Digital nomads: U.S. taxes when you work from anywhere
Working from a laptop in a different country every few months can still qualify you for the foreign earned income exclusion. But the rules weren't written with nomads in mind, and a few details decide whether it works for you.
The short version
- The 330-day physical presence test suits nomads: it counts days in any foreign countries, not one.
- You also need a foreign tax home. If your home base is still in the U.S., the exclusion doesn't apply.
- Freelancers and business owners still owe U.S. self-employment tax.
- Keep your state ties loose, and watch for countries that may call you a tax resident.
1The 330 days
The physical presence test needs 330 full days in foreign countries during any 12 months in a row. The days can be in different countries, and they don't have to be consecutive.
Days in the U.S. don't count, and neither do days spent over international waters, such as long flights or cruises. Our 330-day counter checks your trips for you.
2Your tax home
To use the exclusion, your tax home must be in a foreign country. Your tax home is where your main place of work is. If you have no regular place of work, it's where you regularly live. With neither, the IRS calls you an itinerant, and your tax home is wherever you work, which can be abroad.
But you don't have a foreign tax home for any period your abode is in the U.S. Your abode is your home base: where your family, economic and personal ties are. A short visit to the U.S. doesn't move it.
A home base in the U.S. can cost you the exclusion.
3Self-employment tax
If you freelance or run a business, the exclusion doesn't touch U.S. self-employment tax, 15.3% of most of your net earnings. Social security agreements can stop it, but only if you're paying into the other country's system and get a certificate of coverage, which most nomads don't. More on self-employment tax abroad.
4Your state
If you keep a home, a lease or strong ties in a state, it may keep treating you as a resident while you travel. Nomads with no fixed base can stay residents of the last state they lived in until they clearly leave it. See state taxes after you move abroad.
5Other countries' rules
- Many countries treat you as a tax resident after 183 days in a year, and some sooner. Then they can tax your income too, and the exclusion or the foreign tax credit keeps you from paying twice.
- Some countries offer digital nomad visas with local tax breaks. Croatia, for example, exempts remote work for foreign employers. The U.S. taxes you the same way regardless.
- Accounts with online banks and payment apps based outside the U.S. could count toward your FBAR, depending on where the provider holds your money.
Already behind on U.S. returns after years on the move? If you meet the non-residency test, the Streamlined Foreign Offshore Procedures can catch you up with no penalty. See every IRS catch-up option for expats.
Common questions
I spend a few weeks in the U.S. each year. Can I still qualify?
Usually, if the total stays within about 35 days in any 12-month window, counting travel days. Spend more and the 330-day test fails for that window, so plan visits with the count in mind.
I'm paid by a U.S. company. Can I still use the exclusion?
Yes. What matters is where you do the work, not where your employer is. Wages for work done while you're physically abroad are foreign earned income.
Do I have to file in the countries I visit?
It depends on each country's rules and how long you stay. Short visits usually don't create a filing duty there, but long stays can.
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Reviewed by Lewis Grunfeld, CPA. Based on IRS Publication 54 and the IRS's guidance on a tax home in a foreign country. General information, not advice for your specific situation.