I guess it is still a bit grey area. I guess most people enter the country just as 'tourist'. I'm also not sure what will happen if you have an accident while working time. What will the companys insurance say?
Leaving aside workman's comp issues, why would it be any different than if you were there on vacation? As a US citizen, for most of Europe, I just get a stamp (maybe) when I arrive. I'm not even applying for a specific type of visa.
It’s a tourism advertisement couched as an informational piece. My guess is paid placement? She also claims “accountants say” without telling us which ones. I’m afraid I have to send this paper back for correction, maybe she can hand in the revision before it’s due on Monday.
I didn't read the article because if I ever have to read another article about "digital nomads" I'll kill myself. But I saw your comment and just wanted to note I've used Greenback for years and they're pretty fantastic. YMMV as it surely depends which accountant you get. Jeremiah is mine.
Any other Americans avoid things that they might otherwise do due to real or perceived tax complications? I was hesitant to hire a nanny as that would make me an employer, and add various tax responsibilities. I did a little bit of Robinhood "investing" with a small amount of money during the pandemic just for grins, thinking everything would be neatly wrapped up on a 1099 form, but I accidentally found myself with an unexpected, incomprehensible (to me) "contracts or straddles" 6781 tax form to fill out, all because I made $25 in a specific type of fund. I haven't seriously considered doing digital nomading like the folks in the article but it is something that I might like to try at some point...although the tax issues do scare me.
It's not that I don't want to pay the appropriate taxes, I just don't want to accidentally do the wrong thing and then kick off a painful audit.
It’s not just about paying an accountant but also not accidentally doing something that ends up highly taxable. Example: moving to a country without a tax treaty with the US and getting double taxed, at least temporarily.
I had a US citizen colleague who moved from Singapore to the UK and just got absolutely killed on tax - I can't remember the exact details but there was some kind of annual (or less frequent) election he had to make that was correct for Singapore but meant he ended up paying full US and UK taxes on his income with very little relief.
I thought that in tax treaty situations you only pay the maximum tax rate? So the place you lived/ worked gets their tax cut or the US gets the difference (or something along those lines). Hard to imagine someone paying 70% of their income in taxes just for living somewhere else for a little while.
It isn't that simple in practice unless your finances are trivial. Even under a tax treaty there are a several circumstances where you'll pay more total taxes than if you solely paid taxes in either country. Tax incidence is determined per income type, it is not based on your total tax return; you can pay more taxes locally than you would in the US and still owe a lot of taxes to the US. Similarly, differences in definitions, recognition, taxation across types of income can differ between countries such that you end up paying taxes that are not recognized by the US and therefore are not credited as taxes paid. It is pretty complicated.
The US tax code places an indefensible burden on expats. Also, some States (looking at you California) can require you to pay income taxes even if you live overseas for the entire year.
Which is the other reason to pay way too much money to an accountant. So you can ask them questions about this sort of thing. (Though you get to obscure edge cases and accountants may not know all the ins and outs of international tax consequences.)
In my limited experience accountants can get even relatively trivial things (like state tax credits for cases of partial residency) wrong. I’m sure there are different levels of quality/attention you can get the more you pay, including talking to pedigreed tax attorneys, but it’s expensive.
Personally I think there is a high dollar value in just not having to worry about these kinds of things. If I were entering a complex working situation or moving to another country, I would probably take steps to make things as simple as possible such as ending work in December and starting something new in January, not realizing investment income, putting assets in corporations or trusts to defer any income, etc.
Absolutely. As far as I know, I've never had issues with my accountant although my filings are such a thick sheaf at this point that, who knows? (And my income sources aren't even that complicated.)
I do fear state tax filings are about to get more complicated with some states apparently looking to collect money for even one day business trips. I wish Congress would get off the blocks and pass the minimum 30 day exclusion that's been brought up a couple times.
You can also get caught up if you move between countries that have tax treaties but where the tax years don't align on the calendar and where the schedule for paying estimated taxes are different, like the US and the UK.
The US tax year runs from Jan - Dec, with a quarterly estimated tax payment schedule for self-employed people. In the UK, it runs from Apr - Mar, with bi-annual tax bills. So there's a point at the end of the calendar year where you owe US taxes (that you should be able to fully wipe out with tax paid to the UK), but the UK hasn't calculated the tax amount yet nor asked for the money yet, so you can't show the US that you already paid those taxes under the tax treaty. So you end up owing two countries taxes on the same money, at least temporarily.
Depending on the mix of countries, it can be really hard to find an accountant who actually knows how to do it properly.
It's also entirely possible that the answer you get is "well, this is how we interpret the updated tax treaty, but nobody has tried it in court so we aren't sure."
Usually this stuff is in the details rather than the basic question, but it can be fiddly.
So true. I have the simplest mix of countries possible (US citizen / UK resident) and getting clear answers from an accountant on various questions is harder than one might expect because cross-border scenarios aren't always clearly defined in the law.
A lot of it comes down to the accountant saying "our firm recommends X as more defensible based on recent changes in legislation, but if you want to do Y, here is why that might also be possible."
checks out. I am a digital nomad. I pay about $300/month to bench to take care of it all for me. They handle day by day accounting and file at the end of the year for me. 100% worth the money.
