Most guides selling Georgia's 1% to a US citizen compare it against the wrong baseline. What matters is not Georgia's 1% against the marketing claim; it is Georgia against staying in the US, because a US citizen or green card holder owes US tax on worldwide income no matter where they live. Run that comparison honestly and moving does save real money, but the saving is not the 1%. It is the Foreign Earned Income Exclusion, available anywhere abroad, Georgia included, while self-employment tax, 15.3% with no US-Georgia totalization agreement to offset it, follows you regardless of where you register a business.
What a US freelancer actually pays: staying versus moving
Take a freelance developer with $90,000 of turnover and, after modest expenses, $85,000 of net self-employment profit. Self-employment tax is identical either way: 15.3% on 92.35% of net profit is about $12,000, and no totalization agreement offsets it. What changes is the income tax line. Staying in the US, applying the 2026 single-filer brackets and $16,100 standard deduction published by the IRS, after deducting half of self-employment tax, federal income tax on this profile comes to roughly $8,500, illustrative and dependent on filing status and other deductions. Moving to Georgia and genuinely qualifying for the Foreign Earned Income Exclusion brings that line to roughly zero, since $85,000 sits comfortably under the $132,900 2026 exclusion, and Georgia adds 1% of turnover, about $900.
| Stay in the US | Move to Georgia (with FEIE) | |
|---|---|---|
| Turnover / net profit (illustrative) | $90,000 / $85,000 net | $90,000 / $85,000 net |
| US federal income tax | roughly $8,500 | roughly $0 |
| US self-employment tax (15.3% on ~92.35% of net profit) | roughly $12,000 | roughly $12,000 |
| Georgian tax (1% of turnover) | - | roughly $900 |
| Total | roughly $20,500 | roughly $12,900 |
The saving, roughly $7,600 a year, is exactly the federal income tax line minus what Georgia charges. Self-employment tax is identical in both columns, because nothing on either side reduces it.
Does the 1% actually apply to your income in the first place
Before any of this matters, the 1% has to actually apply, a Georgian-side question. Small Business Status taxes Georgian-source income, and for services that generally means work physically performed in Georgia, not billed through a Georgian entity while you live and work elsewhere. We cover this in Georgia's 1% tax and 1% tax without living in Georgia, and it applies to a US citizen exactly the same way it applies to anyone else. What changes for a US person is everything downstream: citizenship-based taxation never turns off, and self-employment tax follows regardless of where the work happens.
What the US does regardless of where you live
Citizenship-based taxation means a US citizen or green card holder owes US tax on worldwide income regardless of where they live. Becoming a Georgian tax resident under the 183-day rule in Georgia tax residency changes none of this; only formally renouncing citizenship or abandoning a green card ends it, both covered below.
The Foreign Earned Income Exclusion, claimed on Form 2555, shelters up to $132,900 of foreign earned income for 2026, up from $130,000 in 2025, confirmed on the IRS's own announcement of the 2026 inflation adjustments. Claiming it needs the bona fide residence test or the physical presence test, broadly 330 full days outside the United States in a 12-month period; nothing about it is Georgia-specific, and the same exclusion applies to a US person living anywhere abroad. What it does not shelter is self-employment tax: the IRS's own page on the exclusion states directly that the excluded amount reduces regular income tax but not self-employment tax, computed on the full net profit regardless.
Self-employment tax exists to fund Social Security and Medicare, 15.3% combined, 12.4% and 2.9%, applied to net earnings no matter where they were earned or where the business is registered. Georgia has very few totalization agreements and the US is not a partner to one with it, so nothing offsets this. The Foreign Tax Credit does not fill the gap either: it is capped at foreign tax actually paid, and 1% of turnover generates almost nothing to credit against a bill measured in thousands. No treaty compounds this above the exclusion threshold, confirmed on the IRS's own page listing Georgia's tax treaty documents, which shows nothing beyond a 1973 treaty with the former Soviet Union. Earn more than $132,900 of foreign earned income and the excess loses FEIE shelter, taxed by the US with little relief.
