EP 10: What Is English for “Digital Nomads”?
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In this "shortie" episode, Jane and Manasa discuss the concept of digital nomads and the financial and tax implications of this lifestyle.
They define what a digital nomad is and explore the growing trend of remote work. They also highlight the importance of considering legal, financial, and tax consequences when becoming a digital nomad.
They touch on topics such as filing U.S. taxes, paying self-employment taxes, and potential double taxation.
The views and opinions are those of the speakers and should not be considered financial, tax, or legal advice. Consult your advisor for any legal, cross-border tax, and financial advice.
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Jane Mepham, CFP (00:01.619)
In today's episode, we go back to something we talked about a while back. This is what we're calling translating financial and tax legalists to plain English. And so...
Today we are actually going to do, I think, what's going to be our second terminology where Manasa and I in less than 10 minutes take a term mainly used in the cross border space and we give you a very high level definition of what it is simply as a way of introducing the language to you knowing at some point in future.
we'll come back to it. So last week, I had a prospect who mentioned to me that she wants to be a digital norm. And she wants to go to Portugal. And she mentioned the Portuguese golden visa, although I don't know if that's still valid, but she talked about getting some sort of a digital norm and visa to go to a European country for a couple of years. So I'm thinking, let's define what a digital norm and is,
can do that in less than 10 minutes, my Nasa.
Manasa Nadig, Enrolled Agent (01:14.098)
I know. OK. You know, Jane, statistically, I believe that there are 7.3 million digital nomads. There were 7.3 million digital nomads in 2019. This figure climbed to 10.9 million in 2020 and 15.5 million by 2021. And if they break it up to 10.3 million,
generationally, of this, millennials were 44%, followed by Gen X 23%, Gen Z 22%, and Baby Boomers 12%. And they also found that digital nomads tend to hold college degrees and do work that requires specialized education, training, or expertise. What do you say?
Jane Mepham, CFP (02:05.687)
Hey, wait, I think I meet the requirements. So if I go back to my country and I work from there for let's say four months, does that make me a digital nomad?
Manasa Nadig, Enrolled Agent (02:21.69)
Remember episode on domicile? So let's break down what a digital nomad is and see if you qualify. So I thought that I'll look up this term on the Merriam-Webster dictionary. And so the dictionary defines a digital nomad as someone who performs their occupation entirely over the internet.
Jane Mepham, CFP (02:24.843)
Yeah?
Manasa Nadig, Enrolled Agent (02:50.158)
while traveling. They may work remotely for years or weeks and months. Some cross borders, whereas others never leave the US. Their professions vary almost as much as time zones they live and work in. So this looks like, yes, you could be a digital nomad.
Jane Mepham, CFP (03:16.035)
Great. Although I think based on the questions we get that we talk a lot about, most of the people are actually looking at international locations, not necessarily in the US. And when I look at the digital normal index, most of the countries that are popular on the list are places like our next door neighbor, Canada, UK, let's see, Romania, Spain, and a couple other countries.
But of course they all have very different visa requirements that you need to look into to make sure you can actually live and work there. Yeah, I'll pass it back to you.
Manasa Nadig, Enrolled Agent (04:01.534)
Yeah, and not just visa requirements. I think as a digital nomad, you must also, and you know why we are here, is think about legal, financial, and tax consequences. So you know what, if you know this already, if you are a regular listener of ours, if you're a US citizen, green card holder, et cetera, you still have to file US taxes no matter where you live.
So therefore, you also pay self-employment taxes if you're an independent contractor. Depending on which state you have a driver's license from or car registrations and voter ID or a permanent residence, especially states like California, Virginia, New Mexico, et cetera, you may end up paying state taxes as well. And also remember.
the foreign country where you're in, it may or it may not have a special program for digital nomads. And a lot of countries which are not the US, which US you know is a citizenship-based taxation, but other countries tax you on source of income and days of residence. And if that happens to be the case, you may want to look at
the foreign earned income exclusion or foreign tax credit to avoid double taxation, right Jane?
Jane Mepham, CFP (05:29.787)
Yeah, and I think this kind of goes back to what I alluded to when I said figure out the visa requirements. So you pick the country, figure out exactly what you need to get there so you can be legal. And of course, to your point, also consider all the tax and financial implications. And then of course, there's a whole lot of other things you need to look into, internet speed and that kind of thing, the language, obviously. But keep in mind that you also do need to think a lot about
health and life insurance but probably mainly your health insurance because you want to make sure you're covered since the US health insurance is most likely not going to cover you when you're out there. Anything else you want to add to this? I think we're good on time.
Manasa Nadig, Enrolled Agent (06:19.438)
I know we are. Well, we did it again in less than 10 minutes, Jane. So, dear listener, if you are a digital nomad or not, and you like listening to matters on cross-border taxes and finances, please visit us on our website, theimcafe.com and subscribe so you can receive our episodes.
Jane Mepham, CFP (06:25.015)
Great.
Manasa Nadig, Enrolled Agent (06:47.122)
ahead of time maybe and beat the race. All right, signing off for now. Thank you. Bye.
Jane Mepham, CFP (06:55.171)
Bye.
