How does tax day work for digital nomads like travel photographers? File this one under “good to know.” Digital nomads often end up paying way too much in US taxes that they are not legally obligated to pay.
But on the other end of the spectrum, many assume that living outside the US means they don’t have to file US taxes at all. In this video from Nomad Capitalist, Andrew covers the sad reality of US taxes: as long as you’re a US citizen and hold a US passport, you must file. No exceptions. However, you may be able to claim the Foreign Earned Income Exclusion on your US taxes to reduce your tax burden substantially, possibly altogether!
You definitely don’t want to get a postcard from Uncle Sam, so if you plan to take the Foreign Earned Income Exclusion, get in touch with a CPA who specializes in expat tax law. When you can save potentially tens of thousands of dollars, it’s worth spending a little for someone who knows what they’re doing. Consider this yet one more incentive to hit the road indefinitely and take your photography around the world!
Note: this does not constitute legal or financial advice. Seek the help of a professional accountant for any questions.
Lead image by Pixabay user geralt, used under Creative Commons.
today is the last day to file unless you have an extension?... this advice is next years plan?
It's definitely *my* next years' plan! But you have to be outside the US for 330+ days in a year, so it's quite a commitment.
The law is 330+ days in a 12-month period, which is a bit easier than 330+ in a calendar year. So it could be in this year's plan if you'd like. Horse's Mouth (scroll to the bottom) - https://www.irs.gov/individuals/international-taxpayers/foreign-earned-i...
I'm a fan of the blog Go Curry Cracker. He explains everything he does, even how he gets his income below the 100K mark when it goes over.
This is true... I feel like taxes would be easier if I started right on the first of a year, but maybe that's not necessarily the case.
And thanks for the GCC link, I have some weekend reading material now =) have you tried taking advantage of the FEIE?
[Usual I am not an accountant, etc etc] I'm sure it would be easier if you started at the beginning of the year. But what about taxes is easy? There are so many tricks where you hear about them and think 'that's legal?'
As for the FEIE, no, I've never taken advantage of it. But, I would like to in the next few years. The rules around the FEIE are weird. A flight to Europe from NYC does not pass over Canada, while a flight from Chicago would. So if you travel from Chicago, you are out of the country a day earlier than leaving from NYC.
Got to "many assume that living outside the US means they don’t have to file US taxes at all." and I was thinking "Wait, but I'm an Australian. Do I still need to file US Taxes?"
In my defence, it is late at night. It is not much of a defence, but it is the only one I have :P
*suppressed cackles* And all this time you didn't know you were on the hook =D