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What being a digital nomad means for your taxes

What Being a Digital Nomad Means for Your Taxes

By | Business, Digital Nomad, Guest Blog | No Comments

As a digital nomad, what are the tax issues that you need to be aware of? How is income reported, what provisions are there for full-time travelers, and what are the pitfalls? While location independent work is on the rise, tax regulations struggle to keep up with it and there are still a lot of grey areas in the matter. Regulations also vary greatly from country to country, so it’s always recommended to do some research of your own or talk to a tax professional.

However, if you are a US citizen digital nomad you’re in luck! We spoke with Krystal Pino, seasoned accountant, digital nomad and founder of Nomad Tax, a firm dedicated serving the nomad community when it comes to small business and personal tax issues.

Keep reading to find out Krystal’s recommendations when it comes to dealing with taxes for US digital nomads.

Krystal Pino

 

Making a Federal Case Out Of It

First and foremost: the foreign earned income exclusion (FEIE). The tax code provision states that if you are outside of the United States for either a set number of days, or you’re considered a resident of another country, you could be exempt from paying federal income taxes on a portion of your income ($103,900 for 2018 and $104,100 for 2019). Hold your horses though, it’s not automatic simply because you’ve decided to travel. There are tests that need to be met.

First is either the bona fide resident test or the physical presence test. Under the bona fide resident test, you’re considered exempt should you qualify as a resident of another country for a full calendar year. For those of us constantly on the move, there’s the physical presence test (PPT). Under the PPT, you need to be outside of the United States for 330 out of 365 rolling days (which means you can use any 365 day period, not just January-December).

Once you pass the PPT, the next thing the Internal Revenue Service wants to know is where your tax home is. For our FEIE purposes, this tax home is not your residence, or abode (discussed later), but rather refers to how and where you make your money. If you’re self employed, you make your money wherever you are. Congrats, you’ve passed the second test!

W-2 employees take a little bit of an extra look at the nature of their work and assignment. You’re going to have to convince the IRS that your remote work is for the benefit of your employer and not only personal. Not impossible, but it weakens your case for the FEIE.

But wait! We’re not done yet!
The last thing the IRS takes a look at is what is called your ‘abode’. This is a referral to your social, family, and economic ties to the United States. Own a home in the US and not renting it out? Still voting in local elections? Have a car registered? Strong family ties? While none of these automatically disqualify you from the FEIE, they could potentially weaken your case that the US is not your permanent home, and this lifestyle of travel is only temporary for you and you’re trying to get out of paying taxes for a bit.

Self(ish) Employment Taxes

Another important thing to note when considering the FEIE is that it only applies to FEDERAL income taxes. None of us are exempt from paying social security and Medicare taxes. Good news for W-2s: you get to split this with your employer, and it is already taken care of for you. Those of us who are self employed are responsible for the full burden (12.4% for Social Security and 2.9% Medicare), although a credit is offered for half. Self employed and don’t want to deal with SE tax? You can mitigate your SE tax by setting up your business as an S Corporation, but this does subject you additional tax filings.

State of Affairs

So, what about state taxes? While some states do have foreign earned income exclusion provisions, most of the time you’ll still be subject to state taxes. Traveling full time? CA, CT, DE, ID, MN, MO, NY, OK, OR, and WV all offer safe harbor provisions, provided you’re out of the state for a number of days and subject to other residency requirements.

State residency is another hot topic among US digital nomads and something my firm looks at intently. Residency can be both hard to break and to establish, especially when trying to do it from overseas. Thus, consider it before you leave or talk to someone who’s already done all the leg work.

Deductions Reasoning

Finally, another frequent question I get is “what can I deduct?” 
If you’re a W-2 employee: nothing. Sorry. The Tax Cuts and Jobs Act basically got rid of anything you could previously deduct.
For self-employed individuals, the answer is: it depends. First, consider the nature of your business and the nature of your travel. The IRS states heavily that business expenses must have a clear business purpose, and nothing that is considered personal is allowed. What you can deduct include coworking space fees, trips made specifically for client/business work, meals with clients, and professional fees, which are still deductible simply as if you were sitting still.

Congratulations, you made it this far! Dealing with taxes can be daunting, but it should be on your top priority list when planning your life on the road.

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5 Tips to Hire Top Talents For Your Remote Team

5 Tips to Hire Top Talents For Your Remote Team

By | Business, Guest Blog, Remote Worker | No Comments

Going remote can be daunting at first when you want to build and scale a business or agency, but as long as you hire the right team members straight off the bat, you’re well on the road to success. The top talents aren’t drifters; rather, they’ll stick around for the long haul, which is exactly what you want.

However, the hiring process has for a long time saddled all businesses. When we don’t hire the right people, productivity slows down, morale drops, and we have to spend money repeating the process until we get the right person in.

The last thing we want is to hire an individual who suddenly vanishes from the online world.

For your company to be a success, you need to bring the A-players to your team. The thing is that, with everyone working remotely, you might need to be a bit more creative with how you identify and “seduce” the top talent.

Let’s take a look at 5 tips to hire top talents for your remote team.

