There's a persistent myth in nomad circles that if you leave the country long enough, the IRS loses interest in you. That is wrong. The United States is one of only two countries in the world (the other being Eritrea) that taxes its citizens on worldwide income, regardless of where they live. Whether your income comes from a client in Germany, a product sold to someone in Japan, or a consulting call taken from a café in Mexico City — you owe U.S. federal tax on all of it.

That doesn't mean you'll necessarily owe a lot. The tax code has tools designed for Americans abroad — we'll get to those — but the obligation to file never goes away.

One of the best decisions a nomadic entrepreneur can make is forming a U.S.-based LLC before packing up. An LLC gives you:

Liability protection — your personal assets are generally shielded from business debts or lawsuits Tax flexibility — LLCs are pass-through entities by default, meaning the income flows to your personal return Legitimacy — clients, payment processors, and banks take you more seriously with a registered entity Where should you form your LLC? Wyoming and Delaware are the two states nomads tend to favor, and for good reason. Wyoming has no state income tax, charges very low annual fees (around $60/year), offers strong privacy protections, and doesn't require you to list members publicly. Delaware is popular for its business-friendly court system and is often preferred if you plan to raise investment.

Here's the catch: if you don't live in Wyoming or Delaware, you'll need a registered agent in that state to accept official mail on your behalf. Services like Northwest Registered Agent or Registered Agents Inc. typically charge $100–$150/year.

Just because your LLC is registered in Wyoming doesn't mean Wyoming is the only state with a claim on your taxes. States look at where you, the owner, are operating the business. If you spend significant time in a state — particularly one with income tax — that state may argue you have a nexus there and owe them a cut.

The good news: if you're genuinely traveling and not maintaining a permanent home in any high-tax state, you can often minimize state tax exposure significantly.

Here's where many digital nomads unknowingly break the law. Most tourist visas explicitly prohibit "working" in that country — and "working" often includes doing remote work for your own foreign clients, not just local employment. Technically, sitting in a Parisian café writing code for a U.S. client may violate your French tourist visa.

The enforcement of these rules varies wildly. Many countries don't pursue it aggressively. But the landscape is changing. More than 60 countries now offer some version of a digital nomad visa, a legal pathway specifically designed for remote workers.

Some popular options as of 2025 include:

Portugal's Digital Nomad Visa (D8) — requires around €3,280/month in income Spain's International Telework Visa — requires proof of remote work for non-Spanish companies Costa Rica's Rentista Visa — requires proof of stable monthly income Indonesia's E-33G Second Home Visa — designed for remote workers in Bali and beyond Each country has its own income thresholds, health insurance requirements, and duration of stay. The critical question is: does obtaining a long-term visa in a foreign country trigger tax residency there? Often yes — particularly once you hit that country's substantial presence threshold, commonly 183 days.

Most countries use some version of a 183-day rule: spend more than 183 days in a calendar year there, and they may claim you as a tax resident, subject to local income taxes on your worldwide income. This doesn't automatically cancel your U.S. tax obligation, but it does create the risk of double taxation — paying tax in both countries on the same income.

The solution involves a combination of U.S. tax tools and, sometimes, bilateral tax treaties. But the most important thing to understand right now is this: time your country stays deliberately. Many nomads solve this by spending fewer than 183 days in any single country during the year.

If you meet either the Physical Presence Test (330+ days outside the U.S. in any consecutive 12- month period) or the Bona Fide Residence Test (established genuine residence in a foreign country for a full calendar year), you can claim the Foreign Earned Income Exclusion (FEIE) using IRS Form 2555.

For the 2025 tax year, the FEIE allows you to exclude up to $130,000 of foreign-earned income from U.S. federal income tax. For 2026, that rises to approximately $132,900. On a $100,000 income, using the FEIE correctly could eliminate your federal income tax liability entirely.

Note that the FEIE only applies to earned income — wages, salary, and self-employment income. It does not apply to passive income, capital gains, or dividends.

Here's the part that surprises most nomadic solopreneurs: even if the FEIE zeros out your income tax, you may still owe self-employment tax (15.3% on the first $176,100 of net self- employment income in 2025). The FEIE doesn't shield you from this. There are strategies to mitigate it — like electing S-Corp taxation on your LLC — but that's a conversation to have with a CPA who specializes in expat or nomad taxation.

Getting the legal structure right doesn't have to be overwhelming. Here's what to actually do:

1. Form your LLC in Wyoming, Delaware, or your home state — whichever makes sense for your situation. Use a registered agent service. 2. Get an EIN (Employer Identification Number) from the IRS — free, done online, takes about 10 minutes. 3. Open a U.S. business bank account before you leave — Mercury, Relay, or Bluevine are nomad-friendly and don't require in-person visits. 4. Research your destination country's visa options — check whether a digital nomad visa is available and whether it triggers tax residency. 5. Track your days in every country using an app like Nomad Tax or a simple spreadsheet. This is critical for FEIE qualification and avoiding foreign tax residency. 6. Hire an expat-focused CPA — this is not optional. The cost pays for itself the first year.

Running a business from anywhere in the world is genuinely possible for American entrepreneurs in 2025 — and the legal framework to support it is more mature than it's ever been. But "possible" requires intention. The nomads who get into trouble are almost always the ones who assumed things would work themselves out, not the ones who did a bit of planning upfront.

If you're serious about building a location-independent business, start with the right legal foundation now. It's a lot easier to set up correctly at the start than to unwind a mess years later when the IRS or a foreign tax authority comes knocking.

Ready to take the next step? Explore the rest of the NoBossly guide series for deeper dives into FBAR reporting, tax treaties, international payment setup, and managing your state tax exposure when you move.

Two companions to this guide: state residency and taxes when you move and FBAR reporting for foreign accounts. If clients pay you from abroad, international payment rules round out the picture.