Do NRIs need a CPA? CPA vs TurboTax vs doing it yourself

Every NRI forum has this thread: one person quotes a $1,500 CPA fee, another has filed on TurboTax for six years with no problem, and both are right, because their situations differ. Here is the decision framework.

When is tax software genuinely enough?

Software is the right answer, not a compromise, if all of these are true:

• Your US income is W-2 salary, US bank interest, and maybe some US brokerage activity with clean 1099-Bs.
• Your Indian financial accounts, added together, never exceeded $10,000 at any point in the year (that is the FBAR line, per FinCEN Form 114 rules).
• You hold no Indian mutual funds, ULIPs, or India-domiciled ETFs.
• You were a US tax resident for the full year (no arrival or departure year, no visa status change that splits the year).
• You have no India-source income: no rent from a flat in Hyderabad, no NRO account interest, no capital gains from selling Indian property.

That describes a large share of H1B and L1 filers in their first years here. If it is you, paying hundreds of dollars for someone to type your W-2 into professional software adds no value. File yourself, keep the money.

What situations break tax software for NRIs?

These are the complexity triggers. One is a yellow flag. Two or more, and software stops being cheap and starts being risky.

India income plus Form 1116. As a US tax resident you report worldwide income: NRO interest, rent from Indian property, dividends. India often withholds tax (TDS) on that income, and you claim a credit for it on Form 1116 so you are not taxed twice. Software technically includes Form 1116, but the categorization of income baskets, currency conversion, and the interaction with India's TDS timing is where DIY filers routinely get it wrong. State returns add a layer too: California taxes residents on worldwide income with no federal-style foreign tax credit, so India income can be taxed again at the state level.

FBAR and Form 8938. FBAR (FinCEN Form 114) is required once your foreign accounts crossed $10,000 in aggregate at any time in the year. It is filed separately through the BSA e-filing system, it is free, and TurboTax does not file it for you. A current-year FBAR alone is not a hire trigger: if the rest of your return is simple, file it yourself in twenty minutes. Missed past years are different (see the FAQ). Form 8938 stacks on top at higher thresholds: for a single filer living in the US, more than $50,000 in specified foreign assets on the last day of the tax year or more than $75,000 at any point in the year; $100,000 and $150,000 for married filing jointly, per the IRS thresholds. Neither form creates tax by itself, but the penalties for skipping them are far worse than any prep fee.

RSU and ESPP sales. The forms are ordinary, the trap is data: your vested RSU income is already in your W-2, but your broker's 1099-B often shows a zero or wrong cost basis, so DIY filers pay tax on the same income twice. Software can handle it if you know to adjust the basis. Many people do not. See our guides on RSU taxes for H1B holders and ESPP and 83(b) elections for visa holders before deciding you need a pro for this one; it is learnable.

A dual-status year. The year you arrive in the US, or the year you leave for good, you may be a resident for part of the year and a nonresident for the rest. That return combines Form 1040 with a 1040-NR statement, and TurboTax explicitly does not support it (it refers those filers to Sprintax). If you are planning a move back, read selling RSUs before moving back to India too; the departure year is the single most pro-worthy year of an NRI's US tax life.

Indian mutual funds: the PFIC problem. The IRS generally treats non-US pooled investments, which includes most Indian mutual funds, as Passive Foreign Investment Companies. PFICs can require Form 8621 per fund, and the default tax treatment is punitive. There is a limited exception: if your total PFIC holdings are $25,000 or less ($50,000 married filing jointly) and you had no excess distributions and no gain from selling the funds, you may not need to file Form 8621 for those funds, per the IRS instructions; "excess distribution" is a term of art, so confirm your facts rather than self-certifying. The rules are intricate, elections (mark-to-market, QEF) are situation-specific, and consumer software does not support Form 8621 at all. If you hold Indian mutual funds as a US resident, this is the strongest single reason to talk to a specialist; be skeptical of anyone who gives you a confident one-line answer here.

Treaty (DTAA) positions. Claiming an India-US treaty position that reduces your tax can require Form 8833, and failing to disclose one carries a $1,000 penalty even when the underlying claim was valid. This is specialist territory; a general preparer at a strip-mall office may never have filed one.

CPA, Enrolled Agent, or general preparer: which do you actually need?

The credential matters less than the specialization, but know the difference:

• A CPA is licensed by a state board, with broad accounting training. Most CPAs do very little cross-border work. "CPA" is not a synonym for "knows FBAR."
• An Enrolled Agent (EA) is licensed federally by the IRS, specializes in tax only, and has unlimited rights to represent you before the IRS in all 50 states. For tax prep and IRS representation, an experienced EA is equivalent to a CPA and often cheaper.
• A general preparer (seasonal storefront, uncredentialed) is fine for simple returns, but a simple return is exactly the case where software already wins on price.

The question to ask any of them: "How many returns with Form 1116, FBAR, and Form 8621 did you file last season?" If the answer is vague, keep looking. One nuance on Indian CAs: a CA can register with the IRS and legally sign a US return as a paid preparer, but the CA credential alone carries no right to represent you before the IRS; only CPAs, EAs, and attorneys have that. Many cross-border firms pair Indian CAs with a US CPA or EA.

What does each option cost, and when is it worth it?

Prices vary widely by city and firm; treat these as commonly quoted ranges, not quotes.

Per-fund PFIC work is often billed separately, at a reported $200 to $300 per Form 8621 based on published preparer fee schedules. Ten Indian mutual funds can cost more to report than they earned you, which is why many cross-border advisors suggest US-domiciled funds while you live here.

The honest math: a professional is worth it when the downside of an error (FBAR penalties, double-taxed RSU income, a botched departure year) exceeds the fee, or when your time is worth more than the twenty-plus hours a first PFIC return can take. It is not worth it as a subscription for simple years. Plenty of people hire a specialist once, for the messy year, then go back to software.

If you are in the two-or-more-triggers bucket, Lesser prepares US returns specifically for Indian immigrants, including the FBAR, Form 1116, and equity-compensation cases above. And if you are in the W-2-only bucket, we mean what we wrote: file it yourself.