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I am an Indian citizen and have resided in the US for more than 5 years and will be moving back to India soon (because of idiotic laws that prevents an H4 visa holder to work remote for an overseas company!).

For tax purposes I'm a resident of the US. Once I move back to India, I'll be working (as a contractor, not as an employee) for UK company that'll pay me in dollars.

Since I have personal checking accounts in the US, and the requisite Non-Resident accounts in India, I'm not sure where I should receive the payments, since I'll be a resident of US for tax purposes for FY 2018 (when filing tax returns 2019).

  1. If I'm receiving the income to my US accounts, would that mean I'll have to pay advance taxes each quarter (since no taxes are withheld by the UK company?) similar to how a 1099 contractor in US does?

  2. Would it be ideal for me to receive money into my NR account in India, repatriate funds to my US checking account and then pay the taxes when filing tax returns for FY 2018?

  3. Can I create a LLC in the US, receive money into the LLC from the UK company, and then pay myself to the US checking account, then to Indian NR account? Are there any benefits/pitfalls with such a setup? Would this involve any import/export compliance and taxation for the LLC?

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  • rush, in fact run don't walk to completely disassociate yourself from the US tax-wise as soon as possible. as explained in Rupert's answer. indeed your only issue is how, and how most quickly, to sever ties.
    – Fattie
    Commented Mar 8, 2018 at 21:51

2 Answers 2

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since I'll be a resident of US for tax purposes for FY 2018 (when filing tax returns 2019).

You have an option to quality as Dual-Status Aliens. This will allow you to pay taxes in US for the time you are in US [for all global income]; and pay tax in local country for remaining year.

Would it be ideal for me to receive money into my NR account in India, repatriate funds to my US checking account and then pay the taxes when filing tax returns for FY 2018?

This income will be taxable in India and you would need to pay taxes accordingly. Also note you would need to convert your Non-Resident Accounts into Resident Accounts.

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  • Thanks for the reply Dheer. I'll take a look at Dual Status Aleins option. Forgot to mention in OP that my wife, will be in the US on H1b during this time. So I'll have to factor that in figuring how to file in 2019. w.r.t NR accounts, I believe I have to convert it to a resident account only after 6 months of stay in India right? (without which I cannot claim to be a resident?)
    – Nitin Alabur
    Commented Mar 8, 2018 at 16:14
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    @NitinAlabur If you know you have come for good, you can change it immediately with out having to wait
    – Dheer
    Commented Mar 8, 2018 at 16:21
  • Thats good to know. I thought I cannot until I've resided in India for at least 6 months. Thanks for clarifying that @Dheer
    – Nitin Alabur
    Commented Mar 8, 2018 at 18:00
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I would move your affairs out of the USA as soon as possible. Since you'll be self-employed, you will be responsible for employers Social Security and Medicare contributions, which will be 12.9% of your income and not covered by the Foreign Earned Income exclusion.

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  • Thats good to know Rupert. Does that mean, if I receive my payments directly in india, I'm not responsible for the FICA contributions and only responsible for the Federal tax?
    – Nitin Alabur
    Commented Mar 8, 2018 at 16:12
  • If you're required to file US taxes, you're required to file them on all your world-wide income, and the US tax code punishes the self-employed. So look into dual-status as Dheer suggests so you can get out from under the IRS as soon as possible.
    – Rupert Morrish
    Commented Mar 8, 2018 at 19:39
  • Thanks Rupert. Thats helpful to know. I'll check with an accountant in US and in India about these points you both have mentioned.
    – Nitin Alabur
    Commented Mar 8, 2018 at 20:40

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