As a US citizen, running your business while living abroad can provide substantial tax savings through the IRS foreign earned income exclusion.
This allows you to exclude around $120,000 of foreign earned income annually from US taxation. You still owe self-employment tax but avoid normal income tax.
The exclusion results in an effective tax rate of only around 15% vs. 40%+ if operating in the US. Significant savings for service businesses able to work remotely abroad.
Some nuances exist around entity structure – the exclusion applies fully for sole proprietors but S-Corp profits may not be excluded, factoring in ownership. Weigh entities carefully.
For eligible remote businesses, moving overseas provides not only lifestyle benefits but also major tax minimization unavailable working in the US.
