As a digital nomad, you may have chosen the life of a remote worker because of the freedom it offers. You can travel the world, explore new cultures, and enjoy a flexible lifestyle. But before you can truly enjoy the benefits of being a digital nomad, you need to understand the US taxes that come with it.

What is a Digital Nomad?

A digital nomad is an individual who works remotely and travels the world. They are often self-employed, working in a variety of industries such as web design, software development, content creation, and other creative fields.

Do Digital Nomads Have to Pay US Taxes?

Yes, digital nomads still need to pay US taxes, even if they are living and working abroad. According to the US Internal Revenue Service (IRS), US citizens are required to report and pay taxes regardless of where they live and earn their income.

What Taxes do Digital Nomads Have to Pay?

Digital nomads are subject to the same taxes that all US citizens have to pay. This includes federal income tax, state and local taxes, and self-employment taxes. Depending on the type of income they receive, they may also be subject to other taxes, such as capital gains tax or payroll tax.

How Can Digital Nomads File US Taxes?

Digital nomads have the same filing options as other US taxpayers. They can file their taxes online, by mail, or in person. They should also consider hiring a tax professional to ensure that their taxes are filed correctly and any credits and deductions are maximized.

What About Foreign Earned Income Exclusion?

Digital nomads may qualify for the Foreign Earned Income Exclusion, which allows them to exclude up to $105,900 of their foreign earned income from US taxes (for the 2021 tax year). To qualify for this exclusion, digital nomads must meet certain criteria, including having a tax home in a foreign country and having been a resident of that country for at least 330 days in a 12-month period.

Conclusion

Digital nomads need to be aware of the US taxes that come with their lifestyle. Although they still have to pay US taxes, they may be able to take advantage of the Foreign Earned Income Exclusion and other credits and deductions to minimize their tax burden. With the right planning and preparation, they can ensure that they are compliant with US tax laws and maximize their savings.