Tax residence in the United States for Indian residents and NRIs

The United States treats you as resident if you hold a green card or meet the substantial presence test over three calendar years; it taxes its citizens wherever they live. India counts your days in India in the tax year from 1 April. The India–U.S. Convention of 1989 decides dual residence under Art. 4(2), but its saving clause keeps U.S. tax on U.S. citizens.

Check your status: India and United States

Free, no sign-up, about 3 minutes. Conclusion under Indian income-tax law, compared with the law of the United States and the tax treaty.

When United States treats you as a tax resident

The United States taxes its citizens on worldwide income regardless of where they live.

A green card makes you a U.S. resident for tax purposes even if you live abroad, until the status is revoked or abandoned.

The U.S. counts days over three years: all days in the current year, one third of the days in the previous year and one sixth of the days in the year before that.

You are a U.S. citizen — the United States taxes your worldwide income wherever you live, and a treaty tie-breaker does not change that (saving clause).
You held a green card this year — under § 7701(b) you are a U.S. resident regardless of how many days you spent in the United States.
Your weighted days over three years reach 183 — you meet the substantial presence test and are a U.S. resident.

When you are a nonresident

You do not meet the substantial presence test and have no green card — you are a nonresident alien. The U.S. taxes only your U.S.-source income and income connected with a U.S. business (including pay for work done in the U.S.).
Your days in the U.S. as a student, teacher, trainee or diplomat do not count — you are a nonresident alien.
Fewer than 183 days this year and a closer connection to another country (closer connection exception, Form 8840) — you are a nonresident alien.

Where the rules of the United States clash with Indian tax rules

Resident of both: the U.S. calendar year meets India's April–March year. The United States counts days per calendar year (substantial presence test: all days this year, one third of last year's and one sixth of the year before), while India counts days in its tax year from 1 April to 31 March. In the year you move — for example on an H-1B visa — you can meet the U.S. test and still have 182 days or more in India in the Indian tax year, or remain resident in India under the 60 + 365-day test unless you left India for employment abroad (then only 182 days count, s. 6(3)). Article 4(2) of the India–U.S. Convention decides: permanent home → centre of vital interests → habitual abode (also where you have a permanent home in neither State) → nationality → mutual agreement.
Green-card holder resident in India: claiming treaty residence has U.S. consequences. A green card makes you a U.S. resident regardless of days. If you are also resident in India and the Art. 4(2) tie-breaker points to India, the saving clause (Art. 1(3)) does not preserve U.S. taxation of you as a resident, because it covers residents only as determined under Art. 4. U.S. regulations then treat you as a nonresident alien for computing U.S. income tax: you file Form 1040-NR with Form 8833, you remain a U.S. resident for other Code purposes, and filing as a nonresident may affect immigration determinations about your permanent residence.
Substantial presence in the U.S. and residence in India. You meet the U.S. substantial presence test and are also resident in India under s. 6 of the Income-tax Act, 2025. If the Art. 4(2) tie-breaker of the India–U.S. Convention assigns you to India, the United States may tax you only as a non-resident: you compute U.S. tax as a nonresident alien (Form 1040-NR) and disclose the treaty position on Form 8833. If the tie-breaker assigns you to the United States, India may tax only income from Indian sources to the extent the Convention allows (s. 159(4)).

