Moving to the US for Work on H-1B or L-1: The First-90-Days Money Sequence, SSN to Credit to the PFIC Trap, and What to Do With Your Indian Accounts

You land in the US on an H-1B in, say, late March, your employer wants you productive in a week, and your first US paycheck is three weeks out. Meanwhile your salary in India has stopped, your Indian SIPs are still auto-debiting, your resident savings account is technically now illegal under FEMA, and somewhere in the background a US tax clock has already started ticking. The financial mistakes Indians make in this window are not exotic. They are ordinary, expensive, and almost entirely avoidable if you do six things in the right order.

The 30-second answer: In your first 90 days on H-1B or L-1, sequence it: apply for your SSN about 10 days after arrival (card arrives in roughly 3 to 6 weeks), open a US checking account, get a secured credit card so you build a credit score from zero (a usable score takes about 6 months), and enroll in your 401k to at least the employer match. The 2026 employee 401k limit is USD 24,500. You become a US tax resident once you cross 183 days under the substantial presence test, which makes worldwide income taxable and triggers FBAR (accounts over USD 10,000 aggregate) and Form 8938. Before that, stop buying Indian mutual funds: they are PFICs taxed punitively under Section 1291. Redesignate your Indian resident accounts to NRO, open NRE for repatriable savings, and remit US savings into NRE freely.

This guide assumes you already understand what NRE and NRO accounts are and roughly how Indian residency works; if not, the NRE, NRO and FCNR account guide and the RNOR residency rules cover the basics. What follows is the part that costs real money and real time: the exact order to set up your US financial life, the US tax clock that catches people off guard, the PFIC trap that quietly bars the Indian investment products you have used your whole life, and the cleanup your Indian accounts need before the rules catch you holding them illegally.

The first 90 days, in the order that actually works

The sequence matters because each step gates the next. You cannot open most US bank accounts cleanly without an SSN, you cannot get a real credit card without a bank relationship, and you cannot build a credit score without that first card reporting to the bureaus. Do them out of order and you waste weeks.

Start with the SSN. The Social Security Administration verifies your status electronically with DHS, and that record takes time to sync after you enter, so the guidance is to wait about 10 days after arrival before applying. Apply too early and the verification fails, which adds another two weeks. Once you apply with your passport, I-94 and approval notice, the card typically arrives by mail in two to four weeks, so plan for roughly three to six weeks from landing to card in hand. You can technically start work on H-1B before the card arrives using the receipt, but you cannot do much else financially without the number.

While you wait, open a checking account. Several banks will open an account for a new arrival with a passport, visa and US address, sometimes before the SSN lands, then attach the SSN later. Get a checking account and a debit card, set up direct deposit so your first paycheck has somewhere to go, and avoid accounts with monthly maintenance fees you can waive by keeping a minimum balance or a direct deposit on file. This is plumbing, not strategy; pick a large bank with branches near you and good app, and move on.

The real long game is credit. You arrive with a US credit score of zero, which is not bad credit, it is no credit, and to American lenders the two look similar. With no score you will be quoted worse rates on a car loan, asked for large deposits on an apartment or utilities, and turned down for the good rewards cards. The fix is a secured credit card: you put down a cash deposit, often USD 200 to USD 500, and that deposit becomes your credit limit. You use the card for small purchases and pay the statement in full every month. The issuer reports your behaviour to the three bureaus, Experian, Equifax and TransUnion, and a score begins to form. Bureaus typically generate a score after three to six months of activity, and with on-time payments and low utilisation most newcomers reach a fair score (580 to 669) within 6 to 12 months.

Two faster levers, if your employer or bank offers them. Some issuers run newcomer programmes that use your foreign credit history or your bank relationship to issue an unsecured card without a US score, and a few will skip the SSN entirely using an ITIN, though as an H-1B worker you will have an SSN soon anyway. The other lever is becoming an authorised user on the card of a spouse or relative who already has US credit, which can seed your file faster. The full mechanics, including which behaviours move the score and which myths waste your money, are in the building credit history abroad guide.