I really do want to do the right thing but its hard when I am unable to find any clear guidelines. I have been traveling and working outside of the country for over a year now. Ultimately I just set where i live as my parents house and called it a day. The company didn’t want to work with me on doing it properly so im not sure how i would be able to. Additionally they aren’t even paying my state taxes properly because they “don't have it setup” so im being forced to pay tax to a state I have no presence in. This is a company with several thousand people and my situation is not uncommon across the company.
You'd probably do it under the table. I once spent a few months working from Spain. Prior to departure, I also wanted to do things by the book, but my tax and visa questions to the Spanish consulate kept getting deflected in that "I'm going to misunderstand your question in a way that makes it clear you should simply use a standard tourist visa instead of making your life harder, but I'm not going to come right out and say that" kind of way. IMO, it becomes a real issue when your travel pattern becomes more "expat" than "digital nomad" (stay abroad much longer, don't move around as much).
Glad you brought this up, it really shows that working/visas need to be rethought. Most countries should have no problem if I show up on a tourist visa to stay for a few months but continue to work for a foreign company remotely - and defacto, they don't, as your experience demonstrates - but it's technically not allowed (or even legal?).
I'm not entirely sure what kind of loopholes allowing remote work on what would normally be a tourist visa/stay open up, but surely it's preferable for all parties in the "average" case for it to be allowed.
I think the thing with tourist visas is that you can’t work for a local company. (Also you might need to get paid in a non-local bank account.) To work for a local company you need a work visa.
In some ways, a standard tourist is still working for their foreign company, they just are using their allotment of get-paid-for-doing-nothing days. Likewise, a guy who wants to workation for a week still is effectively a tourist. At some point you seem less touristy, which is probably why tourist visas are typically around 90 days.
Some countries (like China as I recall) are strict about getting business visas with a letter of introduction, etc. if you're doing something like attending a conference. But, yes, in general Western countries are mostly fine at least with other Western countries so long as you don't work for a local company.
I have never heard of anyone from Western Europe having to do anything out of the ordinary to attend, say, a team meeting or a conference in the US. And, in the other direction, I have never done anything in the other direction aside from maybe China. No immigration officer has ever cared in the slightest that I was attending a conference or business meetings.
Business meetings and conferences are some of the very few activities allowed. Go read on B1 visa. Just try to tell an immigration officer you will be "working" for a few days and see what happens.
Obviously it would be a bad idea to say that you're here "to work" because the implication is that you're doing local work of some sort. If you're not going to a conference, having business meetings, etc. and were mostly going to be vacationing with a little email or other remote work on the side I assume you would get a tourist visa. There is certainly no indication on the US site that you're not allowed to spend any time working remotely. The idea that someone would be allowed to enter the country for meetings and conferences but isn't allowed to spend a morning doing email simply doesn't make sense.
And US citizens have visa-free travel to Schengen which allows for either tourist or business activities.
While nobody can prevent you from sending some emails, they will have questions about how you're gonna sustain yourself in the US, especially if you stay for longer periods of time and go back repeatedly. As soon as they know you're "making money" from this activity, you'll be rejected.
Also EU law is separate/different from US immigration law.
In summary, if you can help it, I suggest you don't do any work from the US.
PS: also if you had to deal with USCIS, you'll find there's a lot of things not written on their site, but that are actually important and enforced. Very different for example from Canada, where nearly everything is available online and helping you succeeed in the process. And yes, US immigration many times "doesn't make sense".
This is correct to my understanding, just because working remotely for a foreign company is extremely easy to get away with and not enforced, doesn’t make it legal. I assume this is true for many other countries
It's not just duration though - if you and I both enter a country on a 30 day tourist visa, say, and you work remotely on your laptop from a hotel but I do on-site sales or service visits... are we really doing this same thing?
The difference is mostly plausible deniability. If I'm speaking at an event or meeting with local customers, it's hard to deny that I'm doing business in the country. If I'm just working remotely from my laptop, who knows that I'm not just being a tourist?
Yes this has the ring of truth, I went through a very similar experience spending some time working in France. Totally legit, paid by my company in another country and hosted by a French company for a short placement.
Total bureaucratic fail, the French company just told me the specific visa was not going to happen, so I cut my stay to fit the tourist limits and went on that visa.
I remember many years ago I bought a small amount of Apple stock for fun, and come tax time, I realized I would need to pay TurboTax like $80 to do my taxes because I had make like $8 of dividends from that Apple stock.
I suspect that there have been some years where I've ended up paying my accountant more to handle some complexity that involved phone conversations and additional forms than the dollar amount of the complexity in question.
Definitely. I don't mind paying taxes (for the most part) because their purpose makes sense in a lot of cases, but I hate doing taxes.
A single W2 salary is so much simpler. Taxes are automatically deducted and I don't have to think about much.
Luckily, I do have a stable residential address that any mail can be sent to, and it is in the same state as my employer, but I am essentially a digital nomad. Able to work anywhere with an internet connection - even from my phone's hotspot if I want. Occasionally I camp out for a week and work in the woods. Or pick up and drive to another town for a while. It's not a bad setup. Feels like I have the best of both worlds.
If the logistics were more complicated I probably wouldn't bother with being as nomadic.
Same here. I find it especially ridiculous because the IRS generally has all the information already for the majority of US taxpayers, W2's and 1099's from employers, financial institutions, casinos, etc. They should be able to send people a proposed return with a refund or amount owed and if you review and agree you simply sign and collect or pay. All this redundant data entry is a huge waste of time. I've heard people say the tax preparation industry lobbies against this but don't know if that is true or not.
