The rise of remote work has created new tax complexities for digital nomads who work across borders. Understanding your obligations can prevent costly mistakes.
Tax Residency Rules
Different countries have different rules for determining tax residency. Some use physical presence tests, while others consider your "center of vital interests." Spending too much time in a country might unexpectedly make you tax-resident there.
Foreign Earned Income Exclusion
U.S. citizens can exclude up to $112,000 (2022) of foreign earned income using the FEIE, but you must meet either the Physical Presence Test or Bona Fide Residence Test.
Tax Treaties
Many countries have tax treaties that prevent double taxation. These treaties determine which country has primary taxing rights for different types of income.
Digital nomads should consult with a cross-border tax specialist to ensure compliance while minimizing their global tax burden.