Is this income indian or foreign income?

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This discussion clarifies whether a signing bonus, paid from an Indian company's payroll to an Indian bank account, should be classified as Indian or foreign income. Despite initially signing with a US affiliate, the payment method dictates it's considered Indian income. The advice also touches upon reporting this to a US CPA, noting that for non-residents, only US-source income is typically taxable, though full disclosure is recommended.

LoneWolf

LoneWolf (Querist)

20 November 2024 I left my job with an Indian company and joined an US affiliate. The US company offered me a salary and a signing bonus. The signing bonus is not a part of the employment offer letter but a separate letter saying that i have to return this if i leave within one year. Later, it was decided that the signing bonus will be paid from Indian company payroll. Since it is paid from indian payroll to my indian bank account and not a part of the offer letter, Is it indian income or foreign income?
It was not reported in my US tax w2 and the indian company told me that it was documented as employee bonus in indian company records.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 November 2024 It's Indian income as it's paid by Indian company to Indian bank account.

LoneWolf

LoneWolf (Querist)

20 November 2024 Thank you so much sir. Can in anyway this be classified as foreign income since I signed the letter initially with the US affiliate?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 November 2024 No, as it's paid from Indian pay roll to Indian bank account.

Nikhil Kaushik

Nikhil Kaushik (Expert)

21 November 2024 in addition to this, please do not forget to report this income in your US tax return as a foreign income.

LoneWolf

LoneWolf (Querist)

21 November 2024 Thank you so much for your reply. You mean in US it is going to be considered foreign income, right? I am not a resident in USA this tax year actaully.

Nikhil Kaushik

Nikhil Kaushik (Expert)

21 November 2024 Okay. I would leave the determination of what income needs to be disclosed to your US CPA. Just ensure that you inform him about this transaction. The threshold for taxable foreign income is very high. So I do not expect any additional taxability. But better to disclose everything to the CPA to ensure proper tax filing.

LoneWolf

LoneWolf (Querist)

22 November 2024 Thank you Nikhil, I asked my CPA, he told me that since i am a NRA (Non resident alien) in USA and also a non US citizen, only my US source income is taxable.

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