Your Tax Home Away from Home: Digital Nomad Essentials

Learn How to File Your Taxes Without the Headache!

In 2025, thousands of Americans live on the move—traveling from city to city or country to country, working from cafés, coworking spaces, or even the beach.

But being a digital nomad doesn’t mean you’re exempt from paying taxes. Quite the opposite. Even far from office desks or U.S. borders, you’re still responsible for staying compliant with the IRS.

Understanding the Concept of a “Tax Home”

The Internal Revenue Service (IRS), the agency responsible for administering federal taxes in the U.S., operates with the concept of a “tax home.”

This doesn’t refer to your home address in the traditional sense. Your tax home is the location where you primarily conduct your work or have a regular place of business—even if you’re constantly on the move.

For many nomads, this may seem contradictory, but it’s a crucial definition: your tax obligations remain as long as you are considered a U.S. tax resident.

You Still Need to File Taxes—Even Outside the U.S.

If you’re a U.S. citizen or permanent resident (Green Card holder), you must report your income to the IRS every year, regardless of where you’re living or working.

This includes:

• Income earned abroad
• Payments received in cryptocurrency
• Freelance or remote work earnings

The good news is there are tools and exclusions that help you avoid double taxation, as we’ll explore below.

What Is FEIE and How to Use It

The Foreign Earned Income Exclusion (FEIE) is a widely used option that lets U.S. taxpayers working abroad exclude up to $125,000 of foreign-earned income from their federal taxes (as of 2025).

To be eligible, you must meet one of the following conditions:

• Spend at least 330 full days outside the United States during any 12-month period, OR
• Establish a tax home in a foreign country and show stronger, more permanent ties to that location

For digital nomads, the first condition is often easier to fulfill, as many spend extended periods living and working internationally.

Watch Out for Local Taxes in the Countries You Visit

Even if you exclude part of your income from U.S. taxation, remember that some countries also tax income earned within their territory.

You should:

• Be aware that staying more than 183 days in a country could make you a tax resident there.
• Know that some countries require tax registration if you open a bank account or rent a property.
• Consult an international accountant to avoid surprises.

Tools to Simplify Your Tax Life

Here are some digital tax tools used by U.S. expats and nomads:

• Greenback Tax Services
• Expat Tax Online
• MyExpatTaxes
• Xolo (ideal for EU-based freelancers)
• Taxfyle (connects you with licensed CPAs)

Crypto Payments Are Also Taxable

If you’re being paid in Bitcoin, Ethereum, or other crypto assets, the IRS considers this a taxable event. You must declare:

• The USD value at the time of receipt
• Capital gains or losses upon converting the crypto
• Any NFT income, staking rewards, or DeFi activity

Tools like Koinly, CoinTracker, and ZenLedger help organize these transactions for accurate tax reporting.

Social Security and U.S. Self-Employment Tax

If you’re self-employed, you’re still responsible for paying Social Security and Medicare taxes in the U.S.
Even abroad, you must pay Self-Employment Tax—unless you qualify for exemption under a totalization agreement with the country where you’re registered.

Practical Tips to Stay Compliant

1. Keep detailed records: Save invoices, contracts, travel logs, and payment receipts.
2. Use digital banks with tax reporting tools: Platforms like Wise, Revolut, and Mercury help generate exportable financial reports.
3. Consider forming a business: Consistent income may justify forming an LLC or corporation to optimize your tax strategy and gain liability protection.
4. Avoid last-minute surprises: Set calendar reminders for tax deadlines (usually April 15, or June 15 with extensions).
5. Work with a pro: Even with automated tools, a CPA specializing in expat taxes can help avoid costly errors.

Your “tax home” may be virtual, but your tax obligations are very real. Being prepared is the best way to fully enjoy the nomadic lifestyle without unnecessary risks.

And remember: living without borders doesn’t mean living without tax rules!

Written by

Gabriel Gonçalves