Put concrete numbers on the 90-day sequence for a single H-1B engineer on a USD 130,000 salary arriving with about USD 15,000 in starting savings. Week one: checking account opened, debit card active, USD 15,000 parked. Day ten onward: SSN applied for, card expected by week five or six. Week two: a secured card with a USD 500 deposit, used for groceries and the phone bill, paid in full. First paycheck, roughly USD 3,600 net every two weeks after federal and state tax and 401k, lands by week three or four. By day 90 you have a checking and savings account, one secured card reporting cleanly, and an emerging score, having spent nothing on this beyond the refundable USD 500 deposit. The person who instead waited for the score to appear on its own is, at day 90, still at zero.

Your 401k is the single highest-return move you will make this year

This is where Indians arriving in the US leave the most money on the table, usually out of a vague sense that retirement accounts are for people who plan to stay forever. The mistake is treating the employer match as optional. A typical US employer matches, say, 50% of your contributions up to 6% of salary, sometimes dollar-for-dollar. On a USD 130,000 salary, contributing 6% (USD 7,800) to capture a 50% match hands you USD 3,900 of free money, an instant 50% return before the market does anything. There is no investment in India or the US that reliably beats a guaranteed 50%. Contribute at least enough to get the full match from your first eligible paycheck.

For 2026 the IRS set the employee deferral limit at USD 24,500, up from USD 23,500 in 2025. If you are 50 or older the catch-up takes you to USD 32,500, and for ages 60 to 63 a higher catch-up applies. One change to know if you earn well: starting in 2026, if your prior-year FICA wages exceeded USD 150,000, any catch-up contribution must go in as Roth (after-tax) rather than traditional. The combined employee-plus-employer ceiling is USD 72,000. For most new arrivals the binding number is the USD 24,500 employee limit and, more importantly, the match.

The honest nuance for someone who may return to India: a traditional 401k cuts your US taxable income now, but withdrawing before age 59 and a half generally triggers a 10% early-withdrawal penalty plus ordinary tax, and the India-US treaty does not make 401k withdrawals tax-free. So if you genuinely expect to leave within a couple of years, weigh contributing beyond the match against the friction of unwinding it later. But do not let that uncertainty talk you out of the match itself. Even if you cash out early and eat the penalty, capturing a 50% employer match and then losing 10% to a penalty still leaves you far ahead. Inside the 401k, choose low-cost US index funds (an S&P 500 or total-market fund), which neatly sidesteps the PFIC problem described next, because US-domiciled funds are not PFICs.

The PFIC trap: why your Indian mutual funds become a liability the day you become a US resident

This is the part almost nobody warns you about before you fly, and it is the most consequential. Indian mutual funds, ELSS schemes, index ETFs, ULIPs and most pooled India-domiciled investment products are, under US tax law, Passive Foreign Investment Companies, or PFICs. The label sounds technical and harmless. The tax treatment is neither.

Once you are a US tax resident, a PFIC you hold is taxed by default under the Section 1291 excess-distribution regime, and it is built to punish. When you sell, or receive a large distribution, the gain is not given the preferential US long-term capital gains rate of 15% or 20% that a US stock or US fund would get. Instead it is spread back over your holding period, taxed at the highest ordinary income rate for each prior year, and then an interest charge is added on top, as if you had deferred tax you owed all along. The effective rate on a long-held Indian fund can climb past 40% once the interest charge compounds. On top of the tax, each PFIC requires its own Form 8621 every year, and these forms are genuinely difficult; many US tax preparers charge USD 150 to USD 300 per form, so ten Indian funds can mean a four-figure annual compliance bill on its own.

There are two elections that can soften this, and both have catches. The Qualified Electing Fund (QEF) election taxes you annually on your share of the fund's earnings at normal rates, which avoids the interest charge, but it requires the fund to give you a specific US-format annual statement, and almost no Indian fund house provides it. The mark-to-market election treats the fund as sold and rebought at year-end value annually, taxing the paper gain as ordinary income; it is available only for funds that are regularly traded and is mostly useful for listed ETFs, not regular open-ended schemes. For the typical Indian mutual fund portfolio, neither election is realistically available, which leaves you with the punitive default.

There is a second, blunter wall: FATCA compliance by the fund houses themselves. Most Indian asset management companies now refuse fresh purchases and SIPs from NRIs resident in the US (and Canada), or accept them only with extra paperwork and physical, non-online transactions. So even if you wanted to keep investing, the door is largely shut from the Indian side too.

