More than half of Gen Z and Millennials say the ability to work remotely and / or have flexible hours is more important to them than a higher pay, according to a recent survey from Bankrate.com. Although I work in a hybrid situation, I have friends who have recently moved and who never go to the office. Some even explore a digital nomadic lifestyle, in which they travel from place to place while they work (see Making It Work).
Before hitting the road. First, review your company’s remote working rules and get the green light from your employer. Even if you are already working from home, it’s important to make sure the move doesn’t violate any workplace policies.
Once you have decided where you would like to live, make sure you can do your job there. If you venture too far from the network, you may not have consistent mobile phone and internet service. Although efforts to expand broadband access are underway, large swathes of the country still have spotty or no internet service. See the Federal Communications Commission broadband map to examine coverage for specific areas at https://broadbandmap.fcc.gov. If you choose to use a mobile hotspot, look for an affordable cellular data plan that offers reliable service.
Create a budget with your new lifestyle in mind. The most important expense to watch is the cost of housing. If you are a homeowner and choose to become a digital nomad, renting will help cover your costs. You can rent your home for up to 14 days a year without reporting income to the IRS, and there is no limit to the amount you can charge. If you are renting your home for more than 14 days, you must report rental income, but you can deduct rental expenses.
Whenever you move to another state (or states), you should also consider how this might affect your state taxes. If you are working remotely from a state where you do not have a legal residence, you may need to file an income tax return with that state and pay taxes on the money you earn. However, you can usually claim credit from your home state for any income tax you pay to another state while you are working there.
Some states have reciprocal tax agreements in which employees who live in one state but work in an office in another state are exempt from withholding tax in the state where they work. If you have to file for more than one state because you moved during the year, check the reporting rules for those states.
Globetrotters should keep in mind that each country has different rules when it comes to working within its borders. Even if you are still working for a company in the United States, you may need to apply for a work visa if you are moving overseas. Some countries, such as Costa Rica, Taiwan and the Bahamas, offer visa programs tailored to remote workers who wish to settle temporarily. Use the keywords “Digital Nomad Visa” to search online for countries offering these programs.
US citizens owe US taxes no matter where they live. However, if you stay outside the United States for a year or more, you may qualify for the Foreign Earned Income Exclusion, which allows you to exclude up to $ 112,000 of foreign income from your income. in 2022. Some states will continue to levy taxes on your income.