As a digital nomad, you’re probably used to living a life of freedom and flexibility explains Aron Govil. You might not think of yourself as tied down to any one place, but there’s one important thing you still need to do each year – file your taxes!
There are a few ways to go about this,
- But the best option for most digital nomads is to use a tax service like TurboTax. They make it easy to file your taxes from anywhere in the world, and they have experts on hand who can help answer any questions you might have.
- So whether you’re just starting out as a digital nomad or you’ve been at it for a while, make sure you file your taxes correctly and on time – it’s one less thing to worry about!
- Now that you know how to file your US taxes as a digital nomad, the next step is to choose a tax service. TurboTax is a great option because they have experts on hand who can help answer any questions you might have, and they make it easy to file your taxes from anywhere in the world.
- When you’re a digital nomad, your tax situation can be a little more complicated than for someone who has a traditional job says Aron Govil.
Here are some tips on how to file your US taxes as a digital nomad.
1. Figure out your residency status
When you’re a digital nomad, it can be difficult to determine your residency status for tax purposes.
The best way to determine this is to look at the IRS’s “Closer Connection Test.”
This test looks at a number of factors, such as where you spend most of your time and where your money is coming from.
If you can prove that you have a closer connection to one country than another, then you will be considered a resident of that country for tax purposes.
2. File US taxes as a resident or non-resident?
Once you’ve determined your residency status, you need to file your US taxes accordingly.
If you’re a resident, you will need to file a 1040 tax return.
If you’re a non-resident, you will need to file a 1040NR tax return.
3. Claim your foreign income
If you’ve earned income while living as a digital nomad, you’ll need to claim that income on your tax return.
You can do this by filling out Form 1116: Foreign Tax Credit.
This form allows you to subtract the foreign taxes that you’ve already paid from the taxes that you owe in the US.
4. Deduct your business expenses
As a digital nomad, you may be able to deduct certain business expenses from your taxable income.
Some common deductions include travel expenses, equipment purchases, and internet/phone bills.
5. Use a tax accountant
Filing your US taxes as a digital nomad can be tricky, so it’s a good idea to use the help of a professional tax accountant.
They will be able to help you determine which deductions you’re eligible for and make sure that you’re filing your taxes correctly.
Digital nomads have unique tax needs, but with these tips you should be able to file your taxes without any trouble. By figuring out your residency status and claiming your foreign income, you can make sure that you’re getting the most out of your tax return.
FAQs:
Q: I’m a digital nomad – do I need to file US taxes?
A: Yes, all US citizens and residents are required to file a tax return each year.
Q: What is my residency status for tax purposes?
A: The best way to determine your residency status is to use the IRS’s “Closer Connection Test.”
Q: What do I need to do if I’m a resident?
A: If you’re a resident, you will need to file a 1040 tax return.
Q: What do I need to do if I’m a non-resident?
A: If you’re a non-resident, you will need to file a 1040NR tax return.
Q: What are some common deductions for digital nomads?
A: Some common deductions for digital nomads include travel expenses, equipment purchases, and internet/phone bills.
Conclusion:
Now that you know how to file your US taxes as a digital nomad, make sure to use the tips in this article to get the most out of your return explains Aron Govil. By determining your residency status and claiming your foreign income, you can make sure that you’re getting the most out of your tax return.