At least in Germany there are so many ways to get deductions that you really want "do your taxes". Even as a regular employee. Especially while I was employed at a consulting company. Even as a regular employee you can claim part of your commute (IIRC you could claim the distance from your home to work). Then as a contractor (though I was not self employed but a regular employee of the consulting company) I could claim the entire thing IIRC meaning both traveling to and from work and even better, if going between clients in a single day that can be claimed. You could only claim the 'shortest path' unless you could prove 'significant time savings' by taking a longer route. The deduction was based on the distance driven. Also a daily amount for food was claimable for example but even as a contractor only for IIRC up to 3 months. And there's more like this and probably stuff I wasn't even aware of and left on the table.
While I don't disagree, for anyone whose taxes really are just a W-2 and a few 1099s, no changes in residency, dependents, etc., filling out their taxes is pretty straightforward.
Basically, companies are apparently starting to more closely track employee travel and state filing requirements. Not sure the exact impetus other than a lot more remote work happening--although this pre-dates COVID.
> I did a little bit of Robinhood "investing" with a small amount of money during the pandemic just for grins, thinking everything would be neatly wrapped up on a 1099 form, but I accidentally found myself with an unexpected, incomprehensible (to me) "contracts or straddles" 6781 tax form to fill out, all because I made $25 in a specific type of fund.
I don't use Robinhood for serious trading, but any major brokerage should be compatible with major tax software. With TurboTax I just import the data from my brokerage and it's mostly finished. There are a few unique situations where you might need to confirm some options, but it's largely automated.
Robinhood provides the same thing, but it is annoying to see an unusual tax form if you're used to W2 and 1099. I wonder what kind of fund he was buying though. He couldn't have been actually trading straddles, because Robinhood would have had to approve him, which involves acknowledging you understand the tax implications...
I don't think I did anything too out of the ordinary. Using the typical Robinhood UI, I bought and sold Invesco DB US Dollar Index Bearish Fund (UDN), which didn't require any extra work on my part compared to trading $SPY or $TSLA or whatever. Then I got a Schedule K-1 from Invesco and instructions to file a Form 6781. It was a separate form from the 1099 that Robinhood sent me and not auto-imported from Robinhood to TurboTax.
A K-1 is what I get from a Charitable Remainder Unitary Trust. (Basically an annuity from donating appreciated assets.) Never looked into the details of the form--that's why I have an accountant--but seems to relate to some sort of partnership interest.
Yeah, the form lists me as a limited partner in the partnership and lists my purchase price of the ETF as "capital contributed during the year" and my sale price of the ETF as "withdrawals & distributions".
I really don't understand why trading that particular ETF triggers this tax form vs listing the gain or loss on a 1099 just like every other stock or fund I traded. Probably something about the underlying currency trading? But if I had known it was going to mean spending hours researching the correct way to file, I probably would have skipped that particular investment.
It seems because the fund is basically a bundle of futures contracts and therefore "The Fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder." But, yeah, I wouldn't have dug that deeply in all probability and I'm sure the details are hyper-technical.
You can go back to Adam Smith complaining about this in The Wealth of Nations. The tax burdens and complexity have only increased since then.
The trouble today is that the tax/legal world has not yet moved into the 21st century. Try selling something online and figuring out taxes. Am I selling a service or a product? Do I have an economic nexus in certain states? If I'm an American running an online business in America, what are the implications of someone in Germany clicking the "buy" button? What the hell is a VAT anyway? Etc. etc.
GDPR and privacy/data regulations are another legal quagmire.
> I did a little bit of Robinhood "investing" with a small amount of money during the pandemic just for grins, thinking everything would be neatly wrapped up on a 1099 form, but I accidentally found myself with an unexpected, incomprehensible (to me) "contracts or straddles" 6781 tax form to fill out, all because I made $25 in a specific type of fund
I've had the exact same experience, but with a K-1 (?) document. It basically meant i was a partner of an LLC i think, and it ended up being a TON more work, and i got charged more from turbo-tax... so i ended up losing money on that investment.
Worst part is that the company mailed me a paper document instead of from robinhood over digital medium, so i had to transcribe like 10 docs.
Yeah, it definitely seems to imply that these people are all abroad but I definitely think most of them are 'nomadic' within the US which has very different tax implications for individuals.
It seems odd to call someone who works remotely within the US a digital nomad. At least I've only ever heard it in the context of someone traveling to countries that are more affordable to live that lifestyle than the US, such as Vietnam.
Better question: is it really a burden to have clicked on something not relevant to yourself? The mods are not the secretaries and filing and sorting team of HackerNews.
It's an American Media outlet's article posted on an American website during prime American working hours. Unless you are Canadian you really have no place to complain...
Considering the topic is about being digital nomad, it is bit ironic that the article and you are both focusing on American centeric points of view.
Nytimes has an International Edition, there are versions in Spanish and Chinese, classifying it as an American website is perhaps a bit myopic.
Time zones have very little meaning if you are a digital nomad like me and I hope many others on this website, or work with multi geography teams as it increasingly common last 15 months.
The title is misleading to people like OP and me who wanted to learn something useful beyond tax woes (for Americans or others) when considering a digital nomad lifestyle. Yes it is important topic for Americans and had the author just mentioned a paragraph about that it would not be a problem, however the entire article is basically a puff piece for the tax consultants quoted and contains only talking points on why you really need such expertise.
