Even in the aftermath of COVID, digital nomads are still growing as a community. Anyone working remotely without a permanent residence is now a digital nomad. Is that you?
One may guess that all travel expenses are deductible for digital nomads as they travel around the world working, laptop on hand. Unfortunately, IRS rules havent yet caught up with this generation of workers. Under IRS rules, a digital nomad is an “Itinerant Worker”, someone without a regular place of business nor a regular place to live. An itinerant worker’s tax home is wherever there is work. No travel expenses can be deducted because the digital nomad is never considered to be traveling away from their tax home.
Now we can look at the timing. The IRS does allow “temporary assignments” and this is where someone travels to a single destination to work for one year or less. Then we can make a case to deduct travel expenses because a home was still maintained during that time away.
So if you are a digital nomad or dream of being a digital nomad, make sure that you discuss tax strategies with your tax advisor before you set off on your adevntures. Making assumptions may be expensive!
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