Introduction
A digital nomad is someone who works remotely for an organization and travels the world, often in a series of short-term contracts that require little physical presence at their place of employment. The term "digital nomad" was popularized by Tim Ferriss in his book The 4-Hour Workweek, which details how to live this type of lifestyle.
As with any other type of work arrangement, tax laws vary depending on where you live and what currency you earn in--and while it can be confusing to navigate these rules as a digital nomad, it's important not to leave money on the table!
Nomad Taxes and Cryptocurrencies
Cryptocurrencies are considered assets and are therefore subject to capital gains tax. Cryptocurrencies are also subject to income tax, self-employment tax and estate tax.
The IRS considers cryptocurrency investments as property, which means they're subject to capital gains taxes when you sell them for more than their original cost price. If you're looking at investing in cryptocurrencies as an alternative way of earning money while traveling as a digital nomad, be aware that they might not be as lucrative as you think!
Nomad Taxes and Your Digital Businesses
If you're a digital nomad, the first thing to consider is whether or not your business is considered a digital nomad business.
A digital nomad business is a location independent one that can be run from anywhere in the world and has minimal physical presence in any country. It could be an online store selling products, a service like graphic design or writing articles, or simply advertising on social media platforms such as Facebook and Instagram.
The benefits of having a digital nomad business include:
- No need for office space - You don't need to rent an office because everything can be done remotely from home or cafes/coffee shops around town! This saves money on rent and utilities bills too!
- Less time spent commuting - Since there are no set working hours for most jobs nowadays anyway (especially tech jobs), why waste precious time traveling back-and-forth between home/office every day? Instead spend those precious moments with friends & family instead :)
Nomad Taxes and Your Regular Business Taxable Income
In general, your income is taxable. You should know how to calculate your taxable income and report it on your tax return. This includes any money that you earned while working remotely or freelancing in a foreign country.
If you're a US citizen or resident, this includes:
- The money earned from selling products online (eBay sales) or offline (eCommerce store).
- Payments made by clients who are located outside of the US but pay via PayPal/Stripe/Square etc...This could include payments made through an offshore account as well as those made directly into yours from another country's bank account (e.g., if someone ordered something from Amazon using their British pounds).
Taxing nomadically can seem complicated but it's not.
The first step to understanding your tax obligations is to learn about the rules and regulations that apply to you. You can find this information online, but it's also helpful to speak with a professional who has experience in tax law. If you need help finding a knowledgeable professional, we recommend looking on LinkedIn or contacting local accountants through the American Institute of CPAs (AICPA).
Conclusion
We hope that this article has given you some insight into how to pay taxes on your nomad lifestyle. It can be confusing, but if you follow the guidelines above and keep track of your earnings and expenses, then paying taxes will be a lot easier.
Say goodbye to hassle of currency conversion for your invoices!
With Invoicee, effortlessly transform your invoices into any currency using the most up-to-date exchange rates. No manual calculations needed - let Invoicee handle it all seamlessly for you!
Top comments (0)