If HN was a pure aggregator and never changed the title I would agree that it should be directed at NYT.
HN also editorializes the content posted here, they do change titles here to reflect some of the values or ethics that this form embodies, so asking for the title changed to better reflect the content is a fair ask.
Sounds like you expect the world to cater to you? The NYT is a fundamentally an American Newspaper, HN is an American website and as stated this was posted during typical American working hours. If you want something else then find an international website posting articles from Newspapers in your timezone. I think you have a completely flat criticism. It's as if you bought a gallon of whole cow's milk from a normal grocery store and are complaining that its not low fat organic soy milk...
Edit: The article does mention the income exclusion. Their fault for burying the lede; somebody's getting paid by the word. Can't be bothered taking responsibility for not reading the full article; I'm off today.
Yes, this article is rudimentary at best, especially for something with serious personal ramifications like taxes where doing something incorrectly can have serious consequences.
> If you qualify for the Foreign Earned Income Exclusion, your first $108,700 is exempt from U.S. income tax. But keep in mind that this applies only if you’re a U.S. citizen who resides in a foreign country for more than 330 days within 12 consecutive months, not including time on planes, or if you are a bona fide resident of a foreign country. (You would still have to pay federal and state taxes on unearned income including interest, dividends and capital gains.)
This is such an odd article starting with the title. I get that a lot of people consider being nomadic because of the tax implications but I strongly recommend people who are doing it just for tax optimization who are U.S. citizens think twice (if your liquid net worth is under a few million) as it is really complicated and one mistake can hose your plans. For reference, I am an American but worked for the Estonian governments e-Residency program where we made it easy for people to set up and run a business remotely and most of our users were nomads and so I dealt with a ton of tax issues... it is insanely complicated and risky.
Just this AM I had a call with a citizenship by investment firm (happy to make recommendations in this space as I know a few people through previous work) and we were talking about tax implications for remote workers and various programs. All I can say is, get ready to pay an accountant a lot of money. If you want the simplest break as an American, I would leave the U.S. on Dec 31 this year and go establish physical residency somewhere with no local income tax (or via a program like Barbados Welcome Stamp) and stay there long enough to pass the smell test (e.g. open a local bank account, have an address for a few months)... should be at least 3 months, probably more like 184 days. Then you can move on and go other places (not the US) for under 2-3 months at a time, not creating roots. Of course there will still be complications if you're doing this while employed somewhere but I guess if you're an independent contractor or with your own company you can spin up an overseas entity somewhere.
The premium is Henley & Partners (although they had a bit of a scandal recently), I also think Latitude seems very good (https://www.latitudeworld.com/), and Arton Capital is another leading one but I haven't dealt with them directly
US tax law has become a bit less sticky over time for non-residents. At least today they don't throw tax on your global income for people doing few months stints.
Though, I don't think you can find much people today willing to go to US just for a few months for the sheer amount of paperwork headache.
The thing is you couldn't even work in the US as a non-resident even for a week, how do you stay a few months and get taxed? Are you talking about income from an overseas business while you are on vacation in the US?
If you are a citizen it doesn’t matter where your stint is - you pay tax on worldwide income. I think you are referring to non-citizens + non-residents that physically work in the US for a few months?
You can't help where you're born though. Ask "accidental American" Boris Johnson for example[0]. Although he's since renounced his U.S. citizenship to spare him from U.S. taxes.
The CRA does not tax you like the IRS does, no. Generally there's that "half year" rule of residency and also the "if you are considered a resident for tax purposes on Dec 31st" and things might be different for other country combinations than I have experienced (where a tax treaty existed between Canada and said country).
The only other country that taxes like the US (citizenship based rather than residency) is Eritrea and… wait for it… the US has the gall to criticize Eritrea for doing it.
Citizenship based taxation has been said by many think tanks to cause a drag on US GDP as there are relatively disproportionately fewer Americans working abroad than Brits, Aussies, etc etc. and people tend to work with companies they are familiar with back home. Go to Hong Kong, Dubai, etc and there are so many more citizens of non-US countries it is shocking.
I think you're overstating the complexity here, the foreign earned income exclusion is available for anyone that meets the physical presence test (330+ days abroad) and is easy to qualify for if you take an extended trip. Establishing residency is unnecessary, you can travel around from country to country (hence, nomad).
I've been living overseas in SE Asia for many years and met hundreds of self-proclaimed digital nomads. Almost none of them are doing it for the tax benefits.
It takes me 15 minutes to file my taxes both for my full-time employment, but I’m not some objectivist trying to scam my way out of paying my share of taxes. Just an engineer making a San Francisco wage working for bay area startups remotely while living in the third world.
I’ve spent the past 7 years traveling and living in DN-friendly countries (Türkiye, Georgia, Czechia). When covid is over I will move to Spain for 2 years under the Non-Lucrative Residency Permit.
More and more countries are coming out with non-lucrative / pensioner / digital nomad visas. They dont care as long as you aren’t doing business locally. From their perspectice it’s free sales tax income.
My domicile is now in Florida. I file my federal taxes as a us citizen and Floridan resident, no state income tax. (which means $60k per year for nothing more than bad consular services).
