Author Topic: Nomad : how I pay tax (or lack of it)  (Read 1466 times)

neonlight

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Nomad : how I pay tax (or lack of it)
« on: March 16, 2019, 03:56:42 AM »
Hi,

I am from a small Asian country, have been a ten year nomad. I do tech consultancy and will usually be in a new place in weeks, if not days. Having caught the bitcoin bug, it also helped my coffers.

Previously I have paid tax to IRS even though I didnít reside in US (in 2005 for a tech gig, I was withheld 30% and after many painful hours convincing IRS I gave up) and paid tax in Europe for a few years (last in 2012), Iíve also paid some capital gain tax in 2-3 Asian countries, and thatís about it. Iíve never paid tax in my home country Malaysia because I never worked there but I have a tax ID  because I own a house. If a tax resident is based on staying for 90-180 days in a country I am not a tax resident in any in the past few years.

I hold bank accounts in US, Europe and Asia. Two properties, and bitcoins. So far no one asked any question, maybe because itís not sizable amount in each jurisdiction, do you think this works ? I know majority of readers are US but Iíd really love to hear everyoneís take on this.
« Last Edit: March 16, 2019, 10:32:46 PM by neonlight »

Hirondelle

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Re: Nomad : how I pay tax (or lack of it)
« Reply #1 on: March 16, 2019, 05:03:59 AM »
Hi! Sounds like you're living a pretty damn good life as a nomad (if the lifestyle fits you - seems like it does!).

Just like you, I have lived in Europe, Asia and the USA, however I didn't have much of an interesting tax situation as I didn't earn money while in the USA (did file taxes though) and did not file taxes when in Asia as I wasn't a resident.

Some people who may have more experience with this are @Malaysia41 @expatartist as I know they've also done the EU + Asia + US thing. Not as much in a nomad fashion, but they may know people who do.

Hula Hoop

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Re: Nomad : how I pay tax (or lack of it)
« Reply #2 on: March 16, 2019, 05:16:31 AM »
Wow -I'm surprised it's legal not be a tax resident in any country and thus to pay no tax.


MustacheAndaHalf

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Re: Nomad : how I pay tax (or lack of it)
« Reply #3 on: March 16, 2019, 10:19:49 AM »
Don't know if this helps with the 30% tax rate...
https://www.irs.gov/businesses/taxation-of-nonresident-aliens-1

But if you're Malaysian, I don't see a tax treaty in this list:
https://www.irs.gov/publications/p901

What bank do you like the best?  For Americans, I think Citibank or HSBC are the main choices - since they have legal departments that can handle the requirements for Americans abroad.  Most banks won't allow an American to open an account - they don't want the auditing hassle for one customer, and the risk of getting the "Iran treatment" (their banks are off the global bank grid - dropped from the SWIFT network, I think).

neonlight

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Re: Nomad : how I pay tax (or lack of it)
« Reply #4 on: March 16, 2019, 10:35:42 PM »
Hi! Sounds like you're living a pretty damn good life as a nomad (if the lifestyle fits you - seems like it does!).

Just like you, I have lived in Europe, Asia and the USA, however I didn't have much of an interesting tax situation as I didn't earn money while in the USA (did file taxes though) and did not file taxes when in Asia as I wasn't a resident.

Some people who may have more experience with this are @Malaysia41 @expatartist as I know they've also done the EU + Asia + US thing. Not as much in a nomad fashion, but they may know people who do.

Yeaps am enjoying! Of course thoughts of settling down in one place crops up occasionally.

Does it mean that you are an American but because you lived elsewhere you didnít pay tax to IRS nor  to the country that you were residing during that time ? Is this grey area or very legal?

Thanks for recommending  @Malaysia41 @expatartist ! Iíll read up their thread :)
« Last Edit: March 16, 2019, 10:42:43 PM by neonlight »

neonlight

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Re: Nomad : how I pay tax (or lack of it)
« Reply #5 on: March 16, 2019, 10:40:34 PM »
Don't know if this helps with the 30% tax rate...
https://www.irs.gov/businesses/taxation-of-nonresident-aliens-1

But if you're Malaysian, I don't see a tax treaty in this list:
https://www.irs.gov/publications/p901

What bank do you like the best?  For Americans, I think Citibank or HSBC are the main choices - since they have legal departments that can handle the requirements for Americans abroad.  Most banks won't allow an American to open an account - they don't want the auditing hassle for one customer, and the risk of getting the "Iran treatment" (their banks are off the global bank grid - dropped from the SWIFT network, I think).

I might have misled you LOL. I do not need to pay IRS much, if any. Only when I get gigs from US that I need to face the wrath of IRS haha. My employer usually auto deducts 30% and I will have to call IRS and tell them the job was done by a Malaysian who didnít do the work in US and does not have SSN. At times it works and I get the 30% back, at times it doesnít.

And yes, having opened accounts globally I can tell you that US is definitely on the watch list, if you are an American or have SSN good luck to that! I have known non Americans who claim they donít have SSN or ITIN when they actually do just to skip the nightmare. Do you know how risky is this ?

