Digital nomads must understand their tax responsibilities while traveling. As U.S. citizens, they must report worldwide income, including self-employment tax. Many digital nomads make common mistakes concerning tax residency. They often fail to track time spent in various locations, potentially creating unintended tax residency issues. Additionally, some assume that remote work absolves them of state tax obligations, failing to recognize that states may tax based on residency and employer location. Factors like driver’s licenses and voter registration can also tie individuals to particular states for tax purposes.
A major mistake is failing to track which states or countries they spend time in. This can unintentionally create tax residency in multiple jurisdictions.
Some states may still tax you based on residency and employer location, even if you're working remotely. They consider more than just where you physically are.
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