This seems a very complicated approach. I'd imagine for most US citizens just declaring their income on the US return and not bothering with any foreign returns / declarations / taxes would cover things.
Yes, the USA is one of the few countries that do this.
There are exclusions for foreign income tax paid, but I believe there is a cap (US$75,000?) on the amount of tax paid. That is, tax paid to another country can reduce your US liability.
Anyone in this situation needs competent advice. That leaves me out as a source of that advice.
There needs to be a tax treaty between the US and the other country.
I first moved to the US in May of 1989. At the end of the year, when preparing my US tax returns, I had to report my UK income and UK taxes. The tax treaty was essentially reciprocal, so the final position was that the the US government treated the taxes I had paid the UK as part of my US taxes. Since the UK taxes at a higher rate, I actually got a refund from the US government!
I figured all this out by going to the library and actually reading the full text of the tax treaty between the US and the UK. It seems that most people wouldn't do this, and would pay "an expert" instead.
Yes, it is reversed in that trivial sense. But when filing taxes in the US in 1990 for the 1989 tax year, I had already become a "US person" for tax purposes, which meant that the treaty applied to me as it would to any other "US person", citizen or otherwise. The fact that I had been a UK citizen working in the UK, and was now a UK citizen working in the US did not change that. As a US person, I owed US taxes under US laws.
Surely it was only a non-refundable credit. The US government is not going to give you back more than you paid them in the first place when recognizing foreign tax?
The check for about $600 showed up shortly. I was amazed, but years later talking to people who actually do this stuff for a living, yes, that's how it (can) work.
It is to the point that in some country, like France, bank have to ask anybody (even if you are not foreigner) if you are a U.S citizen or have close family who are, before opening a bank account.
As far as I know it is to report the creation of the account back to the IRS.
We have to file taxes in the US, and the US has tax treaties with many countries that allow the US citizen to simply make up the difference in the US. This means if you are in a country with a high tax rate, you won't have to pay anything in the US.
Yes, the US taxes the worldwide income of all citizens, and all residents. But if you are outside of the US 330+ days a year ~$108k of foreign income is tax free. Beyond that the US has tax treaties with ~70 countries to give you a credit for any foreign taxes paid.
I've been doing this for ten years now and you often need to go back and figure out where you were, when and why. It's insane. I have a physical book, that I periodically scan into my evernote. It's awesome, high quality paper and Its stood the test of time. Still not completely full.
Arrival data, travel purpose, when you decide to become a "resident" of said country, when visa's/passport/PR card were renewed. After each trip, count the number of days abroad, and attach a note for travel purpose. Keep an index of those at the back.
Japan.. Muji has great pens, and I like ball point 0.5 or 0.38 mm. You can't write very fast because it just becomes a sharp mess. It forces you to go slow and with the small precision it looks so beautiful.
Not affiliated or anything (haven't even tried their service), but if you're looking into becoming a nomad and have a high enough net worth, this was interesting, lots of free articles https://nomadcapitalist.com/
I know a couple genuine digital nomads. I try to meet up with them if I'm traveling internationally through their part of the world.
It's always interesting to meet at their favorite digital nomad coworking places, because they're always full of digital nomads who are doing anything but working.
To be fair, some of the people I've met do legitimate part-time contract work doing things such as managing social media accounts for companies or taking design jobs here and there. However, many of the people I've been introduced to at these places are trying to do some mix of life coaching, affiliate marketing, or creating content and services for other aspiring digital nomads.
My experience hiring digital nomads has not been great. Some of them have been quite talented, but when their lifestyle revolves around minimizing their workload every day it becomes very difficult to manage them. I'm sure there digital nomads out there who are also diligent teammates and employees, but on average I'd take a mediocre in-office hire who can put in predictable effort over a digital nomad who is constantly working to minimize their workload so they can travel more.
Jesus. This is not complicated. Just go to a country for as long as the tourist visa will let you (often 3 months or so), and work there, and enjoy it. Don't offer to pay tax to that country unless you want to. You only get one fucking life!
I'd probably hesitate to, say, rent a co-working space if I were technically required to have a business visa. But so long as I'm not speaking at events, meeting with customers, etc. absolutely no one cares if you're working on email, programming, writing, etc. on a valid tourist visa. (And, as a US citizen, aside from a few countries with somewhat onerous visa policies in general, I have absolutely never had an issue come up where I needed something different from whatever on arrival paperwork there was.)
This NYT practice of offering an article as clickbait then waiting a few moments after you start reading to block access and ask for a subscription is getting really old. Everytime is a slap in the face and reenforces my position on never buying news articles. If only there was a filter or plugin to blackout links that pull that trick.
So I have to make 50 accounts for every news service and hand out my credit card for yearly subscriptions everytime I want to read an article? Do you know what a PITA it is to keep track of and cancel those subscriptions? Half the articles are clickbait, opinion pieces, or have a strong political agenda with painful lack of objectivity. The assumption then is I'm going to pay upfront based on a headline? No way not in 2021. The news services need to get together and back one single payment processor, and accept payment on articles that are actually read, and there needs to be a one click option at the end of every article to cancel payment to prevent them taking advantage. And they are taking advantage and clearly have no respect for their readers looking at current tactics.
I wonder who in a foreign country, let's say Japan for example, will be checking on a tourist, to see if he/she/x is doing work while on a coffee shop, or just watching youtube. How can another country prove i was working over there, and not writing code for an open source project or something similar? I'm honestly curious. Is there any mechanism for that?