Hirondelle

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Re: Nomad : how I pay tax (or lack of it)
« Reply #6 on: March 17, 2019, 03:59:58 AM »
Hi! Sounds like you're living a pretty damn good life as a nomad (if the lifestyle fits you - seems like it does!).

Just like you, I have lived in Europe, Asia and the USA, however I didn't have much of an interesting tax situation as I didn't earn money while in the USA (did file taxes though) and did not file taxes when in Asia as I wasn't a resident.

Some people who may have more experience with this are @Malaysia41 @expatartist as I know they've also done the EU + Asia + US thing. Not as much in a nomad fashion, but they may know people who do.

Yeaps am enjoying! Of course thoughts of settling down in one place crops up occasionally.

Does it mean that you are an American but because you lived elsewhere you didnít pay tax to IRS nor  to the country that you were residing during that time ? Is this grey area or very legal?

Thanks for recommending  @Malaysia41 @expatartist ! Iíll read up their thread :)

I'm European and was an exchange student in the USA at the time, hence I didn't have to pay taxes as I did not have any US-income (lived on a grant from home country). In Europe if I'm not a resident of my home country I wouldn't have to pay taxes either, but I would have to pay them in the country where I'm residing at the time if I have any earned income.

I'm not sure about the grey area of earning money while not residing in my home country and nomading around! 

FreelanceToFreedom

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Re: Nomad : how I pay tax (or lack of it)
« Reply #7 on: March 17, 2019, 04:54:15 AM »
This is a big and complicated world that I've looked into briefly. Nomad Capitalist has some good articles on it: https://nomadcapitalist.com/articles/

stuartkuz

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Re: Nomad : how I pay tax (or lack of it)
« Reply #8 on: March 17, 2019, 09:22:12 AM »
As an American living abroad for 18 years and earning less than $75k (1980s money), I did not have to pay any US taxes. I'm surprised the IRS would give you a hard time if you are a resident of another country. But yes it can be a complicated world.

neonlight

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Re: Nomad : how I pay tax (or lack of it)
« Reply #9 on: March 20, 2019, 02:29:45 AM »
This is a big and complicated world that I've looked into briefly. Nomad Capitalist has some good articles on it: https://nomadcapitalist.com/articles/

Thanks for recommending such a good read! Summarizing the digital nomad's blog post, trying to tick off the box.

Become a tax non-resident in your home country
- I am almost certain I don't spend enough days in home country Malaysia to be taxed, but just to be sure I will check again with the local authorities' website.

Earn your money in an offshore company
- I give myself a basic minimum salary, paid via my Singapore company, Singapore is not exactly an "offshore", but having a reputable jurisdiction helps with business and the tax is minimal given that it's basic salary. I also try to get paid in bitcoin, and for this I do not know which jurisdiction I should pay tax to, if assuming it's Singapore there is no capital gain tax in Singapore.

Be careful where you live.
I am in a country for not over 90 days, usually just a week or so.

Bank overseas in a foreign currency
- My holdings are majority in USD, and am doing future payouts in HKD and EUR too. I can decide quite easily the currency type as I can request the tech project to pay in bitcoin if not fiat and I sell it to local currencies. As for bank overseas, I prefer Singapore or Hong Kong, but am thinking of venturing to places like Malta, Cyprus, Estonia etc, thoughts? I have recently traveled to Lithuania for a tech project and from the feel of it they are pretty open for non resident foreigners to open bank accounts.

Advice appreciated!
« Last Edit: March 22, 2019, 09:43:06 AM by neonlight »

FatFI2025

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Re: Nomad : how I pay tax (or lack of it)
« Reply #10 on: March 21, 2019, 04:26:35 PM »
I had this situation for a very brief period several years ago -- earning US-source income in Japan. Tax laws and treaties were created back when you could only work in one location and receive source income from that location. You might travel overseas for a few weeks each year for business, but the visited country doesn't want to tax that little bit of income. So that's why you see the 183-day standard for tax residency. Great loophole if you can set yourself up with source income from another country (except USA and Eritrea, or is it Somalia?) -- unfortunately it's not easy to do this in my field.

As for getting withholding back from the US IRS, file a return and they will send you a check or US direct deposit pretty quickly. It's hard for me to imagine that calling them would result in a refund being sent!

neonlight

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Re: Nomad : how I pay tax (or lack of it)
« Reply #11 on: May 11, 2019, 09:55:30 AM »
I had this situation for a very brief period several years ago -- earning US-source income in Japan. Tax laws and treaties were created back when you could only work in one location and receive source income from that location. You might travel overseas for a few weeks each year for business, but the visited country doesn't want to tax that little bit of income. So that's why you see the 183-day standard for tax residency. Great loophole if you can set yourself up with source income from another country (except USA and Eritrea, or is it Somalia?) -- unfortunately it's not easy to do this in my field.

Yeaps, not a US citizens and don't spend 183 days in a country a year.

As for getting withholding back from the US IRS, file a return and they will send you a check or US direct deposit pretty quickly. It's hard for me to imagine that calling them would result in a refund being sent!

I had the luck of a 30% refund many years ago after calling IRS. It was an IT project I did for a US employer which during the time I didn't live in the US. The second time I took another project from the same employer IRS decided not to refund this time. I guess they got smart.