Digital Nomad Tax Residency: 6 Things to Settle First

Digital Nomad Tax Residency: 6 Things to Settle First

Digital nomad tax residency is not one decision, and the visa stamp in your passport settles only a small part of it. If you are a U.S. citizen or green card holder working remotely from abroad, you still answer to the IRS, probably to your old state, and to the country where you now sleep.

Two firms in the Sam's List partner program are written up here. Iota Finance, a Florida firm whose profile lists Digital Nomads as a specialty, fits the return and planning items. Crypto Tax Made Easy, a New Jersey digital asset tax firm that lists both Digital Nomads and Cryptocurrency Investors, fits the crypto item. Every firm named is a vetted Sam's List member. The firms written up here are paying members of our featured program, and payment does not buy the language we use or its reviews. How we picked them is at the end.

The six items are ordered by the decision you face, not by firm quality, and the firms are not ranked.

1. Digital Nomad Tax Residency Starts With U.S. Worldwide Taxation

The first thing to settle is the one that does not change when you move. U.S. citizens and green card holders are generally taxed on worldwide income and generally must file a return no matter where they live. Moving to Lisbon or Chiang Mai does not end that.

What changes is the set of tools available: exclusions, credits and extra reporting. The next items cover them. Treat anything a forum says about "becoming a tax nomad" with suspicion unless it starts from this rule.

The limitation: filing thresholds, forms and treaty positions depend on your status and facts. Do not assume a country's tax treaty removes your U.S. filing duty.

2. State Residency When You Leave: Domicile and Ties

Leaving the country does not automatically end your obligations to your old state. Many states look at domicile, which is the place you regard as your permanent home, and at the ties you left behind: a home or lease, a driver's license, voter registration, family, bank accounts and where you plan to return.

States differ a lot. Some use day counts, some weigh ties more heavily and some are quick to challenge a departure from a high-tax state. Cutting ties cleanly, and writing down when and why, tends to matter more than a single day count.

The limitation: no one checklist works for every state, and a state can disagree with your view of when you left. Ask a CPA who knows your state before you assume the move ended your residency there.

3. The Foreign Earned Income Exclusion and the Foreign Tax Credit

The foreign earned income exclusion lets some taxpayers exclude part of their foreign earned income from U.S. income tax. To claim it, you generally need a tax home in a foreign country and foreign earned income, which means pay for work you do abroad, and you must pass one of two tests. The bona fide residence test looks at a full tax year of genuine residence in a foreign country. The physical presence test generally requires 330 full days in a foreign country during a 12 month period.

The alternative is the foreign tax credit, which generally offsets U.S. tax with income tax you paid to another country. Which one saves more depends on the foreign tax rate, your income and whether you can use both. The exclusion amount changes yearly, so check the current IRS figure rather than relying on a number you saw in a blog.

The limitation: the exclusion generally does not cover investment income or capital gains, and the day counts are unforgiving. Visiting the U.S. a few times can break the physical presence test.

4. Local Digital Nomad Tax Residency Abroad and Visa Rules

Your U.S. status is half the picture. The country where you live may treat you as a tax resident after a certain number of days, or sooner if you rent a home, and it may tax you on worldwide income. A tourist stay, a digital nomad visa and a residence permit can each carry different tax consequences, and some visas say nothing about tax.

This is a separate legal question, and neither firm below should be asked to answer it. Local tax residency, social security contributions and the right to work remotely belong with a qualified adviser in the country where you live, ideally one who understands how the U.S. return fits in.

The limitation: the rules vary country by country and change often, and a U.S. exclusion does not shield you from a local bill. Settle this before you sign a long lease.

5. FBAR and Form 8938: Foreign Account Reporting

A foreign bank account is a reporting item even when it earns nothing. U.S. persons with foreign financial accounts above a threshold generally must file an FBAR with FinCEN. Separately, taxpayers with specified foreign financial assets above certain levels generally must attach Form 8938 to their return. The two filings overlap but are not the same, and the thresholds differ by filing status and by whether you live abroad. Check the current IRS and FinCEN figures instead of trusting a remembered number.

Nomads trip on this one because accounts pile up: a local bank, a payment app, a savings account opened for a visa. Each one is worth listing.

Iota Finance may fit items 1, 2, 3 and 5. It is based in Florida, was founded in 2022, has seven employees and is led by Igor Tutelman, CPA, as Managing Partner. It lists Cryptocurrency Investors, Digital Nomads and Equity Compensation as specialties and serves clients nationwide.

The limitation: the profile does not name FBAR or Form 8938 work, expatriate tax or foreign earned income exclusion filings, so ask whether it handles them.

