Ever since Tim Ferris released his book “The 4-Hour-Workweek” back in 2007, millions of people have dreamed about being able to work while traveling to exotic locations at the same time. And with the rise of remote work in a post-COVID-19 world, that dream is now more possible than ever.
If your current employer allows you to work remotely, the idea of becoming a digital nomad may have come to mind (at least once!). This article is about what’s behind the “work-from-anywhere” mentality and why more and more Americans are embracing the digital nomad lifestyle.
What is a digital nomad?
A digital nomad is a worker who leverages technology to travel and work at the same time. For example, a digital nomad might work remotely for a company as a full-time employee, or alternatively, they might manage their own location-independent business.
What started as a privilege for a select few individuals in the workforce has become accessible to many others over the past few years. The digital nomad movement accelerated with the COVID-19 pandemic, as millions of workers were suddenly forced to work from home and quickly realized that they don’t need to be in an office all day to be productive.
“Prior to the pandemic, digital nomads were often seen as a fringe way of working and limited mostly to freelance jobs,” says Sara Sutton, CEO at FlexJobs, in a CNBC article. “But as companies adopt more flexible arrangements, including location independence and remote work options, we anticipate people will have more opportunities than ever before to work remotely — and from anywhere in the world.”
What’s behind the rise of digital nomadism?
As the world opens up and moves forward from the COVID-19 pandemic, it seems our approach to work will never be the same again.
Here’s why more and more people are considering adopting the digital nomad lifestyle:
Changes in company policy
According to research from Microsoft, over 52% of people are considering switching to a full-time remote or hybrid job. As a result, many companies across different industries are changing their work policy to be more accepting of permanent remote or hybrid work and accommodate the rise in interest.
Foreign digital nomad visas
To cash in on this wave of digital nomads flocking to other continents, more and more countries are introducing “digital nomad visas” that allow remote workers to stay in their territory for extended periods.
Tourist visas usually allow for a stay of around 30 to 90 days. With digital nomad visas, however, remote workers are sometimes granted residency for up to one year (or more!) in the country.
The requirements for digital nomad visa applications differ from place to place. For example, to qualify for Estonia’s digital nomad visa, you need to prove that you have a monthly income of at least €3,504 per month. You won’t have to pay taxes during your first 183 days in the country, but after that, you automatically become a tax resident.
For the digital nomad visa in Georgia, you must prove that you have a minimum income of $24,000 per year. If you spend more than 180 days in the country and make less than $155,000, you’ll pay a small income tax of 1%.
Flexibility and better work-life balance
People’s work expectations and priorities have changed post-COVID-19 in a significant way. The modern worker isn’t just looking for a steady paycheck — they’re also looking for a better balance between work and their personal lives. A recent survey by FlexJobs shows that 68% of people are willing to change careers for another opportunity with a better work-life balance.
Risa F. Scott, a full-time engineer before becoming a digital nomad, is an example of someone who changed career paths to seek work-life balance. At her engineering job, she realized she much preferred working alone at home and that her dream was to work remotely while traveling the world.
As a result, she quit her engineering career and launched her online business as a web designer and photographer. Once her business became steady, it had an incredible impact on her work-life balance:
“My life became vastly more ‘my own,’” says Risa. “I could make my schedule, more flexibly plan to travel, and manage my day more effectively for everything from eating better, fitting in yoga and workouts, and even seeing and spending time with family and friends.”
Better quality of life
Another big reason why some aspire to become digital nomads is that their money may go further in other countries, especially as the world experiences high inflation. On an average western salary, nomads can easily afford a very comfortable lifestyle in many of the go-to countries for nomads, such as Thailand or Indonesia.
This was the case for Schoeberg, CEO of DropInBlog, who, after traveling the entire world as a nomad, decided to settle in Thailand. “The quality of life in Thailand, compared to the United States, is much better for 90% of things and more stress-free,” says Scheoberg in a CNBC article. “It’s also a lot easier to afford a luxurious lifestyle.”
Some nomads are also impressed by the quality of amenities they get in other countries. “While I can afford a pretty nice life in the US, I live a lot better here than I did in the US,” continues Schoberg. “The level of services you get here — fancier movie theaters, nice cars — completely blow away what you get in the US.”
How do taxes work for digital nomads?
Life as a digital nomad is an exciting opportunity for adventure and life-changing experiences. But it’s also essential to address a (potentially) less “fun” topic: taxes.
There’s a lot of confusion about how digital nomads navigate taxes. If you’re constantly hopping from place to place, you don’t really owe taxes to any country, right?
Unfortunately, that’s not the case. While most countries have residency-based taxation, US expats are in an interesting position. The US applies citizenship-based taxation, meaning US expats must declare their worldwide income to the IRS each year. Acquiring residency in a new country does not eliminate their US tax filing obligation.
That doesn’t mean that American nomads must pay taxes twice on the same income though. In many cases, thanks to tax relief plans such as the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC), they owe nothing to the IRS!
Read More: Digital Nomad Taxes: A Complete Guide
Ready to become a digital nomad?
If you’ve wanted to become a digital nomad and explore new countries as you work on the road, there’s never been a better time. However… don’t forget about filing your US taxes!
Thankfully, you can work with a US expat tax advisor, like Bright!Tax, who can handle all of your filings and help you stay compliant with the IRS.