Here is what this means in practice, with numbers. Suppose you hold Rs 30,00,000 of Indian equity mutual funds, bought over several years, and after becoming a US resident you sell them three years later for Rs 45,00,000, a gain of Rs 15,00,000, roughly USD 18,000 at Rs 83. Held in a US index fund, that long-term gain would be taxed at the US long-term rate, perhaps 15%, about USD 2,700. As a PFIC under Section 1291, the same gain is sliced across the holding period, taxed at the top ordinary rate (37% federal) for each slice, and an interest charge is layered on, easily pushing the bill past USD 7,000 on the US side alone, before any state tax, and that is on top of whatever India taxed at source. The counterfactual is stark: the same Rs 15,00,000 of growth, earned in a US-domiciled S&P 500 fund instead, would have cost you under USD 3,000 and zero Form 8621 headaches.

So the rule is simple and you should act on it before you become a US resident, not after. Stop fresh Indian mutual fund purchases, cancel SIPs that will debit after you move, and do your future equity investing through your 401k and a US brokerage in US-domiciled index funds. For the Indian units you already hold, there is a genuine planning question about whether to sell before you trigger US residency (potentially capturing India's gentler rates while still a resident) or hold, and that is a question for a cross-border CA, not a blog. The NRI mutual fund eligibility guide goes deeper on the PFIC overlay and what NRIs can still hold.

The US tax clock: when worldwide income becomes Uncle Sam's business

The moment you become a US tax resident, the US taxes your worldwide income, your Indian rent, your Indian interest, your Indian capital gains, all of it, not just your US salary. So knowing exactly when that switch flips is not academic.

The test is the substantial presence test. You are a US resident for tax purposes in a year if you are present at least 31 days in the current year and 183 days counting all days this year, one-third of last year's days, and one-sixth of the prior year's days. Crucially, H-1B and L-1 holders are not exempt individuals. F-1 students get to exclude their first five years of days; you do not. Every day from your arrival counts.

The practical consequence for year one turns on your arrival date. Arrive on or before July 2 and stay through December 31, and you cross 183 days in that calendar year alone; you are a US tax resident from your arrival date, and a nonresident for the part of the year before you arrived. That makes you a dual-status alien for year one: nonresident then resident. Arrive after July 2, say in October, and you usually fall short of 183 days in year one, so you are a nonresident for all of year one, then a full resident from January 1 of year two once your day count carries you over.

This timing has real money attached. As a dual-status or nonresident in year one, you are generally taxed by the US only on US-source income for the nonresident portion, which can keep your Indian income outside the US net for those months. There is also a first-year choice election that lets some people choose to be treated as a resident from arrival, and married couples can often elect to be treated as full-year residents filing jointly, which unlocks the much larger married-filing-jointly standard deduction. Whether that election helps depends on how much Indian income you would then be dragging into the US net versus the deduction you gain. Run both ways before you file; this is one of the few places a few hundred dollars with a cross-border preparer in year one pays for itself.

Put it on a calendar. An engineer arriving June 15 is present roughly 200 days that year, so a US resident from June 15, dual-status for year one, and the Rs 4,00,000 of Indian rental income earned January to May sits in the nonresident window. A colleague arriving October 1 is present about 92 days, a nonresident for all of year one, with the whole year's Indian income outside the US net, becoming a full US resident only from January 1 next year. Same jobs, same salary, very different year-one US filings, decided purely by the arrival date. Once you are a resident, you also claim a foreign tax credit for tax India already took on the same income, so you are not taxed twice; the mechanics live in the foreign tax credit guidance and your treaty.

FBAR and FATCA: the reporting that lands you in trouble even when you owe no tax

This is where compliant, well-meaning Indians get hurt, because the penalties attach to not reporting, not to owing tax. You can owe the IRS nothing and still face life-altering penalties for failing to file two specific forms.