6. Digital Nomad Crypto Taxes: Reported at Home, Wherever You Trade

Crypto held or traded abroad is still reported at home. Selling a token, swapping one for another or spending it generally creates a gain or loss for a U.S. taxpayer, and the foreign earned income exclusion generally does not wipe it out. Digital nomad crypto taxes also raise a question about foreign exchange accounts, which may count for foreign account reporting. Ask your preparer how they treat them.

Records are the practical problem. A nomad who trades from three countries on four platforms needs one clean transaction history, with cost basis, before any return can be prepared.

Crypto Tax Made Easy may fit this item. It is based in Little Silver, New Jersey, was founded in 2021, has six employees and serves clients nationwide. Its profile lists Cryptocurrency Investors, Digital Nomads and High Net Worth Individuals as specialties and states no revenue or income minimums.

The limitation: the profile does not say whether it handles foreign account filings or the state side of leaving, so confirm the scope before you assume one firm covers everything.

Where Iota Finance Fits

Iota Finance is the closer match if your situation is a return, a residence question and some planning, and your income is at the level it states. Its profile also describes monthly accounting, tax and fractional CFO services for small businesses, startups and entrepreneurs, which suits a nomad who runs a company.

Iota Finance has 14 verified client reviews on Sam's List. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Iota Finance is a paying member of our featured program, and payment does not buy its reviews. Ratings and rankings are not indicative of future performance or results.

The limitation, plainly: the profile lists minimums of $200,000 in income, $500,000 in revenue and $500,000 raised, and it does not say whether they are alternatives or all required. A smaller earner may fall outside them. It does not list foreign account reporting by name, and its state-level Florida location tells you nothing about your own state, so ask.

Where Crypto Tax Made Easy Fits

Crypto Tax Made Easy is the closer match if your biggest question is digital assets: cost basis, swaps, several exchanges and years of history. Its profile lists Digital Nomads alongside Cryptocurrency Investors.

Crypto Tax Made Easy has 6 verified client reviews on Sam's List. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Crypto Tax Made Easy is a paying member of our featured program, and payment does not buy its reviews. Ratings and rankings are not indicative of future performance or results.

The limitation, plainly: the profile does not describe its scope of services, who signs returns or whether it covers the exclusion, foreign accounts or state residency. If your main need is an exclusion claim and a residency plan rather than crypto, ask whether it fits.

Frequently Asked Questions

Do digital nomads still have to file U.S. taxes?

Generally yes. U.S. citizens and green card holders are taxed on worldwide income and generally must file wherever they live. Exclusions and credits can reduce or eliminate the tax owed, but they do not usually remove the filing requirement. Confirm your own filing duty with a qualified tax professional.

Does leaving my state end my state tax residency?

Not automatically. States look at domicile and the ties you keep, such as a home, license, voter registration and family. Rules and day counts differ by state, and some states challenge departures. Ask a CPA who knows your state what evidence supports your leaving date.

Can I use the foreign earned income exclusion and the foreign tax credit together?

Sometimes, but not on the same income. The exclusion applies to foreign earned income if you qualify, and a credit generally cannot be claimed on income you excluded. Which route saves more depends on the foreign tax rate and your income, so have a CPA compare both.

Is crypto I trade while living abroad taxable in the U.S.?

Generally yes. U.S. taxpayers report gains and losses from selling, swapping or spending crypto wherever they live, and the foreign earned income exclusion generally does not cover them. Keep a complete transaction history with cost basis and ask your preparer how foreign exchange accounts are treated.

Before you book a flight, write down your old state ties, your day counts and every foreign account, then ask a professional which of the six items applies to you. You can browse accountants on Sam's List, including the firms above, and ask each how it handles the items on your list.

How We Picked These Firms

You should be able to check our work, so here is how this post was built.

The pool. The firms here are vetted Sam's List members in our featured program with live public profiles that list Digital Nomads as a specialty. This is not a survey of every firm that works with nomads, and many Sam's List members not written up here could fit.

How it is organized. The six items are a checklist ordered by the decision you face, not by firm quality. Each firm is matched to the items its profile most closely describes, and the firms are not ranked. Items 2 and 4 in particular call for advisers or state knowledge that neither profile describes, and the post says so.

What review counts mean here. We cite each firm's verified review count and its date from its profile. A count shows how many clients wrote something down. It does not measure technical quality.

What payment does and does not buy. Listing on Sam's List is free, and so is being named in this article. The firms written up here are paying members of our featured program, which is why they get a write-up. What payment does not buy is the language we use about a firm, its review count, or a promise that it fits you.

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About the author: Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.