1.
Buy passport (optionally for the whole family) in zero tax jurisdiction, like Antigua and Barduda or St.Kitts.
Zero income tax, zero capital gains tax, zero nonsense.
Total cost for citizenship and passports including all fees for family of 4 is around $175-180k in Antigua. Add ~$20k for St.Kitts.
Vanuatu is cheaper than above but it's kinda weird passport.
Passports in ~8 months.
2.
Get rid of US Citizenship or US residency for tax purposes. This is no more than IRS trap.
Sounds good on paper, but you missed a small detail that people renouncing might want to consider: You can no longer live in the US. You will need to apply for a US visa to get back into the US to visit friends and family, and you may get rejected as the issuing officer may see that you recently renounced citizenship and considers you a risk of overstaying illegally.
Great journalism: I know Brent and his story with Iceland and the NYT story is a lie, but it is a good pretext to write some words and sell some subscriptions, even with some visibility on HN.
Brent and Erica love the place, so they wanted to live there for a while and visit around. The only way to get in was to get a working visa, so Brent found a local company interested to hire him part time for some work; if you don't know, he is in the top 3 experts in MS SQL performance tuning and he is doing a lot of consulting and training, so getting him even part time for a regular job rate (not his consultant rate) is a great deal for any company with such need. They don't have any plans to be digital nomads (meaning: work from different places around the globe), Iceland is one and Mexico (where Erica has family) are the 2 places they spend their time when not in San Diego.
So he is there not for tax reasons, not to evade US or the US government, but in an extended vacation while they still work as much as needed to justify the visa and to keep their business alive. Most people that are accidentally in this situation don't have a complex problem to solve with taxes, the ones that really do want to avoid US taxes while working abroad have some better sources of information and there are companies that help with that, offering a lot of info and services to get through the process (usually finding you a few good citizenships, more than 1 at a time and giving up on the US one).
What is not mentioned is the reverse situation: you are not a US citizen but you pay taxes in US and in another country, like many of my colleagues do. Because we work for an American company and we get a small portion of our income in US, we are taxed max rate (no return, no exceptions) in US and then we are taxed again in our countries, mostly in Europe, even if we don't set foot in US for that income. This is how it works, US is taxing everything it can.
135 comments
[ 5.5 ms ] story [ 199 ms ] threadHigh enough probability of "You don't have coverage for that", that this is something you really should dig into personally.
"...according to MBO Partners, which provides services for self-employed workers."
Sounds like an infomercial to me for Greenback Tax Services.
https://www.nytimes.com/paidpost/estonia/how-estonia-is-usin...
It's not that I don't want to pay the appropriate taxes, I just don't want to accidentally do the wrong thing and then kick off a painful audit.
The US tax code places an indefensible burden on expats. Also, some States (looking at you California) can require you to pay income taxes even if you live overseas for the entire year.
Other factors to think about:
- not all countries have tax treaties, the default is you owe in both places
- tax deferment schemes complicate things (e.g. 401(k)), the countries won't look at this income the same way
- some tax treaties require specific actions, missing these may leave you owing
- not all income types will be treated the same way in both jurisdiction (e.g. cap gains, rental properties,etc.)
- etc.
Personally I think there is a high dollar value in just not having to worry about these kinds of things. If I were entering a complex working situation or moving to another country, I would probably take steps to make things as simple as possible such as ending work in December and starting something new in January, not realizing investment income, putting assets in corporations or trusts to defer any income, etc.
I do fear state tax filings are about to get more complicated with some states apparently looking to collect money for even one day business trips. I wish Congress would get off the blocks and pass the minimum 30 day exclusion that's been brought up a couple times.
The US tax year runs from Jan - Dec, with a quarterly estimated tax payment schedule for self-employed people. In the UK, it runs from Apr - Mar, with bi-annual tax bills. So there's a point at the end of the calendar year where you owe US taxes (that you should be able to fully wipe out with tax paid to the UK), but the UK hasn't calculated the tax amount yet nor asked for the money yet, so you can't show the US that you already paid those taxes under the tax treaty. So you end up owing two countries taxes on the same money, at least temporarily.
tl;dr - everything sucks, hire an accountant
It's also entirely possible that the answer you get is "well, this is how we interpret the updated tax treaty, but nobody has tried it in court so we aren't sure."
Usually this stuff is in the details rather than the basic question, but it can be fiddly.
A lot of it comes down to the accountant saying "our firm recommends X as more defensible based on recent changes in legislation, but if you want to do Y, here is why that might also be possible."
- spend 330+ days per year outside the USA
- specify that I had foreign earned income (based on the physical presence test)
- specified the foreign address at which I stayed the longest
- claimed foreign earned income exclusion
Before I did any of the above, I paid an expat tax specialist $250 and asked a bunch of questions about how the FEIE works. Worth every penny.
I'm not entirely sure what kind of loopholes allowing remote work on what would normally be a tourist visa/stay open up, but surely it's preferable for all parties in the "average" case for it to be allowed.
In some ways, a standard tourist is still working for their foreign company, they just are using their allotment of get-paid-for-doing-nothing days. Likewise, a guy who wants to workation for a week still is effectively a tourist. At some point you seem less touristy, which is probably why tourist visas are typically around 90 days.