 

5 Tips to Hire Top Talents For Your Remote Team

Know Where to Look

There are a variety of places to look for remote workers, from Craigslist to LinkedIn.

LinkedIn is one of the best places to find your next hire because you get the advantage of seeing an individuals resume, testimonials and credentials there and then. Plus, they’re just a DM away. If you do decide to use LinkedIn, switching to a recruiters account gives you access to perks that a regular account doesn’t have. Then, you need to use keywords like “remote graphic designer” to find potential hires.

Moreover, if a talent really is the best talent, it’s highly likely that they’ll be on LinkedIn. And they’ll probably have examples of their work for you to browse.

Global freelance platforms like Upwork and Freelancer are worth taking a look at, too. These hubs allow clients to post jobs — long term or short term — and multiple businesses have used them to hire the best talent. The problem is that, while there are top-rated remote workers on these sites, there are also lots of dead wood, too. As such, it might take you some time before you find the right person for the right job. However, these platforms allow clients to give freelancers feedback and scores so that you can take a look at an applicants profile to determine how skillful, motivated and reliable they’ll be for you.

 

Outline Your Why

The best remote workers don’t have to work for you. Unlike an office worker who might be terrified of being made redundant because they’ll never find another job, the best remote workers always have other clients they can work for.

This is why you need to sell the job to them.

Outline your company’s ‘Why’. Why should someone work for you? Share your company’s vision with remote workers. Explain your purpose and where your company is heading. What are the perks of working for you? Why should the best talent choose you?

The more attractive you can make your company appear, the easier it will be for the top talent to want to be a part of your future.

 

Go for the Experience

When assessing who is right and who isn’t for your team, it’s a good idea to take a look at how experienced the remote worker is. This doesn’t simply mean how experienced they are in terms of the role — it also means how experienced they are as a remote worker.

For example, if someone has literally just started working remotely, it might not always be the best idea to hire them. They could be a starstruck remote worker who quit the 9-5 grind in the hopes that working remotely would bring them a better work/life balance. Ultimately, however, they have no track record and you don’t know how motivated they’ll be as a remote worker.

Instead, it’s much safer to go for remote workers who already have a proven track record working remotely. If they’ve been doing this for 2+ years now and have strong testimonials to back them up, they’re well worth considering over young pups who may end up like rabbits caught in headlights. They might be good at what they do, but are you taking a gamble?

 

Assign a Test Project

When hiring a remote worker, it’s typical for a company to assign the candidates a test project first. This gives you a better insight into the quality of their work, as well as the speed at which they work. Turnaround time is key, so it makes sense to test each candidate first with a small (but paid) project.

 

Be Communicative

The top talent wants to see a few things from a prospective company they might work for before they commit. One of them is good communication.

The best talent know that communication is the bedrock of all good working relationships, and it’s important to remember the reasons why someone has decided to work remotely in the first place. It might be that they did it for family reasons, but a prime factor is often that the individual doesn’t want to work for a boss they hate anymore.

The top talent can pick and choose who they work for. If they no longer want stress in their working life, they won’t work with someone they dislike.

Poor communication skills can easily make you appear unappealing to a remote worker. If you take too long to respond to messages, or if your messages are often blunt, impersonal and full of criticism, it’s going to put the best talent off.

Be a good communicator. Be friendly, personable and open. Stay in touch with your prospects and your hires. Offer feedback and offer criticism, but offer praise, too. Be positive. That way, it will be a lot easier to hire and keep hold of the best remote talent.

 

These are 5 top tips to hire top talents for your remote team. Look in the right places, sell your company to the worker, go for the experience, run a test project by them and be communicative. If you can do all this, you should be well on your way to building a stronger team.

 

About the author: Aljaz Fajmut is a digital marketer, internet entrepreneur, and the founder of Nightwatch a search visibility tool of the next generation. Check out Nightwatch blog and follow him on Twitter: @aljazfajmut

The Added Value of Coliving: Masterminds

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Written by Alex Barron

I arrived at Sun and Co with a burning desire to come away at the end of my stay with a greater feeling of confidence in the direction in which I was going to take my online teaching business. I had spent the past 5 months trying out new things: creating daily social media content, weekly YouTube videos on topics about the English language and British culture, and my website. And of course doing a lot of reading and learning from others in my domain. Introducing Masterminds…

…What is a Mastermind session? My experience.

Well, a Mastermind session is where the community comes together for an hour, listens to the nature of the personal or profession challenge of someone – or a group (one specific problem works better than many), and then spends the rest of the time offering ideas for solutions. It’s basically a big discussion, but structured around one principal issue.

I’m usually nervous about showing off my work and having it critiqued, but I knew that having fellow co-livers’ opinions could prove very valuable. One benefit of co-living is that the people are quite independent, often experienced in a variety of different fields, and eager to help others. Fresh ideas often come when you don’t expect them.

By the time the second of my near 3-week stay at Sun and Co came around and we were having our weekly family meeting I decided to bite the bullet and commit to holding a Mastermind. I had many different queries and uncertainties in my mind about my project, and hadn’t decided the exact topic of the session until that moment sat in front of the window we use at Sun and Co to write down the weekly schedule. However, pressure can be an effective tool in decision-making, can’t it? I settled on: “Alex’s English Teaching Niche”. This was the main uncertainty I had and if I could get some clarity on this, many of the others would seem less imposing. BOOM! It was written down. I had to do it.

