As a digital nomad, tax filing likely isn\u2019t at the forefront of your mind. It\u2019s understandable \u2014 the nomad life is full of challenges, and between navigating visas and renting your next Airbnb, it\u2019s hard enough to keep it all straight without throwing taxes into the mix. Don\u2019t sweat it too much, though \u2014 H&R Block is here to help.<\/p>\n\n\n\n
Below, we\u2019ll tell you the basics of what you should know about U.S. taxes for digital nomads, including:<\/p>\n\n\n\n
Ready to file? No matter where in the world you are, H&R Block Expat Tax Services brings a tax expert right into your living room (or camper, or bungalow, or wherever you currently call home). Head on over to our Ways to File<\/a> page to choose your journey and get started.<\/strong><\/p>\n\n\n\n The most common question we hear is, “Do digital nomads have to file U.S. taxes?”<\/p>\n\n\n\n Yes, if they make over the minimum amount required to file<\/a>, digital nomads must file a U.S. tax return.<\/strong><\/p>\n\n\n\n The U.S. taxes Americans based on citizenship, not place of residence. That means it doesn\u2019t matter where you currently live \u2014 if you\u2019re legally considered a U.S. citizen and make over the minimum amount of worldwide income, you have a tax obligation as a U.S. tax resident.\u00a0This is true\u00a0even if you earn no income within the U.S.<\/em><\/strong><\/p>\n\n\n\n Taxable foreign income for digital nomads includes:<\/p>\n\n\n\n Filing taxes as a digital nomad may seem difficult, but H&R Block makes it convenient no matter where in the world you are \u2014 whether you want to DIY your expat taxes<\/a> or file with help from an advisor<\/a>.<\/p>\n\n\n\n If you are a digital nomad and have never filed a U.S. tax return, you may be able to get caught up without being penalized.<\/strong>The IRS has a program to help mistakenly non-compliant filers get caught up penalty-free \u2014 Streamlined Foreign Offshore Procedures<\/a> \u2014 which the Expat Tax Advisors here at H&R Block can happily help you with.<\/p>\n\n\n\n To qualify, you must:<\/p>\n\n\n\n To catch up on past returns, get started with an Expat Tax Advisor now.<\/a><\/strong><\/p>\n\n\n\n Trying to wiggle around your U.S. tax filing obligation has steep consequences \u2014 and it\u2019s pretty easy to get caught. Thanks to\u00a0FATCA<\/a>, many financial institutions around the world exchange U.S. citizens\u2019 financial account information with the U.S. government.<\/p>\n\n\n\n Expat tax penalties<\/a>\u00a0can range from a minor fine to penalties upwards of $10,000, and you can even\u00a0lose your passport<\/a>\u00a0if you\u2019re seriously out of compliance with tax regulations.<\/p>\n\n\n\n Bottom line: It\u2019s worth it to file your U.S. taxes each year, even if you\u2019re a digital nomad.<\/strong><\/p>\n\n\n\n Worried about paying too much in taxes? You\u2019re in luck \u2014 digital nomads have two ways to lower their tax bill<\/a> and avoid double-taxation: The Foreign Earned Income Exclusion<\/a> (FEIE) and the Foreign Tax Credit<\/a> (FTC).<\/p>\n\n\n\n The FEIE excludes your foreign earned income from U.S. income tax, which lowers (or eliminates) your U.S. tax liability. As a digital nomad, you can qualify if you pass either the\u00a0Bona Fide Residence<\/a>\u00a0test or the\u00a0Physical Presence Test<\/a>.<\/p>\n\n\n\n Another important tool for lowering your U.S. tax obligation is the FTC. The FTC gives you a dollar-for-dollar reduction of your U.S. tax liability per foreign taxes paid.<\/p>\n\n\n\n Get started on your U.S. taxes now.<\/a><\/p>\n\n\n\n If you\u2019re a digital nomad, accurately tracking your time in each country will be the key to a smooth tax return. You need to have been on foreign soil for a certain number of full days (full = 24 full hours) to claim tax benefits like the FTC or the FEIE, and if you\u2019re off by even 30 minutes you could be disqualified. For example, time spent on a 12-hour trans-oceanic flight may not count toward your full days because you’re technically in international airspace.<\/p>\n\n\n\n Correctly tracking hours in-country gets more complicated when you cross time zones. It\u2019s worth it to get guidance from an international tax professional, like the ones at H&R Block Expat Tax Services<\/a>.<\/strong><\/p>\n\n\n\n If you\u2019re self-employed outside the U.S., you\u2019ll still owe\u00a0U.S. self-employment tax on foreign earned income<\/a>. This is true even if you\u2019re able to claim the Foreign Earned Income Exclusion. However,\u00a0Social Security Totalization Agreements<\/a>\u00a0between the United States and many foreign countries might prevent you from having to pay self-employment taxes in both countries.<\/p>\n\n\n\n There may be a problem for digital nomads moving from country to country because of the residency requirements of the totalization agreements \u2014 if you\u2019re not taxed as a resident in another country, the totalization agreement will not apply. That\u2019s why it\u2019s worth it to have a tax professional handle the paperwork for you.<\/p>\n\n\n\n Bottom line, if you\u2019re self-employed and not paying self-employment taxes as a resident in another country, you have to pay them in the U.S.