And US citizens have visa-free travel to Schengen which allows for either tourist or business activities.
See real cases on Google https://www.google.com/search?hl=en&q=b1%20visa%20remote%20w...
Also EU law is separate/different from US immigration law.
In summary, if you can help it, I suggest you don't do any work from the US.
PS: also if you had to deal with USCIS, you'll find there's a lot of things not written on their site, but that are actually important and enforced. Very different for example from Canada, where nearly everything is available online and helping you succeeed in the process. And yes, US immigration many times "doesn't make sense".
But some do.
Be careful.
Total bureaucratic fail, the French company just told me the specific visa was not going to happen, so I cut my stay to fit the tourist limits and went on that visa.
A single W2 salary is so much simpler. Taxes are automatically deducted and I don't have to think about much.
Luckily, I do have a stable residential address that any mail can be sent to, and it is in the same state as my employer, but I am essentially a digital nomad. Able to work anywhere with an internet connection - even from my phone's hotspot if I want. Occasionally I camp out for a week and work in the woods. Or pick up and drive to another town for a while. It's not a bad setup. Feels like I have the best of both worlds.
If the logistics were more complicated I probably wouldn't bother with being as nomadic.
Same here. I find it especially ridiculous because the IRS generally has all the information already for the majority of US taxpayers, W2's and 1099's from employers, financial institutions, casinos, etc. They should be able to send people a proposed return with a refund or amount owed and if you review and agree you simply sign and collect or pay. All this redundant data entry is a huge waste of time. I've heard people say the tax preparation industry lobbies against this but don't know if that is true or not.
It is my understanding that in most European counties, this is exactly how it works.
It's true and it's infuriating.
https://www.propublica.org/article/inside-turbotax-20-year-f...
I was just posting elsewhere: https://www.concur.com/newsroom/article/what-are-state-tax-i...
Basically, companies are apparently starting to more closely track employee travel and state filing requirements. Not sure the exact impetus other than a lot more remote work happening--although this pre-dates COVID.
I don't use Robinhood for serious trading, but any major brokerage should be compatible with major tax software. With TurboTax I just import the data from my brokerage and it's mostly finished. There are a few unique situations where you might need to confirm some options, but it's largely automated.
I really don't understand why trading that particular ETF triggers this tax form vs listing the gain or loss on a 1099 just like every other stock or fund I traded. Probably something about the underlying currency trading? But if I had known it was going to mean spending hours researching the correct way to file, I probably would have skipped that particular investment.
https://www.invesco.com/us/financial-products/etfs/product-d...
You can go back to Adam Smith complaining about this in The Wealth of Nations. The tax burdens and complexity have only increased since then.
The trouble today is that the tax/legal world has not yet moved into the 21st century. Try selling something online and figuring out taxes. Am I selling a service or a product? Do I have an economic nexus in certain states? If I'm an American running an online business in America, what are the implications of someone in Germany clicking the "buy" button? What the hell is a VAT anyway? Etc. etc.
GDPR and privacy/data regulations are another legal quagmire.
I've had the exact same experience, but with a K-1 (?) document. It basically meant i was a partner of an LLC i think, and it ended up being a TON more work, and i got charged more from turbo-tax... so i ended up losing money on that investment.
Worst part is that the company mailed me a paper document instead of from robinhood over digital medium, so i had to transcribe like 10 docs.
If I read the report right that includes those staying within US borders while the NYT article is mostly about those traveling abroad https://www.mbopartners.com/state-of-independence/2020-digit...
Not everybody is American.
I wouldn't know, I'm not American.
Being able to know when the article looks like it is relevant to me, but is only specific to someone from X country would be useful IMO.
Nytimes has an International Edition, there are versions in Spanish and Chinese, classifying it as an American website is perhaps a bit myopic.
Time zones have very little meaning if you are a digital nomad like me and I hope many others on this website, or work with multi geography teams as it increasingly common last 15 months.
The title is misleading to people like OP and me who wanted to learn something useful beyond tax woes (for Americans or others) when considering a digital nomad lifestyle. Yes it is important topic for Americans and had the author just mentioned a paragraph about that it would not be a problem, however the entire article is basically a puff piece for the tax consultants quoted and contains only talking points on why you really need such expertise.
HN also editorializes the content posted here, they do change titles here to reflect some of the values or ethics that this form embodies, so asking for the title changed to better reflect the content is a fair ask.
Also, maybe they could have thrown a link to the list of countries that have tax treaties with the USA? There are quite a few[2].
[1] https://www.irs.gov/individuals/international-taxpayers/fore....
[2] https://www.irs.gov/businesses/international-businesses/unit...
Edit: The article does mention the income exclusion. Their fault for burying the lede; somebody's getting paid by the word. Can't be bothered taking responsibility for not reading the full article; I'm off today.
> If you qualify for the Foreign Earned Income Exclusion, your first $108,700 is exempt from U.S. income tax. But keep in mind that this applies only if you’re a U.S. citizen who resides in a foreign country for more than 330 days within 12 consecutive months, not including time on planes, or if you are a bona fide resident of a foreign country. (You would still have to pay federal and state taxes on unearned income including interest, dividends and capital gains.)
"Potentially. If you qualify for the Foreign Earned Income Exclusion, your first $108,700 is exempt from U.S. income tax."
