How to Manage Taxes as a Digital Nomad?

Being a digital nomad is an amazing adventure — but you still have to deal with some practical stuff, like taxes.

If you’re an American moving abroad, you still have to pay U.S. taxes. And if you become a tax resident in another country too, it can seriously impact your finances.

We get it — U.S. taxes for digital nomads can feel super confusing. That’s where we come in. As expat tax pros, we know exactly how to guide you through the mess. In this guide, we’ll break down what you need to know: your filing obligations, how to lower your tax bill, why compliance matters, and more.

Do Digital Nomads Need to File U.S. Taxes?

Short answer: Usually, yes.

It depends on whether you hit the IRS’s minimum income thresholds. These vary depending on your age, filing status, and income type. But as a rough guide:

• Single, under 65, and not self-employed: You must file if you earn $13,850 or more (2023 rules).
• Self-employed (which covers a lot of nomads): You must file if you earn just $400 or more.

Even if you don’t live in the U.S., if you meet the threshold, you must file.
Yeah, it doesn’t feel very fair — but under U.S. law (citizenship-based taxation), Americans have to pay taxes no matter where they live.

Good news: if you live abroad, you automatically get two extra months to file your tax return (until June 16, 2025 for the 2024 tax year). You can even request another extension to October 15, 2025.
BUT: any taxes you owe are still due by April 15, 2025. Miss that, and you’ll owe interest.

U.S. Federal Taxes for Digital Nomads in 2025

Once you cross the filing threshold, your worldwide income gets taxed at normal U.S. rates — same as if you lived stateside.

Here are the 2024 tax brackets:

Tax Rate	Single / Married Separate	Married Joint	Head of Household
10%	$0 – $11,600	$0 – $23,200	$0 – $16,550
12%	$11,601 – $47,150	$23,201 – $94,300	$16,551 – $63,100
22%	$47,151 – $100,525	$94,301 – $201,050	$63,101 – $100,500
24%	$100,526 – $191,950	$201,051 – $383,900	$100,501 – $191,950
32%	$191,951 – $243,725	$383,901 – $487,450	$191,951 – $243,700
35%	$243,726 – $609,350	$487,451 – $731,200	$243,701 – $609,350
37%	$609,351+	$731,201+	$609,351+

Remember: U.S. taxes are marginal, meaning only the part of your income that falls into a bracket gets taxed at that rate.

Also Read: How to Make Money While Traveling the World?

Self-Employment Taxes for Digital Nomads

If you’re working for yourself, there’s another tax to watch: self-employment tax, which covers Social Security and Medicare. It’s 15.3% on top of your regular income tax.

Some nomads form LLCs or corporations to protect their personal assets — and sometimes to save on taxes:

• Sole proprietors, partnerships, and basic LLCs: Pay regular income tax plus self-employment tax.
• LLCs taxed as C-Corps: Pay a flat 21% corporate tax.
• LLCs taxed as S-Corps: Pay regular income tax on wages but avoid self-employment tax on profits distributed as dividends.

State Taxes for Digital Nomads

Good news: if you cut ties with your home state, you usually don’t have to keep paying state taxes.
Bad news: some states make it really hard to leave, aka “sticky states.”

Tough states to break up with include:

• California: 1%–12.3%
• New York: 4%–10.9%
• New Mexico, Virginia, South Carolina — also pretty strict.

To truly cut ties, you might need to:

• Sell your property there
• Close your local bank accounts
• Get a new driver’s license
• Move your voter registration
• Store your stuff elsewhere

Also Read: How to Stay Productive While Traveling?

Want to keep a U.S. “home base” without state income taxes? Consider setting up shop in:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Extra U.S. Reporting Rules for Digital Nomads

Just filing a normal tax return might not be enough. If you have money in foreign accounts (like Wise, Revolut, etc.), you’ll probably need to file extra forms:

• FBAR (Foreign Bank Account Report): Required if you have over $10,000 total in foreign financial accounts at any time during the year.
• Form 8938 (Statement of Specified Foreign Financial Assets): Required if you have foreign assets worth over $200,000 at the end of the year (or over $300,000 at any point during the year).

Don’t think you can hide foreign accounts — thanks to FATCA (Foreign Account Tax Compliance Act), many banks around the world report U.S. citizens’ accounts straight to Uncle Sam.

Foreign Taxes for Digital Nomads

Besides U.S. taxes, you might also owe taxes in other countries, depending on two things:

1. Tax Residency: Most countries tax based on where you live, not your citizenship. If you spend over 183 days in a country, you’ll usually be considered a tax resident.
2. Earning Local Income: Even if you’re not a tax resident, a country might tax you if you earn income there (like renting out property).

Heads up: some countries don’t want tourists working remotely within their borders — even for a U.S. company — and might deny you entry if you say you’re planning to work there.

Also Read: Top Remote‑Friendly Cities with Fast Internet

How to Avoid Double Taxation

If you owe taxes both in the U.S. and another country, don’t panic. You might be able to avoid getting taxed twice, thanks to benefits like:

• Foreign Earned Income Exclusion (FEIE): Lets you exclude up to $126,500 of earned income from U.S. taxes (2024 limit).
• Foreign Tax Credit: Lets you claim a credit for taxes paid to a foreign country.

To use the FEIE, you need to qualify under one of these:

• Physical Presence Test: Spend 330 full days outside the U.S. in a 12-month period.
• Bona Fide Residence Test: Be a legal resident of a foreign country for a full calendar year.