Tax preparation Chattanooga self-employed workers need has one complication that Nashville and Memphis do not share: the Georgia state line runs a few miles south of downtown. Tennessee has no income tax. Georgia does. Plenty of Chattanooga freelancers live on one side and earn on the other, and the preparer who handles that badly costs you real money. After years of reviewing border-state returns, I can say that tax preparation Chattanooga filers should be shopping for is defined by that single question first, and everything else second.
Start with the border question
Tennessee imposes no state income tax on wages or self-employment earnings. Georgia does tax income, and it taxes nonresidents on income sourced to Georgia. So the analysis for a Chattanooga freelancer depends on two facts: where you live, and where you perform the work.
- You live in Tennessee and serve Georgia clients remotely from Chattanooga. Service income is generally sourced where the work is performed, so remote work done at your Chattanooga desk usually stays out of Georgia’s reach. Usually is doing work in that sentence, which is why you ask a preparer rather than guessing.
- You live in Tennessee and physically work at sites in Georgia. That income can be Georgia-source, creating a Georgia nonresident return obligation.
- You live in Georgia and work in Chattanooga. Georgia taxes residents on all income regardless of where earned, so you file a Georgia resident return covering everything, with no Tennessee return to offset it.
That last scenario is the one that stings. A Georgia resident working in Tennessee gets no credit for tax paid to another state, because Tennessee collected none. There is no planning trick that fixes it, but there is a real difference between a preparer who explains it in January and one who surprises you in April.
The Tennessee side of the ledger
If you are a Tennessee resident, your income tax exposure is federal only:
- Self-employment tax at 15.3% of net earnings
- Federal income tax at your marginal rate
- Quarterly estimated payments in April, June, September, and January
- Schedule C and Schedule SE
Tennessee’s business-level taxes still apply. Franchise and excise tax reaches LLCs, corporations, and limited partnerships: excise tax at 6.5% of net taxable Tennessee income, franchise tax at 0.25% of net worth or property value with a $100 minimum. Sole proprietors and general partnerships owe neither. Tennessee’s business tax on gross receipts now carries a $100,000 per-jurisdiction filing threshold following the Tennessee Works Tax Act, so many Hamilton County sole proprietors no longer file it.
What tax preparation in Chattanooga costs
- National chain, self-employed package: $250 to $400
- Independent CPA, Schedule C only: $350 to $700
- Enrolled agent: $200 to $500
- Tennessee and Georgia returns together: $500 to $900
- Monthly bookkeeping plus annual filing: $200 to $600 per month
The two-state premium is real and it is worth paying, because the alternative is an unfiled Georgia nonresident return that surfaces two years later with penalties attached. What you can control is record quality: preparers bill for turning bank statements into a profit and loss. Our bookkeeping guide for the self-employed covers a system that keeps you at the low end of every range.
Finding a preparer who handles both states
- Search the IRS Directory of Federal Tax Return Preparers by Chattanooga ZIP code and filter for CPAs, enrolled agents, and attorneys.
- Ask explicitly how many Georgia nonresident returns the practice files each year. A number under ten means you are the experiment.
- Check the National Association of Enrolled Agents directory. Enrolled agents are licensed federally and can practice across state lines.
- IRS Volunteer Income Tax Assistance sites operate seasonally in Hamilton County for filers under the income limit, though multi-state returns are usually outside their scope.
Questions to ask before you hire
- How do you source my service income between Tennessee and Georgia?
- How many Georgia nonresident returns do you file each season?
- Do you handle Tennessee franchise and excise returns in-house?
- Will you calculate quarterly estimates for both federal and, if applicable, Georgia?
- Will you model an S-corp election including the Tennessee entity taxes it triggers?
- What is your PTIN and what credential do you hold?
- Is your fee flat or hourly, and are notices from either state included?
Deductions Chattanooga self-employed filers miss
- Home office at the simplified rate of $5 per square foot up to 300 square feet
- Mileage between clients and job sites, logged with the state noted, which also supports your sourcing position
- Self-employed health insurance premiums, taken above the line
- One half of self-employment tax
- SEP-IRA or solo 401(k) contributions
- Professional licensing, continuing education, and dues, including any Georgia licensure you carry
- Tools, equipment, and software, expensed or depreciated by cost
The mileage log matters more here than almost anywhere else. If Georgia ever questions your sourcing, a contemporaneous log showing which days you worked where is the evidence that settles it. Our guide to self-employed write-offs covers substantiation standards, and our roundup of self-employed tax mistakes covers what goes wrong without one.
Quarterly estimates across two states
Federal estimates are due in April, June, September, and January. If you have a Georgia filing obligation, Georgia expects estimated payments too once your liability crosses the state threshold. Missing them produces penalties in each system independently.
Our quarterly tax guide for the self-employed covers the federal calculation, and our Tennessee self-employment tax hub covers the state picture.
What to bring to your appointment
- All 1099-NEC and 1099-K forms plus a total for cash income
- A categorized profit and loss statement, with revenue split by the state where work was performed
- Mileage and work log showing dates, locations, and which side of the line each job was on
- Records of federal and any state estimated payments
- Prior year federal and any state returns plus depreciation schedules
- Health insurance and retirement contribution statements
- Tennessee Secretary of State filings and any Georgia registrations
Primary sources: the IRS Small Business and Self-Employed Tax Center, the Tennessee Department of Revenue, and the U.S. Small Business Administration, which funds free counseling through Tennessee and Georgia resource partners.
Chattanooga tax preparation FAQ
I live in Chattanooga and all my clients are in Georgia. Do I file a Georgia return?
Not automatically. Service income is generally sourced to where the work is performed, so remote work done from your Chattanooga home office typically is not Georgia-source. If you physically travel to Georgia to perform the work, that portion can create a Georgia nonresident filing obligation. Have a preparer review your specific facts rather than assuming either answer.
I live in Georgia and work in Chattanooga. What do I owe?
Georgia taxes residents on all income regardless of where it is earned, so you file a Georgia resident return covering everything. Because Tennessee collects no income tax, there is no other-state credit to offset it. Plan your estimated payments around the full Georgia liability.
Does Tennessee tax my self-employment income?
No. Tennessee has no state income tax on wages or self-employment earnings. However, if you operate an LLC, corporation, or limited partnership, Tennessee franchise and excise tax applies: 6.5% excise on net taxable Tennessee income and 0.25% franchise tax on net worth or property with a $100 minimum.
Does Chattanooga or Hamilton County have a local income tax?
No. Neither the city nor the county levies a local income tax. Your only income tax exposure as a Tennessee resident is federal, plus any Georgia obligation created by work performed across the line.
How much more does a two-state return cost?
Expect roughly $150 to $250 above a single-state Schedule C, so $500 to $900 with an independent CPA. That premium is smaller than the penalties and interest on an unfiled Georgia nonresident return discovered two years later.
Is an S-corp election worth it for a Chattanooga freelancer?
Sometimes, usually above $60,000 to $80,000 of net profit, but in Tennessee the election also triggers franchise and excise filings and payroll administration. If you also have Georgia-source income, the entity return multiplies. Ask your preparer to model both structures with your actual numbers.
What records prove where I performed my work?
A contemporaneous log of dates, client locations, and mileage is the strongest evidence. Calendar entries, job tickets, and invoices that name the work site support it. Reconstructing this after a notice arrives is far weaker than keeping it as you go.
