UPDATE 1/3/2018: Read the following blog post to see how the new tax laws will affect digital nomad taxes - http://ustax.bz/2017-tax-reform/
If you're an expat working from outside the United States, you may be wondering how to set up your digital nomad tax structure.
Not all the same rules apply to US citizens, freelancers, and entrepreneurs. I myself have been using a simple LLC format and have been paying the usual US tax dollar amount until I came across a few unbelievable tips on digital nomad taxes.
First things first - if you reside outside of the USA for a total of 330 out of 365 days a year you need to know about the Foreign Earned Income Exclusion clause. Basically, you don't need to pay any digital nomad taxes up to $100,000. Now not only does that change the way I budget, but it's also changed my plans of travel to avoid paying any digital nomad tax.
If you use TurboTax or do your taxes through an accountant, I'm sure they've pointed this out to you, and if not - tough luck my friend...better late than never right ;)
Now if you make over $100,000, your digital nomad tax amount will be the same as any old 9 to 5 average Joe from the suburbs. I thought this was the only way to gain some advantage as a digital nomad - until I came across Stewart Patton and his site U.S. Tax Services.
Stewart is a US Tax Attorney and expat living in Belize. For years he's used the strategy he's set up and helped hundreds of clients save THOUSANDS of dollars every year.
Here is what the digital nomad tax structure looks like...
At the top line there's you - the consultant. If you simply work as a freelancer you'll want to change things around a bit to structure yourself and your services as a Consulting Firm or some type of 'agency'.
Below that is a Belize corporation.
Why Belize you may ask?
Well Belize is one of the most tax-friendly countries in the world. It also has no local tax, English is the official language, it's a stable democracy, and you don't need any physical presence required. That along with no audited financials needed or no virtual office requirement make it out to be a pretty ideal location for setting up a corporation in which you have to do nothing but pay a registered agent to be your mail service provider.
Then you want to make this foreign entity 'own' your entity within the US. For this we set up a Wyoming LLC - because, well, Wyoming is one of the best states in the country to set up an LLC.
As an employee of the Belize corporation you simply get compensated as a normal employee would avoiding all digital nomad tax. With this corporation owning your business - you can still pay $0 on any amount up to $100,000 and then anything above it you can keep in your Belize corporation - tax free.
Plenty of other digital nomad careers will work in this digital nomad tax structure - one thing to note though - you can't have any employees in the US.
You can totally try to do the setup he has done by yourself - but by using his services you get it all set up without breaking a sweat.