Work for US Healthcare company from India - Tax forms

Question

I have question regarding work arrangement for remote work from India for US company.

My scenario. I am currently employed on H1B with a Healthcare organization based out of Indiana, US. My work visa expires in June 2018 following which I will move back to India. My employer is wanting to secure my project consulting services as independent contractor. I am setting up a retainer agreement with monthly payment paid directly to my savings account. Given all this,

1. I am not forming a LLC or corporation. I will be the sole proprietor and no other legality. Any issues with that approach?
2. Other form aside from W8BEN do I need to submit to my HR such as W9? I know I need to submit W8BEN so they don't withhold any federal/state/local taxes and such, but what about Medicare and Social security taxes? What forms are required to stop withholding from that aspect or am I liable to pay those?
3. Will I get 1099 from them towards end of year?
4. For employers convenience, I would leave my US bank account running and request payments routed to it just as it does today and transfer to Indian bank account? Or should I apply for NRE/NRO? Which is the best option and any legal issues?

Any guidance will be much appreciated. Thank you in advance!

Answer 1

I am not forming a LLC or corporation. I will be the sole proprietor and no other legality. Any issues with that approach?

None. If your employer and you are comfortable with this, there is no issues working as independent contractor / consultant.

Other form aside from W8BEN do I need to submit to my HR such as W9? I know I need to submit W8BEN so they don't withhold any federal/state/local taxes and such, but what about Medicare and Social security taxes? What forms are required to stop withholding from that aspect or am I liable to pay those?

Someone from US may answer this better. I don't think anything else is required. The Medicare / Social Security are not applicable for this kind of arrangement.

For employers convenience, I would leave my US bank account running and request payments routed to it just as it does today and transfer to Indian bank account? Or should I apply for NRE/NRO? Which is the best option and any legal issues?

This should be OK, i.e. getting paid in US account. It would be best if you can get this directly into a Indian Bank Savings Account. As you are moving for good to India, you would be treated as Resident Indian. As Resident Indian, you cannot hold NRE/NRO accounts. You would have normal savings account or Domestic Foreign Currency Account.

Please note irrespective of where you are getting paid, this would be treated as accrued in India and you would need to pay taxes in India on the salary / consulting fee that you receive for the work done from India.

You would also have a 7 years period between which you can move back the funds saved in US back to India tax free.