An American digital nomad running a US LLC from Bali faces a common problem: complete confusion about tax obligations. With clients in four countries, they don't know whether to file based on where clients are located, where they live, or where the business is registered — and accountants charge a fortune for international tax help.
Posting to r/digitalnomad, the traveler described their predicament: "Living in Bali, running a US LLC and making money from clients in like 4 different countries. Tax time rolls around and I genuinely don't know what I'm doing."
The confusion is understandable — and expensive to resolve. International tax accountants charge $500-2,000+ for digital nomad tax preparation, depending on complexity.
The Basic Answer (That Gets Complicated Fast)
For US citizens and permanent residents, you file based on where you're a tax resident — which, for Americans, means filing US federal taxes regardless of where you live. The US is one of only two countries (along with Eritrea) that taxes based on citizenship, not residency.
This means:
1. You file US taxes on worldwide income even if you never set foot in the US that year 2. Your LLC's location determines business taxes (a US LLC pays US business taxes) 3. Where your clients are located is mostly irrelevant for your filing obligations (though it may create obligations for them) 4. Where you physically live may create additional tax obligations to that country
The Foreign Earned Income Exclusion
US citizens living abroad can exclude up to $120,000 (2023 limit) of foreign earned income from US taxes if they meet physical presence or bona fide residence requirements. But here's the catch: income from a US LLC typically doesn't qualify as foreign earned income.
If you're a single-member LLC (treated as a disregarded entity for tax purposes), your income is considered self-employment income from a US business.