The first is the FBAR (FinCEN Form 114). If the aggregate value of all your foreign financial accounts (every Indian savings account, NRO, NRE, FD, PPF, even an account you have signature authority over but do not own) exceeds USD 10,000 at any point in the year, you must file the FBAR. That is aggregate, not per account, and it is the peak balance, not the year-end balance. Sell a flat in India and park Rs 90 lakh in your NRO for a week and you have blown through the threshold for the whole year. The FBAR is filed electronically with FinCEN, separately from your tax return, by April 15 with an automatic extension to October 15. The penalties are the scary part: even a non-wilful failure can draw a penalty in the thousands of dollars per year, and wilful failures run to the greater of USD 100,000-plus or half the account balance. People do not get caught because the IRS audits them; they get caught because Indian banks report US-resident account holders to the IRS under FATCA, and the numbers do not match.

The second form is Form 8938 (the FATCA form), filed with your tax return. It overlaps with the FBAR but is not identical: it captures specified foreign financial assets, including not just accounts but directly held foreign shares, interests in foreign entities, and certain insurance, above thresholds that depend on your filing status and where you live. For someone living in the US, the threshold is USD 50,000 on the last day of the year or USD 75,000 at any time for single filers, double that for married filing jointly. Living abroad raises the thresholds to USD 200,000 and USD 300,000 for single filers. You can easily be required to file both the FBAR and Form 8938 in the same year, reporting the same accounts on each, and yes, you do both.

The deeper version of the Form 8938 / Indian asset reporting story, including the India-side mirror in Schedule FA, is in the Schedule FA foreign asset reporting guide. The single most important habit to build in your first year: keep a year-end and a peak-balance record of every Indian account, because reconstructing it later is miserable and the forms demand specifics.

Your Indian accounts are now in the wrong shape: the cleanup

The day your status changes under FEMA, your ordinary resident savings account becomes non-compliant. FEMA does not let a non-resident hold a resident savings account, and the penalty under Section 13 of FEMA can reach three times the amount involved, with continuing penalties of up to Rs 5,000 a day for an ongoing contravention. This is not theoretical housekeeping; it is a legal obligation with teeth, and it is easy to satisfy.

You do three things. First, redesignate your resident savings account to an NRO account. Most banks let you convert in place by submitting a form, your visa and overseas address proof; processing is typically 5 to 15 business days. The NRO is where your India-source income lives: rent, dividends, interest, the proceeds of selling Indian assets. Second, open an NRE account to receive the savings you send back from your US salary. NRE balances and interest are tax-free in India and fully and freely repatriable; NRO interest is taxable and suffers TDS at 30% plus surcharge and cess. You cannot convert a resident account directly into an NRE; you open NRE fresh. Third, update your demat account and mutual fund folios to NRO status, and update your PAN-linked KYC, so your equity holdings are held in compliant non-resident form.

A subtlety people miss: PPF and Sukanya Samriddhi. You cannot open a new PPF as a non-resident, and an existing PPF opened while resident can be continued until maturity but not extended, and it earns a reduced rate in the non-resident phase. Do not open a new PPF after you move; it will not be valid. Your EPF from prior Indian employment keeps earning interest for a while but stops accruing interest after the account is inoperative, so plan to withdraw or transfer it rather than forget it.

Remitting your US savings to India, and the direction the limits actually run

This is the happy part, and it is simpler than people fear because the restrictive Indian remittance limit runs the other way. The Liberalised Remittance Scheme cap of USD 250,000 per financial year, and the 20% TCS above Rs 10 lakh, apply to residents of India sending money out. You, sending your US-earned savings into India, are not constrained by LRS at all. You can remit your US salary savings into your NRE account in essentially unlimited amounts, and because it arrives as foreign-earned money into NRE, it is tax-free in India and you can take it back out to the US later without friction.

The practical questions are cost and timing, not legality. Bank wire transfers from a US bank to an NRE account are reliable but carry wire fees (often USD 25 to USD 45 each) and a built-in exchange-rate margin that can quietly cost more than the visible fee. Specialist remittance services frequently beat bank wires on the all-in rate, especially on larger sums, so compare the rupees-actually-credited figure, not the advertised fee. Send into NRE, not NRO, when the money is your US savings, because NRE keeps it tax-free and freely repatriable; sending it into NRO needlessly exposes the interest to Indian tax and complicates taking it back out.

