Digital Nomad Tax Return

The most frequently asked question is:

“Do digital nomads have to file US taxes?”

Yes—if you’re a U.S. citizen or Green Card holder and your earnings exceed the filing threshold, you are required to file a U.S. tax return, no matter where you live or work.

The United States taxes based on citizenship, not residence. That means even if you haven’t set foot in the U.S. in years, you’re still obligated to report your worldwide income.

For digital nomads, taxable foreign income includes:

• Wages
• Interest
• Dividends
• Rental Income

Working in the U.S. while living abroad

If you live abroad but are employed by a U.S. company or physically work in the U.S. for part of the year, you’re still fully liable for U.S. taxes. You may also have to file state tax returns, depending on your ties to a specific state (such as voter registration, a driver’s license, or property ownership).

Even if you’re only in the U.S. temporarily, it’s important to report all your income accurately and explore available tax benefits such as the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC). Your tax situation can become more complex the longer you stay abroad—especially when dealing with pension plans, investments, or self-employment income.

Working and living outside the U.S.

If you both live and work outside the United States, you’re still required to file a U.S. tax return each year. All income earned abroad—including from full-time employment, freelancing, or running your own business—must be reported to the IRS.

You may qualify for:

• The Foreign Earned Income Exclusion (FEIE)
• The Foreign Tax Credit (FTC)

But even with these benefits, you’ll still need to comply with bank account reporting requirements such as FBAR and FATCA if your foreign accounts exceed certain thresholds.

Self-employed with U.S. or foreign clients

Self-employed digital nomads—including freelancers, consultants, and remote business owners—must report all global income, regardless of client location.

This applies whether you’re:

• Working for a U.S. company as an independent contractor

• Working for clients outside the U.S.

• Running your own online business

As a self-employed individual, you’re also subject to self-employment tax, which covers Social Security and Medicare. In some cases, Totalization Agreements between the U.S. and your country of residence may reduce or eliminate these payments.

Key U.S. Tax Deadlines for Digital Nomads

• April 15 – Deadline if you owe U.S. taxes
• June 15 – Automatic extension for U.S. expats
• October 15 – Extended deadline for both taxes and FBAR
• December 15 – Final deadline if you requested a second extension

Tax Treaties and Avoiding Double Taxation

The U.S. has tax treaties with many countries that can help reduce or eliminate double taxation. These treaties often allow you to:

• Exclude certain types of income
• Claim tax credits for taxes paid abroad

Commonly used forms include:

• Form 2555 (Foreign Earned Income Exclusion)
• Form 1116 (Foreign Tax Credit)

We help you determine which applies based on your situation and residence.

Local Tax Returns

As a digital nomad, you may also be required to file a local tax return in your country of residence or long-term stay. Requirements vary widely, so we advise checking with local tax authorities—or ask us for help.

Don’t Forget Your FBAR

If you have foreign bank accounts totaling more than $10,000 at any point during the year, you must file an FBAR (Foreign Bank Account Report).

• Deadline: April 15 (automatic extension to October 15)
• Penalty for missing it: Severe—up to $10,000+ per violation
• The FBAR is informational only—you don’t pay tax on reported balances

Tax Perks for Expats

Some countries offer excellent tax incentives for U.S. expats. For example:

• The 30% ruling in the Netherlands
• Special expat regimes in Portugal, Spain, and Italy

Proper planning helps you avoid double taxation and maximize deductions.

Expats Overseas

Expats Overseas has a large network of experienced CPAs and enrolled agents who understand the unique tax situations of digital nomads, freelancers, and expats living abroad. Whether you’re working remotely from Bali or consulting from Berlin, we’re here to help.

Contact us for a free, no-obligation discussion about your options and how to stay compliant—without overpaying.