It’s fantastic having access to so many experienced minds in one room; it provides the possibility of having such valuable feedback. On the other hand I think I benefitted as much as I did because I tried to narrow down my question to one that was very specific. In the end it was more like two or three questions around the topic of choosing French speakers as a niche. I would say that the fact that arranging a Mastermind forces you to organise your own thoughts on the matter at hand is a great plus in itself. So I felt that I had gained clarity before the session had even begun!

Masterminds take place at the house at Sun and Co. Mine was held inside so I could make use of the projector. The breakdown of time goes as follows:

• 10–15 minutes presenting the current situation/state of the idea/business/product.

• 45 minutes discussion with the other attendees which takes the form of direct feedback and Q&A’s to help them give better feedback by asking questions.

The Mastermind gave me not only new ideas for business models, how to choose my audience, and how to reach customers, but also confirmed my own ideas. I think the latter was more what I was looking for. Of course the former are going to help me a lot, but what I wanted to have when the hour was over was more confidence in the immediate direction of my business, and I got that. Working solo you often rely on yourself for moral-support, but outside voices that you respect have a huge impact! I would say that a Mastermind is the ultimate representation of co-working.

In conclusion I would say Masterminds have so much value. If you have anything you need input on, be it professional or personal, they can offer a great deal. To get the most out of them, really take the time to think about what you WANT at the end. This will ensure that you come away feeling satisfied. I know I was smiling at the end of mine :).

….

Alex is British and has lived in France for 2 years, has been a freelance web developer for 3 years and an online English teacher for one. He came to Sun and Co to see what the co-living experience was all about, and to have a change of scenery that would allow him to mix with like-minded people and generate ideas of how to progress with his teaching business http://britnchipsenglish.com, which he wants to develop into a one-stop-shop for English learners whose native language is French. When not working Alex is often enjoying the sunshine wherever he may be, and practising a new language.

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An introvert discovers coliving at Sun and Co.

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Written by Rachel Stuckey

I’ve been a “digital nomad” for five years, but I started building my freelance editing business ten years ago. After a few years of freelancing, working from home all by myself, I got restless. And when my main client went digital (that is, they stopped sending hardcopy manuscripts and proofs), I realized that I could theoretically do my work from anywhere.

In the summer of 2012 I had never heard the term “digital nomad,” but I packed up my laptop and left Toronto to travel and pay for my travels by working. At the time, there were co-working spaces in big cities like Toronto and London, but they were relatively new and focused more on local freelancers, telecommuters, small businesses, and creatives who needed office space. So, I worked in hotel rooms, cafés, beach bungalows, and even hostel lounges.

But the truth is, I’m not the best digital nomad—I’m easily distracted by the places I visit and my productivity suffers. I also get lonely. And as much as I love seeing new places and meeting new people, I am an introvert. Making new friends is really hard. And socializing with casual acquaintances and strangers is exhausting and emotionally draining.

And so, despite being a digital nomad for the last five years, I often find myself going home to Toronto. There I can throw myself into my work in a comfortable home office and spend time with the people who know me. Of course, the people who know me don’t always get me. And I really can’t stay home for very long!

This year I decided to check out the new and growing co-working movement as part of my travels in India, Thailand, and Spain. As I suspected, co-working was great for my productivity—combined with the great pleasure living in Thailand with good friends, it made me even more productive than I am at home in Toronto. So, when I travelled to Spain on my own, co-living seemed like the next logical step.

I had already planned to spend some time in Valencia—and I found Sun and Co. when I Googled “Valencia + Spain + co-working.” After a few days of considering my options, I decided to book two weeks and give it a try.

The idea of moving in with a bunch of strangers may not seem like a good fit for an introvert. But while introverts enjoy (and need) time on their own, being a solo traveller can be too much of a good thing. The inclination to hide away from the world can make the digital nomad life a lonely one for an introvert like me. Co-living is the perfect antidote.

Sun and Co. gave me exactly what I needed: a comfortable work space, an interesting destination, and a friendly, supportive community. Sun and Co. was also refreshingly inclusive—so much of the digital nomad world revolves around entrepreneurship and tech—but I never felt out of place for being a boring old freelance editor. In fact, Sun and Co. has convinced me that co-living is right for me—giving me the community I need when I’m facing introvert burn out. 

I never know where life will take me, but if and when it takes me back to Spain, it will definitely take me back to Jávea and Sun and Co.

Rachel is a freelance writer and editor from Toronto, Canada. She’s been a digital nomad since 2012 and now divides her time between her hometown and the rest of the world. Rachel works on a wide range of projects, from textbooks, to academic journals, to websites and online learning resources, to children’s books. She spent two years running her freelance editorial business from cafés, hotel rooms, house-sits, beach bungalows, and hostel beanbags around the world. Now she is very happy to be part of the growing co-working and co-living movements.  You can find her online as the Nomadic Editor.

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