For some, a bit of wanderlust draws them to the idea of working remotely. They have hopes of traveling the world without giving up their careers and working remotely seems to fill both needs. While the lifestyle of a digital nomad is entirely possible, it’s not as simple as grabbing your computer and going. Here are a few things to consider before taking your remote working job on the road.
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Does traveling effect your income tax liabilities?
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Are there any industry-specific regulations that prevent travel?
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Will different time zones work out logistically?
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What happens if you need medical care?
How Travel Might Affect Income Taxes
In the US, residents generally pay a federal income tax and a state income tax. The latter is based on where they live. And in the case of traveling employees, it’s based on where they keep a permanent resident. However, the shift to pandemic-era remote work renewed the conversation on how that tax structure works.
A few states have even taken their complaints all the way to the supreme court. New Jersey, Connecticut, Iowa, and Hawaii are fighting for the legal right to tax non-residents. This could open the door for a new income tax structure at the state level and make your annual filings a lot more complicated. Could you imagine if you had to file 32 tax returns every year and pay 32 quarterly tax payments?
If you plan to travel globally, it gets way more complicated. Every country has its own laws regarding tax liabilities so you’ll need to familiarize yourself with those before traveling. However, as a general rule of thumb, you can generally stay for a specific amount of time (either a set number of weeks or months) before you’re on the hook to pay income taxes in a foreign jurisdiction.
What this means is that Americans traveling abroad while working remotely for a US-based company will likely still file US tax returns. But they may also file taxes in other jurisdictions depending on specific arrangements.
How Industry Regulations Might Halt Your Plans
Some professions require state licensing and crossing borders effectively mean that you may not legally be allowed to conduct business. For example, doctors and teachers are two professions that are licensed at the state level. The whole concept of broad application remote working is still young and the existing regulations are changing every day. Some are becoming more restrictive while others are easing up to allow technology flexibility. This means that what is a barrier today, might not be in your way down the road.
Since most remote work is technology-based, anyone interested in working remotely to travel should keep up on the latest data sovereignty laws as well. Big changes, like the GDPR–the EU’s general data protection regulation, spell out clear rules on what’s allowed (and what’s not.) Legislation affecting data rights will become increasingly common and will continue to evolve.
Essentially, these laws aim to assign ownership of data based on country of origin in order to protect the interests of individuals and groups. Hopefully, we’ll get a more secure, ethical internet experience out of them. But for now, it’s a lot of brand new red tape to get acquainted with.
Can Drastically Different Time Zones Really Work?
If you travel across the US, varying time zone differences will be minor. However, global travel presents a different problem. You could be facing an eight to twelve-hour time zone difference with your colleagues or clients. Unless you want to make a habit of midnight-hour conference calls, you’ll need to figure out how practical traveling while working remotely really is.
If the majority of your work is asynchronous, you’re probably okay to travel without limits. However, if you have set “office” hours based on a specific time zone or you need to be constantly interacting with colleagues and clients, it can become problematic quickly. This is one place where collaboration tools like Trello and Asana are really coming in handy. Maybe you just need to get your team to rethink how you communicate.
Will Your Wanderlust Ideology Bury You in Medical Debt?
Have you considered that your private medical insurance has a geographic limit? For one, the healthcare system in each country is unique. Some countries provide social healthcare for their residents and legally require visitors to purchase government-run healthcare insurance to receive healthcare through their system. Other countries use private healthcare, but that doesn’t mean your insurance is compatible.
In fact, most private healthcare insurance plans in the US have a regional territory with two tiers depending on where you receive care. If you’re in your home network, you’ll pay lower rates than if you’re out-of-network.
The good news is that times are changing and new companies are rising to the occasion to fill this need. For example, Safety Wing was one of the first to offer subscription-based travel healthcare that is perfect for remote workers who travel the globe. It’s like buying temporary insurance for a vacation, but a little more permanent for ongoing travel.
The Bottom Line
Working remotely is almost never as easy as simply opening a laptop and signing on. There are dozens of small wrinkles to iron out so that you can ensure that working remotely provides you with the freedom to travel. The process starts with checking industry regulations and reimagining your personal workflows, but it also goes much deeper into exploring tax liabilities and health insurance needs.
