Courtesy of Kristin Vierra
- From visa issues to taxes, becoming a “digital nomad” can be a logistical nightmare.
- Experts told us the main rules and regulations you should know before combining work and travel.
- Some digital nomads fed-up with the complicated rulebook for remote work are going incognito.
The “digital nomad” dream of traveling around the world while working from your laptop has never been more in reach, as remote work becomes a permanent fixture in the US economy.
But virtual employees may be surprised to learn that just because their job is longer attached to an office, it doesn’t mean they can just pack up and work from wherever.
Who is to be blamed for breaking globetrotters’ hearts everywhere, you ask? Only the omnipotent buzzkill that has defined America from the start.
No location without taxation
America’s tax structure is fundamentally at odds with nomadic living. The US is one of two countries around the world that levies taxes based on citizenship instead of residency, a system we only share with Eritrea (an East African nation about the size of Pennsylvania).
That means whether you’re a New Yorker who’s been working in Spain for a decade or a Californian backpacking through Asia for the next two years, you’re still required to report and file your taxes with the IRS.
“No matter where you work from, or how you work — freelancer or salaried employee — if you’re an American citizen, you always have to file and report your taxes,” Adam Nubern, who runs an accounting firm specializing in nomadic tax law, told Insider.
If you’re working abroad, you also have to determine if you’re considered a tax resident in that country too, and, if so, figure out if you’re eligible for any special benefits they might offer.
In the US, benefits exist to prevent having your income taxed twice such as the foreign income tax exclusion and foreign housing exclusion. But qualifying is not as easy as many remote workers expect it to be, Nubern said.
To start, you need to be physically outside the US for 330 days out of the year (and have the receipts to prove it).
On top of that, you have to demonstrate your “tax home” and “abode” are both in a foreign country which isn’t as simple as paying rent or owning a house. The IRS also takes socio-economic factors into consideration, meaning little things like having a storage unit, seeing a doctor, or voting in the US can disqualify you from the benefits.
“Learning the language, having a bank account, having family and friends and doctors in that place, those types of circumstances would be more favorable than moving countries month to month,” Nubern explained.
Kristin Vierra at the Torres Del Paine in Chile.
Courtesy of Kristin Vierra
Kristin Vierra, a remote work career coach and digital nomad of five years, told Insider she pays a specialist $500 to file her taxes because the rules can get so complex.
“In the US it was pretty straightforward when I worked full-time nine to five, but when I worked as a contractor and for a coaching company and was traveling, it added new complications,” she said. “I didn’t want to try to use TurboTax to do this.”
The web of rules isn’t confined to international travel. A similarly complex tax structure regulates remote employees who work across state lines. Over two dozen states require non-resident withholding after just one day working in the state, with varying rules for independent contractors and salaried employees.
“From a regulatory standpoint, even domestically hopping from state to state is just a massive cluster,” Nubern told Insider. “It’s atrocious.”
Companies, businesses, and workers are all figuring out the borderless economy — and they’re rarely on the same page
In the past, nearly all digital nomads have worked abroad on 90-day tourist visas, which is technically illegal, but most governments turn a blind eye to. More recently, countries have attempted to set up clearer tax rules, travel guidelines, and minimum income requirements through “digital nomad visas.”
While the visas are an important step forward in theory, most travelers who don’t stay in one place for more than a few months at a time view the paperwork as more work than it’s worth, Krystal Pino, founder of Nomad Tax and a digital nomad of six years, told Insider.
Pino noted that the new programs have helped companies better understand the legality of digital nomadism — but there’s still too much regulatory grey room for businesses to feel confident letting their remote employees travel internationally.
“There’s not enough information in the space for employers to feel completely covered from a standpoint of not being liable for taxes,” she told Insider. “So generally what we’ve seen is employers say ‘we don’t understand it, it’s not clear enough, so it’s just going to be a hard blanket no.'”
Instead of figuring out how to follow the rules, some digital nomads are going incognito
Adam and Lindsey Nubern worked out of a camper van for four years together. During their travels, they realized there was a huge demand for nomadic tax services.
Courtesy of Lindsey Nubern of NuventureTravels.com
Before dealing with the burden of taxes and visas, most remote workers need permission from their employer to work abroad first. But some travelers fed-up with what they believe are outdated and overly complicated laws are throwing out the rulebook entirely and traveling in secret.
“If you want to try to do this by the book, then you’re paying someone like me $225 an hour. Even if you’re a digital nomad and making $100k, the math doesn’t really add up,” Nubern said. “It takes a lot of hours to be compliant.”
But as corporations are beginning to be held liable for their rule-breaking employees, more companies are trying to properly define their international travel policies that may have been more lenient at the start of the pandemic. Even companies like Airbnb and Spotify, some of the first major companies to tout “work from anywhere” perks, have rules set in place against traveling to certain countries, or permanently moving abroad.
Instead of attempting to travel in secret, Vierra recommends doing research about the tax and visa guidelines of the regions you want to travel to and pitch the idea to your manager.
“If they could get this puzzle piece figured out, it’s not only good for remote workers in general, but it’s also good for the company,” Pino told Insider. “It’s so hard because it’s going to take a truly global effort — it’s really hard to get companies and countries on the same page about what it actually means to work without borders.”