What else to know

U.S. citizens: the United States taxes you wherever you live. The United States taxes its citizens and green-card holders on worldwide income wherever they live. If you are a U.S. citizen resident in India — for example an OCI cardholder who has returned — the treaty tie-breaker does not remove U.S. tax: under the saving clause (Art. 1(3) of the India–U.S. Convention) the United States may tax its citizens as if the Convention had not come into effect, except for the provisions listed in Art. 1(4), which include the relief article (Art. 25). The United States credits Indian income-tax (Art. 25(1)); India credits U.S. tax on income the Convention allows the United States to tax (Art. 25(2)). How the Convention relieves U.S. tax charged only by reason of citizenship has not been analysed here.
How India relieves double taxation of U.S. income. If India is your state of residence, it taxes your worldwide income and deducts the U.S. federal income tax on income that the United States may tax under the Convention — e.g. salary for work in the U.S. beyond the limits of Art. 16(2), or U.S. dividends within the treaty rate — up to the Indian tax on that income (Art. 25(2); s. 159 of the Income-tax Act, 2025). Claim it with Form No. 44 under rule 76 of the Income-tax Rules, 2026, with your U.S. return or Form W-2/1042-S and proof of payment. The U.S. tax year is the calendar year, so U.S. tax for one year relates to two Indian tax years. Whether India credits U.S. state income tax was not verified.
Working in the U.S. as a nonresident: 183 days in the taxable year. Wages for work done in the United States are U.S.-source income and taxable there even for a nonresident alien, unless all conditions of Art. 16(2) of the India–U.S. Convention are met: no more than 183 days in the United States in the relevant taxable year, an employer that is not a U.S. resident, and pay not borne by a U.S. permanent establishment or fixed base. If a U.S. group company bears your salary during a deputation, the exemption does not apply.
Indian students, trainees and researchers in the U.S.. Days on an F, J, M or Q visa as a student, or on a J or Q visa as a teacher or trainee, are generally excluded from the substantial presence test, so you can stay a nonresident alien for years. Under Art. 21 of the India–U.S. Convention, money you receive from outside the U.S. for maintenance, education or training is not taxed there for the period reasonably needed to complete the studies; under Art. 22 a visiting professor, teacher or researcher is exempt on teaching or research pay for up to two years from the first visit. In India your status still depends on your days in India in the Indian tax year.
Treaty rates on U.S. income: give your payer proof of Indian residence. To get the treaty rate on U.S. dividends, interest or royalties, give the U.S. payer Form W-8BEN claiming residence in India under the Convention. Keep an Indian tax residency certificate (Form No. 43, applied for in Form No. 42) in case the payer or the IRS asks for it.

How dual residence is resolved

If both countries treat you as a resident, Art. 4(2) of the treaty applies: Convention between the Government of the United States of America and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at New Delhi on 12 September 1989 (Notification GSR 992(E), 20 December 1990). The tests are applied in order — permanent home, centre of vital interests, habitual abode, nationality, and finally mutual agreement between the tax authorities.

Terms you will come across in the United States

substantial presence test: U.S. residence by days: 31 this year and 183 weighted days over three years
green card test: a lawful permanent resident is a U.S. resident regardless of days
exempt individual: student, teacher, trainee or diplomat whose days do not count
closer connection exception: fewer than 183 days and a closer tie to another country (Form 8840)
Form 1040-NR: U.S. return of a nonresident alien
Form 8833: disclosure of a treaty-based return position, e.g. treaty residence in India

Questions

Which treaty applies between India and the United States?

The Convention signed at New Delhi on 12 September 1989, in force since 18 December 1990. The United States is not a party to the MLI, so the text applies as signed.

How many days can I work in the U.S. for an Indian employer without U.S. tax on my salary?

Under Art. 16(2), no more than 183 days in the relevant taxable year, with an employer that is not a U.S. resident and pay not borne by a U.S. permanent establishment or fixed base.

I am a U.S. citizen living in India. Does the tie-breaker end U.S. tax?

No. Under the saving clause (Art. 1(3)) the United States may tax its citizens as if the Convention had not come into effect; relief comes through the foreign tax credit and Art. 25.