<\/strong><\/p>\n\n\n\n As a digital nomad, you may have more paperwork to file other than your tax return \u2014 if you have a foreign bank account, you might also have to file your Foreign Bank Account Report (FBAR)<\/a> and FATCA Form 8938<\/a>.<\/p>\n\n\n\n This includes digital bank accounts. For digital bank accounts, you\u2019d refer to the country the bank is registered in.<\/p>\n\n\n\n You\u2019d file an FBAR (FinCEN Form 114<\/a>) if the combined balance of all your foreign accounts was more than $10,000 at any point during the calendar year. <\/strong>For example, if you had a bank account in Hong Kong with a balance of $5,000 and an account in Singapore with another $6,000, your total balance in all foreign accounts would be more than $10,000 \u2014 meaning you\u2019d have to file an FBAR.<\/p>\n\n\n\n You\u2019d file FATCA<\/a> Form 8938 if your total combined value of foreign assets is worth more than $300,000 at any time during the year (or at least $200,000 on the last day of the year).<\/strong> If you\u2019re filing a joint return, the thresholds are $600,000 at any time during the year or $400,000 on the last day of the year.<\/p>\n\n\n\n If you\u2019re confused about your FBAR and FATCA filing requirements<\/a>, it\u2019s best to leave your U.S. expat taxes<\/a> to seasoned pros who will dig into your specific tax situation to find all your filing requirements.<\/p>\n\n\n\n Get started on your U.S. taxes now.<\/a><\/p>\n\n\n\n Yes, it\u2019s possible you still have to file state taxes<\/a> even if you\u2019re a digital nomad \u2014 it depends on the state you lived in prior to moving abroad. If you are unsure if you have a U.S. state tax obligation, we recommend consulting with an expat tax professional<\/a> to ensure you stay compliant.<\/p>\n\n\n\n Ready to file or confused about expat tax forms<\/a>? Get started online<\/a> with H&R Block \u2014 the experts on U.S. taxes for digital nomads.<\/strong><\/p>\n\n\n\n Your tax residence country is where you are legally considered a resident for tax purposes. If you spent a significant amount of time or made over a certain amount of money in another country, you may have to pay taxes in that country.<\/p>\n\n\n\n It\u2019s not one-size-fits-all, either. For example, American digital nomads in Canada<\/a> and the U.K.<\/a> will have different tax obligations than digital nomads in Mexico<\/a> or Thailand. Before you land to do business in a foreign country, get to know their income taxation laws and residency laws because that will dictate your tax obligation.<\/p>\n\n\n\n With H&R Block, you can file your U.S. taxes conveniently online from wherever you currently call home. Digital nomads have two options: File using our DIY online expat tax service<\/a> (designed specifically for expats), or let one of our Expat Tax Advisors<\/a> handle it. Here\u2019s how to file your U.S. expat taxes online:<\/a><\/p>\n\n\n\n Filing taxes in one country is enough to give anyone a headache, and it only gets more complicated for digital nomads. But no matter where you call home, we bring U.S. tax solutions to you \u2014 whether you want to be in the driver\u2019s seat with our DIY online expat tax service<\/a> designed for U.S. citizens abroad or let one of our experienced Tax Advisors<\/a> take the wheel. Head on over to our Ways to File<\/a> page to choose your journey and get started online.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Filing taxes as a digital nomad can be complicated. Learn 10 things you should know about filing taxes in the U.S. before tax day comes around.<\/p>\n","protected":false},"author":3,"featured_media":174,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[42],"tags":[],"class_list":["post-173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-status"],"acf":[],"yoast_head":"What digital nomads should know about filing U.S. taxes<\/h2>\n\n\n\n
1. Yes, American digital nomads must file U.S. taxes, even when working remotely abroad<\/h3>\n\n\n\n
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2. Remote workers can catch up on U.S. taxes with Offshore Streamlined Compliance Procedures<\/h3>\n\n\n\n
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3. Not filing taxes as a digital nomad can result in steep penalties and fines<\/h3>\n\n\n\n
4. There are two tax benefits available to reduce digital nomads\u2019 U.S. tax bill<\/h3>\n\n\n\n
5. Americans working overseas must track time carefully to claim certain tax benefits<\/h3>\n\n\n\n
6. Self-employed digital nomads may have to pay Social Security tax in the U.S.<\/h3>\n\n\n\n
7. Americans (including digital nomads) may have financial reporting obligations in addition to filing U.S. taxes<\/h3>\n\n\n\n
8. Digital nomads may still have to file U.S. state taxes<\/h3>\n\n\n\n
9. There are hundreds of IRS forms and schedules \u2014 but these are the most used by remote workers abroad<\/h3>\n\n\n\n
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10. Digital nomads may still have to file taxes in foreign countries<\/h3>\n\n\n\n
How to file taxes as a digital nomad living overseas<\/h2>\n\n\n\n
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Need help filing digital nomad taxes? <\/h2>\n\n\n\n