Tax Liability for the Nu Nomad

The life of a nu nomad is often a ground-breaking one. Not only is living and working remotely vastly different than that of the sedentary life back at home, but the management end of your mobile lifestyle often finds itself within the grey area of how business is conducted—from how you generate revenues to minding your tax obligations. Just because you are no longer residing/working in your home country* does not mean that you are free of the tax man.

For those who work while traveling abroad there are tax options and considerations that differ with how you live. Here are the classic models:

  1. The Business Traveler. This type of traveler is the most familiar. He (we’ll just use the pronoun “he” for simplicity sake) travels abroad for business reasons, stays as needed to conduct business, and then returns home once business is concluded. With the exception of the allowance of a few days to rest before returning, it is all a business trip. Therefore, all expenses should be deductible.
  2. The Expatriate Working Abroad. This is the sort of person who leaves home to live and work in another country. This model has its own benefits. According to Sur Novel of Novel Group LTD, if you are working in any one single country for less than 183 days “permanent establishment,” you may not be taxable there. However, as a US citizen you are always technically going to be subject to tax.  But there is a US $87,500 foreign income exclusion for US citizens working abroad.  In other words, your first US $87,500 of income from that foreign country is potentially tax free, but you can be taxable at US progressive rates if you are residing for more than 183 days in a jurisdiction with a lower tax rate than what you would be taxed at in the US. Anyway, that’s not the situation for the nu nomad.

The third model, the one most reflective of the mobile professional, resembles less like the traveling business person as the work-at-home professional he actually is.
Firstly, it is important to remember that just because your home-based business is transitory (mobile) does not—for the most part—change the dynamics of your tax situation. Certainly there are questions for when a situation is business related and when it is simply personal travel, but with some common sense and reliable guidelines you will be able to adhere to your tax responsibilities with minimal confusion. We offer these primary tax assumptions (which conform to United States and Canadian tax laws) supplied by Joseph Smith of Travel Tax:

From this information alone, already many key issues have been clarified. One thing to keep in mind is that your at-home business is a transient one, subject to the same tax obligations and benefits as if it were in a fixed location.