Sources

Legislation and official guidance

Treas. Reg. § 1.1-1(b) — U.S. citizens, wherever resident, are liable to income tax on income from all sources.
26 U.S.C. § 7701(b) — An alien is a U.S. resident for a calendar year if he or she is a lawful permanent resident (green card) at any time in that year, meets the substantial presence test, or makes the first-year election.
Treas. Reg. § 301.7701(b)-1(b) — A lawful permanent resident (green-card holder) is a U.S. resident for the calendar year regardless of the number of days spent in the United States.
§ 7701(b)(3)(A); Treas. Reg. § 301.7701(b)-1(c) — Substantial presence test: at least 31 days in the current year and at least 183 days counting all current-year days, 1/3 of the days in the first preceding year and 1/6 of the days in the second preceding year. Fractions are not rounded.
§ 7701(b)(5); Treas. Reg. § 301.7701(b)-3 — Days are not counted for 'exempt individuals': foreign-government-related individuals (diplomats), students on F, J, M or Q visas (generally up to 5 calendar years), and teachers or trainees on J or Q visas (unless exempt in 2 of the prior 6 years). The list is exhaustive.
IRS Publication 519, U.S. Tax Guide for Aliens — Official IRS guide for aliens: residence tests, exempt individuals, closer connection exception, dual-status years, dual-resident taxpayers.
§ 7701(b)(3)(B)–(C); Treas. Reg. §§ 301.7701(b)-2, -8 — Closer connection exception: fewer than 183 days in the current year, a tax home in a foreign country for the whole year, a closer connection to that country, and a timely Form 8840; not available if you applied for a green card (e.g. Form I-485).
U.S. Model Income Tax Convention (2016), Art. 1(4)–(5) (saving clause) — The convention does not affect a state's taxation of its residents and its citizens, except for listed benefits (incl. relief from double taxation, non-discrimination, mutual agreement). Each actual treaty has its own saving-clause article — check the treaty with the other country.
Art. 1(3)–(4) India–U.S. Convention (saving clause) — Each State may tax its residents (as determined under Art. 4) and, by reason of citizenship, the United States its citizens, as if the Convention had not come into effect; a former citizen is covered for 10 years after loss of citizenship if tax avoidance was a principal purpose. Para. 4: the saving clause does not affect Art. 9(2), 20(2) and (6), 25, 26 and 27, and — for individuals who are neither citizens of nor have immigrant status in that State — Arts. 19, 21, 22 and 29.
Art. 25 India–U.S. Convention (1989) — The United States allows a resident or citizen of the United States, subject to U.S. law, a credit for the income tax paid to India (para. 1). India allows a resident of India a deduction from Indian tax equal to the income tax paid in the United States on income which may be taxed there under the Convention, capped at the Indian tax attributable to that income (para. 2). Para. 3 contains source rules for this purpose.
Income-tax Act, 2025, s. 6(1)–(2) — Residential status is determined for each tax year. An individual is resident in India in a tax year if in India for 182 days or more in that year, or for 60 days or more in that year and 365 days or more in the four years preceding it.
Income-tax Act, 2025, s. 6(3), (6) — The 60-day test does not apply to an Indian citizen who leaves India in the tax year as a member of the crew of an Indian ship or for employment outside India; only the 182-day test applies. Days of crew on a voyage are counted as prescribed.
Art. 4(1)–(2) India–U.S. Convention (1989) — Resident: any person liable to tax under the laws of a State by reason of domicile, residence, citizenship, place of management, place of incorporation or any similar criterion. Dual-resident individual: permanent home; if in both, closer personal and economic relations (centre of vital interests); if that cannot be determined, or if he does not have a permanent home available in either State, habitual abode; if in both or neither, nationality; otherwise mutual agreement of the competent authorities.
Treas. Reg. § 301.7701(b)-7(a)(1), (a)(3), (b), (c) — A dual resident who claims treaty residence in the other country is treated as a nonresident alien for computing U.S. income tax, files Form 1040-NR with a fully completed Form 8833, and is treated as a U.S. resident for other Code purposes; the filing may affect the immigration authorities' determination on maintaining a residency permit.
