Given the prevalence of people on this forum who are working remote jobs, I figure there's a good number of "digital nomads" here. What's your story? Where are you now? How do you handle taxes and what do you do if you work for a U.S. employer and need to keep a U.S. address?
I'm on Penang, Malaysia right now. Sort of stumbled into the digital nomad lifestyle: was living in Berlin and decided it wasn't going to be a good place to be during a pandemic, so I flew to Singapore back in March '20 and just kept going since then.
Nomad tax setups vary, there's no one-size-fits-all answer. It depends on your citizenship(s), residency/ies when you started nomading, income, location and type of employer/clients, and where you want to spend time.
I'd love to travel and work but I work for a U.S. employer and need to keep a U.S. address, which is an expensive requirement if one doesn't already own property!
> I'd love to travel and work but I work for a U.S. employer and need to keep a U.S. address, which is an expensive requirement if one doesn't already own property!
How much of a resident do you have to be in the U.S.?
Just an address you can receive mail at: https://www.postscanmail.com/. They have a ton of locations, if you want no state income tax + high CoL (for employers doing adjustments): Seattle.
Note there's some issues with using these types of addresses (specifically those designated as Commercial Mail Receiving Agencies by the USPS) with some banks and credit card issuers. Probably your employer would be fine with this.
A mail receiving service in the US is not expensive. I used Traveling Mailbox for years to maintain a Seattle address (Washington has no state income tax, so its a good state to establish residency in so you’re only paying Federal income taxes). You will need a real residential address to set that up, and banks require a real address to open an account, but you can then add a mailing address. You should set all that up before you start traveling. Once you have a mailing address in the US your employer/clients won’t know or care that it’s a service.
Mail receiving services scan your postal mail and you can see it online. You can decide to download it, trash it, or forward it to another address. They also receive packages and will forward them. Some will even deposit paper checks for you, though I found I could download check images, add my signature with a photo editing program, then deposit with my bank’s mobile app by photographing the check on my laptop screen (I had clients who paid with paper checks when I was traveling).
I find that it is fairly common for companies to pay you as a contractor if you want to leave the US. This simplifies things for both parties in most cases (assuming the company doesn't have an established office in the location that you will be working). You likely won't need a US address when this is the case.
Regarding taxes, you will likely need to a hire a tax professional in the area that you are working from. If you are a US or Eritrean citizen / permanent resident you should also hire a tax professional from the US / Eritrea in order to handle their citizenship based taxation.
I went to Asia to visit a friend from university. The weather and living conditions were excellent, so I decided to stay 6 months. I was already working remotely before.
> what do you do if you work for a U.S. employer?
I say up a small company that I use for billing my employer so that they don't have to care about my current/changing address.
I wanted to ask a general question about how you decide where to pay taxes? Like are you paying income taxes in every city you reside in over certain number of days?
Unless you have a work permit or a visa that allows you to legally work you aren’t going to pay local taxes, because you aren’t legally allowed to work.
In general you won’t qualify for a work permit/permanent residency in most countries. And in general nomads travel on tourist visas (or visa waiver/visa on arrival), and those visas almost never allow you to do any kind of work, even online for a foreign employer. It varies by country. Some countries (and more ever year) offer so-called digital nomad visas, which are actually aimed at entrepreneurs, remote workers, and people who earn passive income in some other country. Those may or may not have local tax obligations, you have to look at every case.
Unless you go around telling everyone you are working remotely there’s little enforcement or attempt to round up nomads pounding on laptops in coffee shops, so digital nomads just fly under the radar working remotely and breaking the local immigration and labor laws. You can’t pay local taxes if you aren’t allowed to work and earn an income in the country in the first place.
US resident here. My employer pays for Tailscale, so I can access company-specific services like 1Password without having to log in with weird IPs. I'm currently in Seoul and was using a coffeeshop's wifi hotspot. This may answer part of your 'how do you do it?' question.
Do you keep in apartment in the United States? I'm curious about how you handle residency/address stuff. My employer, for example, requires all employees to have a U.S. address on file.
Keeping an apartment while traveling seems like an expensive idea.
Keeping a US address on file is one thing. Actually living there is another thing. I never ran into this requirement, but I did use physical addresses of family and friends to set up mail receiving and bank accounts, then added the mail receiving service address (which looks like a street address) as a mailing address. Banks, credit cards, even the IRS do everything online so you shouldn’t be getting a lot of important paper mail anyway. Pay whatever bills you have online.
Even if you have to give a street address that checks out as a real residential address (services/databases exist to check that) you don’t actually have to live there. I doubt your employer sends someone to that address to check on you.
My company allows us to work from anywhere, at any time, assuming we're in the continental US as that is what many of our client contracts require.
That said, hotel wifi is routinely terrible (often a total of 5mbit for all rooms or highly latent), particularly in hours when lots of people are in the hotel (Thursday and Friday, all day, and other days of the work week before check-out and after check-in).
When I'm working remote from a hotel, I often find myself on my hotspot and would suggest you have backup solutions for connectivity if you plan to do this on the regular.
The IRS literally doesn’t care where Americans live or work. US citizens/permanent residents are required to file and pay taxes regardless of where they live, and regardless of where they earn their income. US Federal tax obligations don’t change for digital nomads. If an American taxpayer can stay out of the US for 330+ days in a year they may qualify for the FEIE (Foreign Earned Income Exclusion), which applies even to income from US sources. That’s a big tax break.
To avoid state income taxes establish residency in a state that doesn’t have an income tax — Texas, Florida, Nevada, Washington, etc. That can be as easy as getting a new driver’s license. I stayed at a small bed & breakfast in Washington for two weeks (key thing: residential address, not a hotel or mailbox) while I got a WA license, then changed the address online to my mailbox. If you’re unlucky enough to live in California or Virginia now be aware that those states particularly try to hang on and tax you as a resident even after you move out.
Unless you’re breaking the law or otherwise attracting attention no one checks if you actually reside at the address on your license. Presumably you aren’t living in the US anyway so you’re not going to get tickets where your address might matter.
