Global Workforce: U.S. Tax Impact on Digital Nomads, Remote Workers and Their (Often Overlooked) Employers

Tax pro’s - are you prepared to advise clients who wish to explore foreign work possibilities for themselves or for their employees? 

The COVID-19 pandemic has transformed the way we work, with remote working becoming a lasting trend. As people realize that all they need is reliable internet and a laptop, many are exploring new residency options—not just across the U.S. but globally. Countries like the United Arab Emirates are even introducing specialized visa programs to attract remote professionals.

Some individuals may relocate as employees of established companies, while others pursue self-employment, possibly by forming foreign entities to run their businesses. But are you prepared to tackle the intricate tax challenges that accompany these moves? What if your client becomes a “digital nomad,” working from various countries—whether in short-term rentals, hotels, coffee shops, shared workspaces, or airport lounges?

This session by industry expert, Virginia La Torre Jeker, J.D. will explore key tax considerations, including the fact that the employee’s presence in the foreign country can drag the employer-company into that country’s tax net.  There are many U.S. tax implications of living and working abroad. 

Join the webinar to gain insights on navigating these complex scenarios!

Webinar Objectives

• To discuss tax planning for clients wishing to explore moving and working abroad, including breaking State tax residency.
• To discuss the US tax benefits and burdens associated with overseas work. 
• To explain and discuss the nuances of eligibility for claiming foreign earned income and housing exclusions.  Special issues for green card holders.
• To identify the tax differences between employees and self-employed and the US tax impact on each when working abroad.
• Identify problems for the employer when remote workers create “permanent establishments” in foreign countries.
• Discuss the tax impact in the foreign country when workers spend time there. 

Webinar Highlights

• “Employee” v. “Self Employed” – critical tax differences and US tax treatment.
• Overview of the foreign earned income and housing exclusions (FEIE/FHE)
• Where is the “tax home” when working from numerous countries?
• Traps for the unwary - an “abode” in the USA precludes using the FEIE/FHE benefits
• Immigration risks for Green Card holders working abroad
• What if a home is purchased abroad instead of rented? Any benefits?
• Using FEIE/FHE versus FTC and cases of “overlap”
• Tax reporting - Special reporting requirements may come into play when working overseas (FBAR, Form 8938 and numerous other forms if a foreign entity is created to run the business such as Form 926 and 5471)
• Spouses – US or NRA? Making a Section 6013(g) election.
• Consider if the couple is departing from, or relocating to, a jurisdiction with a community property regime.
• Self-employment tax (SE tax) - a rude awakening
• SE tax and totalization agreements
• Can SE tax be avoided through the use of a foreign corporation?  – Beware CFC / Subpart F and Substantial Assistance and, of course, GILTI
• Owning a CFC – Is it beneficial to make a Section 962 Election to treat the US individual shareholder as a “corporation” instead of an individual
• Physical presence in the foreign countr(y)(ies) and becoming “tax resident” 
• Departing the foreign country – exit tax?
• Physical presence of the employee in the foreign country can cause the employer-company to be dragged into that country’s tax net. Planning!
• State taxes –responsibility for State taxes after having moved abroad; breaking State tax residency with proper planning

Who Should Attend

EA, CPAs and tax advisors dealing with clients who are working abroad or considering it and US employers with workers in foreign countries.  

Credit(s)

IRS CPE Credits: 2 Tax hour