Income-tax Act, 2025, s. 159 — The Central Government may enter into agreements for relief from double taxation and avoidance of double taxation; where an agreement applies, the Act applies only to the extent more beneficial to the assessee (s. 159(4)). A non-resident may claim treaty relief only with a certificate of residence from the other country's government and the prescribed documents and information (s. 159(8)).
Income-tax Rules, 2026, rule 76; Forms No. 44 and 45 — A resident gets credit for foreign tax in the tax year in which the income is taxed in India; credit is the lower of the Indian tax on that income and the foreign tax, per source and per country; not against interest, fees or penalties; disputed foreign tax only after settlement (Form No. 45, within 6 months of the month of settlement). Form No. 44 with a certificate of income and tax and proof of payment, within 12 months from the end of the tax year if the return was filed on time; accountant verification if foreign tax is ₹1,00,000 or more. Conversion at the TT buying rate.
26 U.S.C. §§ 871, 1441; IRS — Taxation of nonresident aliens — Income effectively connected with a U.S. trade or business (including wages for services in the U.S.) is taxed at graduated rates; fixed or periodic income (interest, dividends, rents, royalties) not effectively connected is taxed at a flat 30% of gross unless a treaty sets a lower rate; return: Form 1040-NR.
Art. 16(2) India–U.S. Convention (1989) — Remuneration for employment exercised in the other State is taxable only in the State of residence if the recipient is present in the other State for not more than 183 days in aggregate in the relevant taxable year, the employer is not a resident of the other State, and the remuneration is not borne by a permanent establishment or fixed base of the employer there. For Indian tax the 'taxable year' is the previous year (now the tax year) (Art. 3(1)(k)).
Arts. 21–22 India–U.S. Convention (1989) — Students and business apprentices: payments arising outside the visited State for maintenance, education or training are exempt there for such period as is reasonable or customarily required to complete the education or training (Art. 21). Professors, teachers and researchers visiting for not more than two years: remuneration for teaching or research exempt in the visited State for up to two years from the first visit; research must be in the public interest (Art. 22). Under Art. 1(4)(b) these benefits are not available to citizens or green-card holders of the visited State.
Income-tax Rules, 2026, rule 75(3); Form No. 42 (application) and Form No. 43 (certificate) — Application for a certificate of residence for the purposes of an agreement under s. 159(1)–(2), filed on the e-filing portal (replaces Form 10FA): period for which the certificate is needed, basis of the residential status claimed, address in that period, supporting documents; the certificate is issued in Form No. 43.
26 U.S.C. § 1411; IRS — Questions and Answers on the Net Investment Income Tax — 3.8% on net investment income above MAGI of $200,000 (single), $250,000 (married filing jointly), $125,000 (married filing separately); amounts excluded under § 911(a)(1) are added back to MAGI; nonresident aliens — including dual residents claiming treaty nonresidence — are not subject.
Art. 4(2)(a) India–U.S. Convention — An individual resident of both States is deemed resident of the State in which he has a permanent home available to him; if he has one in both States, of the State with which his personal and economic relations are closer (centre of vital interests).
Art. 4(2)(b) India–U.S. Convention — If the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he is deemed resident of the State in which he has an habitual abode.
Art. 4(2)(c)–(d) India–U.S. Convention — If he has an habitual abode in both States or in neither of them, he is deemed resident of the State of which he is a national; if he is a national of both States or of neither, the competent authorities settle the question by mutual agreement.

Case law

United States Tax Court, Topsnik v. Commissioner, 146 T.C. No. 1 (docket 2482-14), 20/01/2016 — Lawful permanent resident status continued until it was formally abandoned (Form I-407); the taxpayer could not rely on German residence under the treaty because he was not liable to tax in Germany on his worldwide income.

Updated 04/11/2026. The result is for information only and is not tax or legal advice. Tax authorities and courts may interpret the rules differently, including because of circumstances not covered here, and the law changes. Consult a qualified adviser before making decisions.

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