H-1B Visa Holder With Foreign Bank Accounts and Investments: What Must Be Reported?

The client’s situation: H-1B employment and investments in India

The client worked in South Florida and retained savings accounts, fixed deposits, a brokerage account and mutual funds in India. His previous returns reflected his U.S. wage statements, but the preparer had not received the Indian statements or asked about fund holdings.

This anonymized case illustrates how accurate payroll reporting can coexist with incomplete international reporting. The H-1B visa did not itself determine tax residency; we first needed to establish which years he was a U.S. resident for tax purposes.

What went wrong

The client had treated reinvested interest and dividends as irrelevant because no money reached his U.S. bank. During U.S. tax residency, foreign interest, dividends and recognized gains generally belong on the return even when reinvested or retained abroad.

There were also two separate reporting questions: whether account balances required an FBAR or Form 8938, and whether his Indian mutual funds required PFIC reporting. A brokerage statement alone does not resolve the tax treatment of every investment inside it.

The tax or reporting requirement

Tax residency generally follows the green card test or substantial presence test. The latter generally requires 31 current-year days and 183 weighted days over three years, counting all current-year days, one-third of prior-year days and one-sixth of second-prior-year days. H-1B days ordinarily count, unlike days excluded under certain F/J/M/Q exempt-individual rules.

For a U.S. person, an FBAR generally applies if aggregate foreign financial accounts exceed $10,000 at any time during the calendar year. Form 8938 is separate and has filing-status and residence-based thresholds. A single filer living in the United States generally uses more than $50,000 at year-end or $75,000 at any time.

Indian mutual funds often qualify as PFICs, potentially requiring a separate Form 8621 for each fund and specialized tax calculations. Eligible foreign income taxes may support a Form 1116 credit, subject to sourcing, category and timing limits; paying Indian tax does not eliminate U.S. reporting.

Forms potentially involved:

• Form 1040, Schedule B and potentially Form 1040-X
• FinCEN Form 114 (FBAR) and Form 8938
• Form 8621 for applicable PFIC holdings; Form 1116 for eligible credits

The potential IRS exposure

Omitted income can create additional tax, interest and possible accuracy-related penalties. Missing Form 8938 can carry an initial $10,000 penalty, while FBAR penalties follow separate rules. Missing information can also affect limitation periods; owing little tax is not a safe basis for ignoring the issue.

Correction procedures have distinct eligibility requirements. Submitting late forms without considering income omissions, prior IRS contact or willfulness can create avoidable complications. We did not promise penalty relief or assume that every overseas account qualified for the same treatment.

How Chirino USA analyzed the situation

Chirino USA reviewed immigration and travel history before comparing prior U.S. returns with Indian bank statements, interest certificates, brokerage transactions and fund records. We identified the resident years, peak account values, foreign taxes and potentially missing income.

For fixed deposits, we examined interest accrual, crediting and the applicable U.S. recognition rules instead of assuming all income arose at maturity. We translated relevant amounts into U.S. dollars and separated fund distributions from sale proceeds and cost basis.

How we addressed the issue

We recommended a year-by-year reconciliation before choosing a correction path. Delinquent FBAR submission procedures may be appropriate when all account income was properly reported and tax paid, no relevant IRS contact exists and the other conditions are met. They do not cure omitted income.

Where income was missed and conduct was non-willful, we evaluated Streamlined Domestic Offshore Procedures, including residence eligibility, required certifications, amended returns, FBAR coverage and the generally applicable 5% miscellaneous offshore penalty. Non-willfulness must be supported by facts, not merely asserted. Other circumstances may require another approach.

The result

The recommended strategy was a coordinated prior-year correction followed by an annual Indian-account reporting checklist. The client was asked to preserve statements and provide new investment details before buying additional funds. No penalty reduction or IRS acceptance was assumed; completion depended on confirming eligibility and obtaining the missing records.

What other taxpayers in similar situations should know

• A foreign account can be reportable even when it predates your move.
• FBAR and Form 8938 do not replace each other.
• Foreign mutual funds need review beyond ordinary interest reporting.

How Chirino USA can help

Chirino USA Accountants & Advisors specializes in U.S. international tax matters for foreign nationals moving to, working in, or investing in the United States. We can review your days in the U.S., your income and your assets abroad, and tell you which U.S. returns and reports apply to you. We advise on taxes only; questions about your visa or immigration status should go to an immigration attorney. You can email us or message us on WhatsApp, in English or Spanish.

Sources and official references

• IRS — Comparison of Form 8938 and FBAR Requirements
• IRS — Instructions for Form 8621
• IRS — Delinquent FBAR Submission Procedures
• IRS — Streamlined Domestic Offshore Procedures
• IRS — Publication 519, U.S. Tax Guide for Aliens