Put numbers on a year of disciplined remitting. Our USD 130,000 engineer saves, after US tax, rent and a maxed 401k match, about USD 2,000 a month, and remits it to NRE. At roughly Rs 83 to the dollar, that is about Rs 1,66,000 a month, or close to Rs 20,00,000 credited to NRE over the year, growing tax-free in India and available to repatriate. The counterfactual matters: had the same money landed in NRO instead, the interest would face 30% TDS and the funds would carry repatriation paperwork (the USD 1 million per year route and Form 15CA/CB) when you wanted them back. Same money, same bank, one letter of difference in the account type, materially different outcome. The full account-by-account comparison is in the NRE, NRO and FCNR guide.

Edge cases

You arrive on L-1, not H-1B. For the financial sequence, the SSN, banking, credit, 401k and tax-residency treatment are essentially identical; L-1 and H-1B are both treated as non-exempt for the substantial presence test, so the same day-counting applies. The differences are immigration-side (intra-company transfer, dual intent), not money-side. Where it diverges is the green-card path, covered in the H-1B to green card guide.

Your spouse is on H-4 with no income yet. You can usually elect to file married filing jointly as full-year residents, which gives you the much larger joint standard deduction even in a dual-status arrival year. The cost is that your spouse's worldwide income (any Indian income they have) also enters the US net, and you both then have FBAR and Form 8938 obligations on Indian accounts. Run the joint-versus-separate maths in year one.

You still have an active home loan on an Indian property. The property and loan are fine to keep; just route the rent into NRO and remember that the rental income is now reportable to the US as worldwide income once you are a resident, with a foreign tax credit for Indian tax paid. The interest deduction rules differ between the two countries, so the net US position is not zero.

You forgot and kept buying Indian SIPs for a few months after moving. This happens constantly. Cancel them now, flag the purchases to your US preparer, and expect to file Form 8621 for those units. It is a cleanup cost, not a catastrophe, but the longer the units sit, the more the Section 1291 interest charge compounds when you eventually sell.

You are only on a short US assignment and will return within a year or two. If you genuinely stay short of the substantial presence threshold each year, you may remain a US nonresident and avoid the worldwide-income and PFIC consequences entirely, which changes the calculus on selling Indian funds. But track your days carefully; people underestimate how fast one-third of last year's days plus this year's days reach 183.

The closing read

The honest read is that moving to the US for work is not financially hard, but it is unforgiving of doing things in the wrong order or six months late. The big-ticket items are not the ones people stress about. Nobody is going to ruin you over a checking account choice. What ruins people is missing the employer 401k match (a guaranteed 50% return you simply forfeit), walking into the PFIC trap by holding or buying Indian mutual funds after becoming a US resident, and failing to file the FBAR and Form 8938 on accounts where they owed no tax at all.

So for the typical Indian arriving on H-1B or L-1, commit to this: in the first 90 days, get the SSN, the checking account and a secured card, in that order, and enroll in the 401k to at least the full match from day one. Before you cross the substantial presence threshold, stop buying Indian mutual funds and shift future investing to US-domiciled index funds inside your 401k and brokerage. Redesignate your Indian resident accounts to NRO, open NRE for your repatriable savings, and remit your US savings into NRE, where they stay tax-free. And from year one, keep peak-balance records of every Indian account so the FBAR and Form 8938 are a twenty-minute job, not a panic. The one place to spend money on professional help is your first US tax return, because the dual-status, first-year-choice and PFIC questions all land at once, and getting year one right sets the template for every year after. If your situation involves a large Indian portfolio you cannot easily exit, or an Indian property you are deciding whether to sell before you trigger residency, that is the point to pay a cross-border CA, not to rely on a guide, this one included.

Related guides

• The financial checklist for moving abroad
• Building credit history abroad from scratch
• H-1B to green card for Indians
• NRI residency and the RNOR rules
• NRI mutual fund eligibility and the PFIC trap
• NRE, NRO and FCNR accounts compared
• Schedule FA and foreign asset reporting
• All Jobs guides
• All Taxation guides
• All Banking guides
• All Visa guides
• All Investment guides

This guide is educational and general in nature. It is not individual tax, immigration or investment advice. US tax residency, PFIC treatment, FBAR and FATCA outcomes and FEMA obligations depend on your exact dates, accounts, residency and treaty position, and several thresholds here are set annually and may change, so confirm your specific situation with a qualified cross-border chartered accountant or US tax preparer before acting.