I live abroad and qualify for FEIE. If I form an Atlanta based single member LLC will this tax exemption still apply?

The short answer is that you really need to hire a tax attorney to work through this problem with you. There are just too many variables to give you accurate advice on a forum like this one. Let me explain.

Let's begin with your second question. You are proposing a single member LLC. Notwithstanding state liability protection, a single member LLC may only elect either to be taxed as an association taxed as a corporation or as a disregarded entity (read sole proprietorship). Generally the later provides more flexibility and a better tax result (but not always).

Now let's talk about some of the complications. You said that you qualify for the foreign earned income exclusion. As you probably know, the exclusion amount is limited to about $91,400 adjusted annually for inflation. One of the reasons you qualify is that your tax home is outside the US. "Tax Home" is a technical issue with many issues, and is viewed based on the facts and circumstances of an individual case.

If you organize under Georgia state law and operate your business under that state's laws you are likely creating an opportunity for both the IRS and the state of Georgia to challenge your FEIE. Also, In addition to being required to pay tax in the foreign country, you now have to file state tax returns and you will be arguing about where your tax should be paid and where is should be collected/withheld. You may be taxed at higher rates in a foreign country because of your entity status. Certainly there will be fees and taxes solely related for operating a US entity in a foreign country. How will VAT apply to your new entity?

If we are not having fun yet, let's caffinate the problem. Most countries and the U.S. have entered into conventions and protocols (think tax treaty and amendments) that limit or avoid the double taxation problem (that is the same dollar being taxed in two countries). Someone will have to analyize the protocol for each country in which you operate, in order to determine how each convention may apply to you individually and to your Georgia entity.

You can see now why you need to hire a tax attorney to help you with this business decision. My recomendation is to keep things as simple as you can, for as long as you can.

Good luck with you venture.

"DL"

The short answer is that you really need to hire a tax attorney to work through this problem with you. There are just too many variables to give you accurate advice on a forum like this one. Let me explain.

Let's begin with your second question. You are proposing a single member LLC. Notwithstanding state liability protection, a single member LLC may only elect either to be taxed as an association taxed as a corporation or as a disregarded entity (read sole proprietorship). Generally the later provides more flexibility and a better tax result (but not always).

Now let's talk about some of the complications. You said that you qualify for the foreign earned income exclusion. As you probably know, the exclusion amount is limited to about $91,400 adjusted annually for inflation. One of the reasons you qualify is that your tax home is outside the US. "Tax Home" is a technical issue with many issues, and is viewed based on the facts and circumstances of an individual case.

If you organize under Georgia state law and operate your business under that state's laws you are likely creating an opportunity for both the IRS and the state of Georgia to challenge your FEIE. Also, In addition to being required to pay tax in the foreign country, you now have to file state tax returns and you will be arguing about where your tax should be paid and where is should be collected/withheld. You may be taxed at higher rates in a foreign country because of your entity status. Certainly there will be fees and taxes solely related for operating a US entity in a foreign country. How will VAT apply to your new entity?

If we are not having fun yet, let's caffinate the problem. Most countries and the U.S. have entered into conventions and protocols (think tax treaty and amendments) that limit or avoid the double taxation problem (that is the same dollar being taxed in two countries). Someone will have to analyize the protocol for each country in which you operate, in order to determine how each convention may apply to you individually and to your Georgia entity.

You can see now why you need to hire a tax attorney to help you with this business decision. My recomendation is to keep things as simple as you can, for as long as you can.

Good luck with you venture.

"DL"