So, What Do I Need to Know About Being a Digital Nomad?

Do you want to become a digital nomad but don’t know how to go about doing it? Cheer up, you’re not the only one. The trend is gaining momentum, what with all the benefits multiple countries are offering to attract fresh capital to alleviate the consequences of the pandemic.

Starting out is the most difficult part to do, as you’ll need to think about everything beforehand so that you don’t get surprised unpleasantly later on. For one thing, if you’re relying on gigs, you’ll need to plan your finances well ahead, especially if you’re planning to country hop.

Let’s take a look at the most important things to consider.

You'll Need to Gather Documentation

Documentation gathering is the most boring part of the process for many, but it is absolutely unavoidable. First of all, make sure to make copies of all important documents and also keep copies of important documents with a friend or family member back home. One can never know if some additional documentation may be called for later; it is easier to have a family member send copies than travel back to the U.S. to gather documentation anew.

Don’t forget to check your passport validity and visa requirements. Renew the passport if its validity is less than one year, just in case.

Finally, obtaining an International Driving License can be a good idea.

It'll Change the Way You File Your Taxes

The matter of taxes can be complicated for digital nomads. Taxes for digital nomads vary depending on a number of factors, notably on your residency status and the country of your origin.

The U.S. is 1 of only 2 countries that applies taxes to all of its citizens, no matter where they earn their wages. That’s to say, you are obliged to file annual income tax returns if:

• You lived in the state for any duration during the tax year
• Your immediate family lives in the state while you’re abroad
• You have a permanent place of residence in the state
• You keep your voting rights, ID card, or driver’s license in the state

As regards the income state tax, you are eligible if you’re earning income in the state. Note that pension, retirement income, and other government benefits are also taxable. Only a couple of states don’t levy state income taxes, as follows: Alaska, Florida, Nevada, South Dakota, Texas, Washington State and Wyoming.

Thankfully, there are ways to mitigate income taxes while abroad. Look into the Foreign Earned Income Exclusion, Foreign Housing Exclusion and Foreign Tax Credit.

Last but not least, there are taxes of your new country of residence to consider. In most cases, if you stay more than 3 or 6 months in the country, you’ll have to pay taxes. This is common practice for residential taxation countries like Australia, China, Japan and Mexico. Some countries impose tax only on income earned in their jurisdiction. Examples include Costa Rica, Hong Kong and Singapore.

You'll Need to Gather the Right Digital Tools

Digital nomads are tech-savvy and knowledgeable about a slew of digital tools and apps. If you haven’t already, familiarize yourself with project management tools, communication tools and, in some cases, workflow automation tools.

Common tools used by digital nomads include Asana, Slack, Trello, Zoom and Skype. However, keep in mind that trends change and new tools pop up regularly, so stay on top of developments.

Your Health and Insurance Should Be Taken Into Consideration

U.S. residents aren’t eligible for health coverage in the EU unlike EU citizens from other EU countries. Some countries have health insurance requirements for obtaining a visa, so familiarize yourself with the requirements and choose the best option for you.

Don’t forget to undergo all necessary health treatments before you set out.

You May Want to Learn More About the Cultures of Your Destinations

One of the main challenges (but also a thing to look forward to) for digital nomads is getting to know the culture. If you’re traveling to a country where English isn’t the mother tongue, you should make an effort to at least learn some common phrases to help you get around (not to mention that the locals will appreciate it).

Secondly, going in completely clueless is a huge problem. Seriously, some people decide on relocating without knowing the basics: where and when to pay the bills, where to buy groceries, and who to contact when something goes amiss.

While it is highly recommended to contact the local expat society, you should still perform cross-cultural training yourself.

ConclusionDigital nomadism is an exciting affair, but that doesn’t mean that you’ll be holidaying all day long. Some obligations apply and some rules need to be followed, especially if you’re starting an online business. Take your time researching possibilities plan ahead for the best results. Digital nomadism is rewarding and allows you to live a great life once you learn the ropes of technicalities.

Angela Ash is an expert content writer, editor and marketer, who focuses on topics related to remote work, freelancing, entrepreneurship and more.