Navigating Global Tax Compliance: US, Canada, and India Tax Filing & Gift and Estate Taxation

In an increasingly interconnected world, individuals and businesses often maintain financial ties across multiple countries. Whether it’s working remotely, investing overseas, or holding dual citizenship, international taxation can quickly become a complex web of forms, rules, and compliance risks. Among the most challenging scenarios is managing US and India tax filing, or more broadly, US, Canada, and India tax filing, especially when combined with critical topics like gift and estate taxation.

If you are an NRI, a US or Canadian resident with ties to India, or someone managing cross-border assets or inheritance, this blog will help you understand how to stay compliant, avoid double taxation, and plan wisely for the future.

Understanding US and India Tax Filing

Who Needs to File in Both Countries?

If you’re a US citizen or Green Card holder living in India, or an Indian resident with US-sourced income, you may be subject to taxation in both countries. The United States follows a citizenship-based taxation system, meaning all citizens and permanent residents must file a US tax return regardless of where they live. India, on the other hand, taxes individuals based on their residency status.

Double Taxation Avoidance Agreement (DTAA)

Thankfully, the DTAA between the US and India prevents taxpayers from being taxed twice on the same income. For example, if you earn interest income in India and have already paid Indian tax on it, you can claim a foreign tax credit when filing your US return.

Common US and India Tax Filing Requirements

• US Returns (Form 1040): For global income, including Indian salary, rent, interest, or business profits.

• FBAR (FinCEN Form 114): For Indian bank accounts with balances over $10,000 USD.

• FATCA (Form 8938): To report specified foreign financial assets over certain thresholds.

• India ITR Filing: Required if you are a tax resident or earn income sourced in India.

Filing in both countries demands precise coordination and understanding of how income is classified and reported.

Expanding the Scope: US, Canada, and India Tax Filing

For individuals with ties to all three countries—such as US citizens living in Canada with investments in India—the tax picture becomes even more complex.

Navigating Three Tax Systems

Each of these countries has distinct tax rules:

• The US taxes citizens and Green Card holders on worldwide income.

• Canada taxes residents based on physical presence and domicile.

• India taxes based on days spent in the country and source of income.

If you meet the residency criteria in Canada, earn rental income in India, and hold a US passport, you may have filing obligations in all three countries.

Example Scenario

Let’s say you’re a US citizen residing in Toronto with property in Mumbai:

• You must file a US tax return, reporting worldwide income and disclosing your Indian financial accounts.

• You must file a Canadian tax return, declaring income from all sources including Indian property.

• If the property generates rent, you must also file an Indian ITR, and pay tax on rental income in India.

To avoid being taxed thrice on the same income, strategic tax planning is essential. You can claim foreign tax credits in the US and Canada, and make use of DTAAs between these countries to reduce your liability.

Reporting Obligations

• T1135 (Canada): Foreign income verification statement for property outside Canada over $100,000 CAD.

• Form 8938 (US): Disclosure of foreign assets.

• Indian ITR: Disclose global income (if resident) or only India-sourced income (if NRI).

A professional specializing in US, Canada, and India tax filing can help align reporting to avoid overlap and penalties.

Gift and Estate Taxation in Cross-Border Context

Beyond income taxes, gift and estate taxation plays a crucial role in international financial planning—especially for families with members and assets across borders.

US Gift and Estate Tax

The US imposes gift and estate taxes on worldwide assets of citizens and residents, with the following thresholds:

• Annual Gift Exclusion: $18,000 per recipient (as of 2024).

• Lifetime Exemption: $13.61 million (subject to change based on legislation).

• Estate Tax Rates: Up to 40% above the exemption threshold.

If you’re a US citizen gifting money or property to a child in India or Canada, you must report gifts exceeding the annual limit using Form 709.

Canadian Rules

Canada does not impose a gift tax or estate tax. However, it has a deemed disposition rule upon death—assets are considered sold at fair market value, and capital gains tax is applied.

Indian Gift Tax Laws

In India, the receiver of the gift is generally taxed if the gift exceeds ₹50,000 in value, unless it’s from a relative or on certain occasions (like marriage). However, gifts from NRI relatives are usually exempt if they qualify as family members under Indian tax law.

Cross-Border Considerations

• Gift reporting may be required in the US even if it’s exempt in India.

• Foreign assets inherited by US persons must be reported, even if no estate tax is due.

• NRIs receiving gifts from abroad may need to disclose them during Indian tax filing.

Planning ahead can help reduce tax liability and ensure your wealth is transferred efficiently.

Why You Need a Cross-Border Tax Professional

Filing in one country is complex enough. Filing in two or three—especially with issues like estate transfers, rental income, and foreign investments—requires expert guidance. A cross-border tax advisor can:

• Determine tax residency and filing obligations

• Apply the correct DTAA provisions

• Avoid double taxation and penalties

• Help structure gifts and inheritances

• Ensure complete compliance with FATCA, FBAR, T1135, and other regulations

Final Thoughts

Whether you’re managing US and India tax filing, coordinating between US, Canada, and India tax systems, or planning for gift and estate taxation, the key to success is preparation and expert support. With ever-changing tax laws and global compliance standards, working with a qualified international tax professional ensures your financial life remains efficient and penalty-free.

From income reporting to strategic estate planning, global tax compliance doesn’t have to be stressful—with the right guidance, you can file with confidence no matter where your money or family resides.