Structure does not change any of this by default. The US classifies foreign entities through check-the-box: Georgia's LLC form is not on the IRS list of "per se" foreign corporations, so both a Georgian IE and a single-owner Georgian LLC default to disregarded status, taxed identically on the owner's own return, unless the owner elects corporate treatment, which can create Controlled Foreign Corporation and GILTI exposure instead, generally worse given Georgia's low rates.
Federal residency never really ends for a citizen, but state residency is separate. California's safe harbor for a qualifying employment contract of 546+ consecutive days does not end domicile itself, and New York taxes a non-domiciled statutory resident who keeps a permanent home and spends more than 183 days in the state. Neither is solved by anything on the Georgian side.
Several filing obligations survive departure regardless. FBAR (FinCEN Form 114) applies once aggregate foreign account values exceed $10,000 at any point in the year. FATCA Form 8938 has its own, higher thresholds for people living abroad, confirmed on the IRS's summary of FATCA reporting, and filing one does not excuse the other. Form 8858 reports a foreign disregarded entity or branch; a Georgian IE, which keeps its own separate books through monthly Revenue Service filings, is likely to qualify, and the penalty for skipping it starts at $10,000 per entity per year.
None of the above changes unless you actually renounce citizenship or formally abandon a green card, a deliberate legal step rather than a side effect of moving. A "covered expatriate" under section 877A, net worth of $2,000,000 or more, average net US tax liability above $211,000 for 2026, or failing five years of compliance certification, faces a deemed sale of worldwide assets the day before expatriating, gains taxed after excluding the first $910,000 for 2026 under Revenue Procedure 2025-32. Ordinary relocation while keeping citizenship never triggers this.
The steps, in order
- Run the honest comparison first: staying in the US against moving with FEIE, not Georgia's 1% against the marketing number.
- Confirm you can pass the physical presence test (330 days abroad) or the bona fide residence test before counting on the Foreign Earned Income Exclusion.
- Budget for self-employment tax in full, 15.3%, since no totalization agreement offsets it wherever you live.
- Confirm the work is genuinely performed in Georgia before assuming the 1% applies at all.
- Register a Georgian IE and apply for Small Business Status, in person or under power of attorney through remote company registration.
- File Form 2555 for the exclusion and Schedule SE for self-employment tax every year, alongside Form 1040.
- File FBAR and, once thresholds are crossed, FATCA Form 8938, both separate from the return and both surviving departure.
- File Form 8858 for the Georgian IE as a foreign disregarded entity or branch.
- Check your specific state's residency rules before assuming state tax ends with the move.
Timeline and cost
The Georgian side is fast: an IE with Small Business Status typically registers within days in person, or a few weeks under power of attorney. The US side never finishes, because citizenship-based taxation runs on no timeline at all: every year brings a Form 1040 with Schedule C, Form 2555, Schedule SE, and FBAR, FATCA and Form 8858 where they apply. US citizens abroad get an automatic filing extension to mid-June and can request one further to mid-October, which helps with timing but not with what is owed. A cross-border preparer who understands both sides is not optional, and their fee is a real, recurring cost.
The verdict: works, but not for the reason you think
For most US citizens, moving to Georgia does save real money, on the order of $7,600 a year in the illustration above. But the saving is not Georgia's 1%. It is the Foreign Earned Income Exclusion, available to a US person living anywhere abroad, and Georgia's actual contribution is that it adds almost nothing on top of it, 1% rather than a real foreign tax bill, and is cheap and fast to set up. Self-employment tax follows you regardless, in full, because no structure here removes it, and that is the part the marketing leaves out.
The decision that actually matters is leaving the United States and genuinely qualifying for FEIE. Once that decision is made, Georgia is a reasonable, cheap place to do it from, not the reason to do it.
