.S. tax documents NRIs must collect each year and how they fit into a complete filing strategy.
Why Document Preparation Matters for NRIs
Accurate documentation allows us to report worldwide income correctly, avoid IRS notices and penalties, claim eligible deductions and treaty benefits, and coordinate U.S. and India tax outcomes efficiently. Starting with the right paperwork keeps us in control of the process.
W-2: Wage and Salary Income
Who receives it
NRIs employed by U.S. companies as salaried employees.
What it reports
- Wages earned in the U.S.
- Federal and state taxes withheld
- Social Security and Medicare taxes
- Retirement plan contributions
The W-2 forms the foundation of most U.S. tax returns. Errors here directly affect taxable income, refund calculations, and retirement contribution reporting. Even small mismatches can trigger IRS notices or delay processing.
Action step
Compare the W-2 against your final paystub for accuracy before filing.
1099 Forms: Non-Wage and Investment Income
NRIs frequently receive multiple 1099 forms, each covering a different income category.
Common 1099 Forms NRIs Receive
1099-NEC
Reports freelance or consulting income. This income may trigger self-employment tax and estimated tax requirements.
1099-INT
Reports interest from bank accounts and fixed income investments. Interest income is taxable even if amounts are small.
1099-DIV
Reports dividends and capital gain distributions from investments, often taxed at preferential rates if structured properly.
1099-B
Reports investment sales, including proceeds, cost basis, and realized gains or losses. These figures drive capital gains planning.
1099-R
Reports distributions from retirement accounts or annuities, which may be taxable depending on account type and age.
The IRS receives copies of all 1099s directly, so omitting one often results in a mismatch notice.
Action step
Collect every 1099 issued, even from inactive or rarely used accounts.
1095 Forms: Health Insurance Coverage
NRIs may receive one of the following health coverage forms:
1095-A
Issued for plans purchased through the Health Insurance Marketplace.
1095-B or 1095-C
Issued for employer-sponsored coverage.
Although the federal penalty for lacking coverage no longer applies, these forms still serve as documentation for state filings and future audit support.
Action step
Retain the form even if your tax software does not request data entry.
Foreign Income Records
NRIs must report worldwide income, regardless of where it is earned or taxed.
This includes:
- Indian salary slips
- Rental income from Indian property
- Capital gains from Indian mutual funds or real estate
- Interest from NRE, NRO, or savings accounts
Foreign income affects eligibility for the Foreign Earned Income Exclusion, calculation of the Foreign Tax Credit, and proper use of treaty provisions. Incorrect reporting often leads to double taxation or lost credits.
Action step
Convert income to USD using consistent exchange rates and retain source documentation.
Foreign Account and Asset Statements
Statements for foreign accounts support compliance filings such as FBAR and FATCA reporting.
These may include:
- Indian bank accounts
- Demat and brokerage accounts
- Mutual funds and equity holdings
- Foreign real estate accounts
Compliance thresholds are based on aggregate balances, not individual accounts, making full documentation essential.
Action step
Download year-end balances and transaction summaries early. Access may be limited later.
Deduction and Credit Support Documents
NRIs often miss deductions simply due to missing records.
Gather documentation for:
- Retirement contributions (401(k), IRA, HSA)
- Education expenses
- Mortgage interest and property taxes
- Charitable contributions
When documented correctly, these items can significantly reduce taxable income.
My Recommended Filing Approach
- Maintain one centralized folder for U.S. and India tax documents
- Begin organizing once W-2s and 1099s arrive
- Never assume small accounts or income can be ignored
- Review documents before choosing exclusions or credits
- Engage a cross-border advisor as complexity increases
Common Mistakes to Avoid
- Missing a 1099 from an old brokerage account
- Forgetting Indian bank interest
- Ignoring FBAR or FATCA thresholds
- Waiting until April to start document collection
Most penalties arise from oversight, not intent.