H1B rule - start a business in INDIA

[the1]

Hi,

I'm on H1B(GC in-process), now I'm planning to start a company in INDIA, below are my questions,

1. Is it legal for H1B holder to start a business in foreign/INDIA
2. if it is legal, do I need to report in US tax returns
3. if I need to report in US tax returns then what is the limit on foreign income, even if company not making any profits or if I earn any income on rental properties.

Please suggest.

[User099]

1. I AM NOT A LEGAL EXPECT, but I think it is ok. May be you won't be the sole owner or handling the day to day activities. I will be interested to know others opinion too on this.

2. Yes, You will have to report it.

3. There is no such limit that I know when reporting to IRS. But there is a limit on how much you can transfer back from India to US for individuals which I think is $250K per year.

Edited November 25, 2019 by User099
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[JoeF]

On 11/19/2019 at 11:06 PM, the1 said:

Hi,

I'm on H1B(GC in-process), now I'm planning to start a company in INDIA, below are my questions,

1. Is it legal for H1B holder to start a business in foreign/INDIA
2. if it is legal, do I need to report in US tax returns
3. if I need to report in US tax returns then what is the limit on foreign income, even if company not making any profits or if I earn any income on rental properties.

Please suggest.

You can start a business, but you can NOT work for it in any form while you are in the US on H1. On H1 you can ONLY be a passive investor, putting money into a business and otherwise staying completely out of it. Working for it would be a violation of the H1 rules.

On H1 you are a US tax resident (except possibly the first year) and you have to declare your worldwide income on your US tax returns. See IRS Publication 519, Tax Guide for Aliens.

Edited November 26, 2019 by JoeF