1099 Contractor moving from WI to FL residency while living abroad (FEIE questions)

[briu]

Hi everyone,

I have a complex residency and self-employment tax situation for this 2026 tax year and would appreciate some guidance on which forms to use.

My Situation:

• Income: $70,200/year as a 1099-NEC Independent Contractor. Paid via ACH, no tax withheld.

• Physical Location: I am currently living in Brazil and plan on staying and visiting other countries

• Residency: My current "address of record" for my bank and employer is a friend's house in Wisconsin. However, I have no lease, no utility bills, and no property in Wisconsin. I used my U.S. Passport to open my accounts. The only thing I did was the provisionary drivers license.

• Goal: I want to legally establish residency in a no-tax state (Florida) to avoid Wisconsin state income tax while I am living abroad. Not sure if its necessary and would like some insight on it.

My Questions:

1. Breaking Residency: Since I have no financial ties (lease/bills) to Wisconsin, what is the best way to "break" domicile with WI while living abroad? If I change my address with my employer/bank to a Florida mail-forwarding service, is that sufficient for the WI Department of Revenue to consider me a non-resident?

2. FEIE & Self-Employment Tax: I understand that if I qualify for the FEIE (Form 2555), I can exclude my income from Federal Income Tax. However, since I am a 1099 contractor, do I still owe the full 15.3% Self-Employment tax (Social Security/Medicare)? Are there any deductions available to reduce the SE tax base while living abroad?

3. State Tax & FEIE: Does Wisconsin (or most states) recognize the Federal FEIE, or would they try to tax the full gross income if I cannot prove I've broken residency?

4. Quarterly Payments: Since I have no withholding, should I be filing 1040-ES estimated payments based on the SE tax alone, or the full tax amount including income tax (before the FEIE is applied at year-end)?

Thank you for the help!

[ThomasM125]

To break Wisconsin residency, you would have to take steps to indicate that you are not away temporarily, meaning you do not intend to return there in the future. Changing your address, bank and diver's license to other states would be helpful. You can read this from the State of Wisconsin Department of Revenue to learn more about residency requirements there. 

You are still liable for self-employment tax even if you qualify for a foreign earned income exclusion (FEIE). You can deduct any expense from your business income that is ordinary or necessary to generate your service or sales income. You can deduct a housing allowance as part of your FEIE, but that will not affect your self-employment tax obligation.

Wisconsin does not allow the FEIE, so you would not be able to exclude that portion of your income if you were a resident of Wisconsin.

To establish residency in Florida, you would have to consider Florida as your primary home. That would entail living there for a substantial period of time in addition to having a driver's license, voter registration and other documentary evidence of that being your primary home.

You should file estimated taxes based on how much tax you expect to owe. Your estimated taxes should be paid in on a quarterly basis.

[briu]

Thanks for the reply, so in short, I will always have to pay the 15.3% Self-Employment tax no matter what, correct? Also, I don't plan on going back or living in the USA, that's why I'm confused on the federal taxes since I'm not even there anymore, I live in Brazil atm and plan on travelling the world, would opening an international company and have the company I work for pay me through there remove me from the 1099, or possibly the self employment tax, because in Brazil its 27% on yearly income non company, and about 8% for a company... so all things considered Id have to pay the 15.3% + the 8% here? I make aprox 70k yearly, so that would be basically 20k only in taxes.. I plan on leaving Brazil to not pay taxes here and have a company in a tax free zone, I also saw something about opening an S Corp, would that eliminate the 15.3% Self-Employment tax?

[DianeW777]

Yes, you will continue to pay self employment tax on your federal return in your current situation. You are a U.S. citizen and therefore will pay tax to the IRS regardless of your residency.

• IRS-FAQs About International Individual Tax Matters

First FAQ: A U.S. citizen living outside the country for many years, do I still need to file my U.S. tax return?

• Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits. Visit Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for additional information.

For your questions about whether you should set up an international company, legal council is suggested. We do not have the answer to legal questions in this tax forum and in your situation it would be the best advice.

@briu