Just this AM I had a call with a citizenship by investment firm (happy to make recommendations in this space as I know a few people through previous work) and we were talking about tax implications for remote workers and various programs. All I can say is, get ready to pay an accountant a lot of money. If you want the simplest break as an American, I would leave the U.S. on Dec 31 this year and go establish physical residency somewhere with no local income tax (or via a program like Barbados Welcome Stamp) and stay there long enough to pass the smell test (e.g. open a local bank account, have an address for a few months)... should be at least 3 months, probably more like 184 days. Then you can move on and go other places (not the US) for under 2-3 months at a time, not creating roots. Of course there will still be complications if you're doing this while employed somewhere but I guess if you're an independent contractor or with your own company you can spin up an overseas entity somewhere.
Though, I don't think you can find much people today willing to go to US just for a few months for the sheer amount of paperwork headache.
0: https://www.bbc.com/news/uk-politics-30932891
Citizenship based taxation has been said by many think tanks to cause a drag on US GDP as there are relatively disproportionately fewer Americans working abroad than Brits, Aussies, etc etc. and people tend to work with companies they are familiar with back home. Go to Hong Kong, Dubai, etc and there are so many more citizens of non-US countries it is shocking.
I’ve spent the past 7 years traveling and living in DN-friendly countries (Türkiye, Georgia, Czechia). When covid is over I will move to Spain for 2 years under the Non-Lucrative Residency Permit.
More and more countries are coming out with non-lucrative / pensioner / digital nomad visas. They dont care as long as you aren’t doing business locally. From their perspectice it’s free sales tax income.
My domicile is now in Florida. I file my federal taxes as a us citizen and Floridan resident, no state income tax. (which means $60k per year for nothing more than bad consular services).
There are exclusions for foreign income tax paid, but I believe there is a cap (US$75,000?) on the amount of tax paid. That is, tax paid to another country can reduce your US liability.
Anyone in this situation needs competent advice. That leaves me out as a source of that advice.
I first moved to the US in May of 1989. At the end of the year, when preparing my US tax returns, I had to report my UK income and UK taxes. The tax treaty was essentially reciprocal, so the final position was that the the US government treated the taxes I had paid the UK as part of my US taxes. Since the UK taxes at a higher rate, I actually got a refund from the US government!
I figured all this out by going to the library and actually reading the full text of the tax treaty between the US and the UK. It seems that most people wouldn't do this, and would pay "an expert" instead.
Along with Eritrea and North Korea.
I've been doing this for ten years now and you often need to go back and figure out where you were, when and why. It's insane. I have a physical book, that I periodically scan into my evernote. It's awesome, high quality paper and Its stood the test of time. Still not completely full.
Arrival data, travel purpose, when you decide to become a "resident" of said country, when visa's/passport/PR card were renewed. After each trip, count the number of days abroad, and attach a note for travel purpose. Keep an index of those at the back.
It's always interesting to meet at their favorite digital nomad coworking places, because they're always full of digital nomads who are doing anything but working.
To be fair, some of the people I've met do legitimate part-time contract work doing things such as managing social media accounts for companies or taking design jobs here and there. However, many of the people I've been introduced to at these places are trying to do some mix of life coaching, affiliate marketing, or creating content and services for other aspiring digital nomads.
My experience hiring digital nomads has not been great. Some of them have been quite talented, but when their lifestyle revolves around minimizing their workload every day it becomes very difficult to manage them. I'm sure there digital nomads out there who are also diligent teammates and employees, but on average I'd take a mediocre in-office hire who can put in predictable effort over a digital nomad who is constantly working to minimize their workload so they can travel more.
Disclaimer: more used to working from different home locations in my home country than being an actual digital nomad.
2. Get rid of US Citizenship or US residency for tax purposes. This is no more than IRS trap.
3. Breathe deeply.
St. Kitts - 133 countries.
Google for exact, up to dated list.
Getting rid of racket forcing you to spend half of your hard earned money to buy taxes from wasteful government is worth the attendance.
I don't mind paying high taxes for high opportunity.
But I DO mind when I have to sell my lifetime freedom as well.
US wants citizens to pay taxes to US even if they don't live or work in US.
This is BS.
Brent and Erica love the place, so they wanted to live there for a while and visit around. The only way to get in was to get a working visa, so Brent found a local company interested to hire him part time for some work; if you don't know, he is in the top 3 experts in MS SQL performance tuning and he is doing a lot of consulting and training, so getting him even part time for a regular job rate (not his consultant rate) is a great deal for any company with such need. They don't have any plans to be digital nomads (meaning: work from different places around the globe), Iceland is one and Mexico (where Erica has family) are the 2 places they spend their time when not in San Diego.
So he is there not for tax reasons, not to evade US or the US government, but in an extended vacation while they still work as much as needed to justify the visa and to keep their business alive. Most people that are accidentally in this situation don't have a complex problem to solve with taxes, the ones that really do want to avoid US taxes while working abroad have some better sources of information and there are companies that help with that, offering a lot of info and services to get through the process (usually finding you a few good citizenships, more than 1 at a time and giving up on the US one).
What is not mentioned is the reverse situation: you are not a US citizen but you pay taxes in US and in another country, like many of my colleagues do. Because we work for an American company and we get a small portion of our income in US, we are taxed max rate (no return, no exceptions) in US and then we are taxed again in our countries, mostly in Europe, even if we don't set foot in US for that income. This is how it works, US is taxing everything it can.