We'll map out the actual saving between staying in the US and moving, where the Foreign Earned Income Exclusion genuinely applies, where self-employment tax still applies in full, and what your Form 8858 and FBAR obligations look like before you register anything.
See what it costs
If your situation involves a spouse or co-founder from a different country, the calculation can look completely different for them on the same Georgian structure. Our full country-by-country guide compares the treaty position and headline trap for every country we cover, including moving from France to Georgia, where a real tax treaty and a genuinely different set of traps apply. A free consultation is the fastest way to get a straight answer on whether your specific numbers change any of the conclusions above.
Key takeaways
- Run the honest comparison before registering anything: staying in the US against moving with FEIE, not Georgia's 1% against the marketing number.
- Confirm you can actually pass the physical presence test or bona fide residence test before counting on the exclusion.
- Budget for self-employment tax in full every year. Nothing on either side of this arrangement removes it.
- File Form 2555, Schedule SE, FBAR and, where thresholds are crossed, FATCA Form 8938 and Form 8858, every year they apply.
- Check your specific state's residency rules separately from the federal question before assuming state tax ends.
- Get a cross-border preparer who handles both sides before you register anything here.
Frequently asked questions
Does moving to Georgia reduce my US tax bill if I am a US citizen?
Often, yes, but not for the reason it is marketed. The saving comes from the Foreign Earned Income Exclusion once you genuinely live abroad, available anywhere, not from Georgia's 1%. Self-employment tax keeps applying in full regardless of where you live.
What is the Foreign Earned Income Exclusion amount for 2026, and does it require Georgia specifically?
$132,900 per person, up from $130,000 in 2025, under Revenue Procedure 2025-32. It requires passing the bona fide residence test or the physical presence test (broadly 330 days abroad in a 12-month period) and applies the same way to a US person living in any foreign country, not just Georgia.
Does the Foreign Earned Income Exclusion cover self-employment tax?
No. The exclusion reduces regular federal income tax on foreign earned income up to the annual limit, but self-employment tax is calculated separately on the full net profit before the exclusion applies, as the IRS's own page on the exclusion states directly.
Is there a tax treaty or totalization agreement between the US and Georgia?
Neither exists. The IRS's own page on Georgia's tax treaty documents shows nothing beyond an old 1973 treaty with the former Soviet Union, and Georgia is not one of the roughly 30 countries with a US totalization agreement. This is why self-employment tax applies in full with no relief.
Would a Georgian LLC avoid US tax the way an IE cannot?
Not by default. Under US check-the-box rules, a Georgian LLC owned by one US person is a disregarded entity unless the owner elects corporate treatment, producing essentially the same result as an IE. Electing corporate treatment can introduce GILTI exposure instead.
What is Form 8858 and do I actually need to file it?
Form 8858 reports a foreign disregarded entity or branch owned by a US person. A Georgian IE, which keeps its own separate books through monthly Revenue Service filings, is likely to qualify, making this a real obligation. Penalties for not filing start at $10,000 per entity per year.
Do I still have to file FBAR and FATCA if I live in Georgia?
Yes, both are separate from your tax return and neither depends on where you live. FBAR applies once aggregate foreign account values exceed $10,000 at any point in the year, and FATCA's Form 8938 has its own, higher thresholds for people living abroad, but filing one does not excuse the other.
Does my home state still tax me after I move to Georgia?
Potentially. States like California and New York run their own residency tests, some based on domicile rather than day counts alone, and a state can keep taxing you even after you have genuinely left the country if you have not properly severed your ties there.
Is renouncing US citizenship a way around all of this?
It removes the ongoing citizenship-based obligation, but formal expatriation triggers its own exit tax under section 877A for anyone who meets the net worth, average tax liability or compliance-certification thresholds, taxed as a deemed sale of worldwide assets. It is a significant, irreversible legal step, not a routine part of relocating.