Digital Nomad Taxes: Do You Still Owe Your Home Country?

Let’s be real—when you first hear about the digital nomad taxes & the lifestyle, it sounds like a dream. Work from anywhere! Beach in Bali today, mountain café in Switzerland next week, and maybe a quick hop to Portugal just because you can. But then, reality hits: taxes. Yep, even if your “office” is a hammock, the tax man still wants his cut. So, do you still owe taxes to your home country as a digital nomad? Grab a coffee, and let’s break it down together—no jargon, just straight talk.

More Read: How to Become a Remote Worker and Move Abroad Legally in 2025

Why Digital Nomad Taxes Are So Confusing

Honestly, the first time I tried to figure out my taxes as a digital nomad, I thought, how hard can it be. Every country has its own rules, and sometimes you owe taxes to more than one place at once. It’s like trying to play chess on two boards at the same time—while someone keeps changing the rules.

Here’s the thing: most countries base taxes on either citizenship or residency.

Citizenship-based taxation: This is rare, but if you’re from the US, you’re in this boat. The US taxes you no matter where you live or earn money. Even if you haven’t set foot in the States for years, you still have to file a federal return every year2 6.
Residency-based taxation: Most other countries only tax you if you’re a resident. Usually, that means spending more than 183 days a year there, but some countries count things like owning property or having family ties too2 4 5.

I remember thinking, “If I just keep moving, maybe I can dodge all taxes.” Nope. The tax authorities have seen every trick in the book. If you stay too long in one place, set up a business, or even just rent an apartment, you might accidentally become a tax resident.

Do You Still Owe Taxes to Your Home Country?

Let’s get specific. I’ll use the US as an example since their rules are some of the strictest, but the basics apply to lots of places.

US Citizens and Green Card Holders

If you’re a US citizen or green card holder, you always have to file a federal tax return, no matter where you are or where your money comes from. This includes:

Salary from remote work
Freelance gigs
Payments from international clients
Even crypto gains (don’t try to hide it, the IRS is catching up)

But here’s the silver lining: you might not actually owe much, or anything at all, thanks to things like the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit2 6.

Foreign Earned Income Exclusion (FEIE)

If you pass the Physical Presence Test (330 days outside the US in a 12-month period) or the Bona Fide Residence Test (live in another country for a full calendar year), you can exclude up to $130,000 of foreign-earned income for 20256. That’s a pretty big chunk.

Foreign Tax Credit

If you pay taxes in another country, you can usually claim a credit on your US taxes so you’re not taxed twice on the same income2 6.

State Taxes—The Sneaky Surprise

Just when you think you’re in the clear, state taxes pop up. Some states—like California, New Mexico, South Carolina, and Virginia—are notorious for chasing after expats and digital nomads for income tax, even after you’ve left the country2 3. If you keep your driver’s license, voter registration, or even a mailing address in one of these states, they might still consider you a resident.

I learned this the hard way. I thought I was free and clear, but because I’d used my parents’ address for mail, my old state tried to tax me. Pro tip: before you leave, officially change your residency to a tax-friendly state (like Texas, Florida, or Nevada) and cut as many ties as possible2 3 5.

Other Countries: Residency Rules

If you’re not from the US, check your home country’s rules. Most only tax you if you’re a resident, but the definition of “resident” can be tricky. In the EU, for example, 183 days is the usual threshold, but some places (like Cyprus) have even lower requirements4 5. Some countries also look at your “center of economic interests”—meaning where you work, own property, or have family.

What Happens If You Stay Too Long Somewhere Else?

Let’s say you fall in love with Lisbon and end up staying for eight months. Now what? Well, Portugal (and many other countries) considers you a tax resident if you’re there more than 183 days in a year2 4. That means you might owe taxes there, too.

Some countries offer digital nomad visas with special tax breaks—Portugal, Georgia, and Thailand are popular examples2. But you still have to check the fine print. Renting a place, opening a bank account, or starting a business can all trigger tax residency.

I met a fellow nomad who got hit with a surprise tax bill in Spain because he didn’t realize his Airbnb counted as a “permanent home.” Ouch.

What Types of Forms Do Digital Nomads Need to File?

For US nomads, here’s the usual lineup2 6:

Form 1040: The main tax return. Report all income, US and foreign.
Schedule C: For self-employed income (freelancers, consultants, etc.).
Schedule SE: For self-employment tax (Social Security and Medicare).
Form 2555: To claim the FEIE.
Form 1116: For the Foreign Tax Credit.

Miss a form, and you could face penalties—even if you didn’t owe any tax. Been there, done that, paid the fine.

How to Avoid Double Taxation

This is the big fear, right? Paying taxes twice on the same money. Luckily, most countries have tax treaties with each other to help avoid this. The US, for example, has treaties with dozens of countries, and tools like the FEIE and Foreign Tax Credit make it rare to actually pay double2 6.

But treaties don’t cover everything, and sometimes the rules overlap in weird ways. If you’re earning a lot or have complicated investments, it’s worth talking to a tax pro who specializes in expat or digital nomad taxes2 5. I tried to DIY my first year, and it was a mess. Now, I budget for a pro—and sleep way better.

Tips for Staying Out of Trouble

Track your days: Seriously, keep a spreadsheet or use an app. The 183-day rule is everywhere.
Cut ties with your home state: If you’re American, don’t leave any loose ends.
Keep good records: Bank statements, contracts, travel tickets—save it all.
File on time: Late filings can mean big penalties, even if you don’t owe much.
Consult a pro: Especially if you’re unsure or your situation is complicated.

My Experience: The Good, The Bad, and The Annoying

I’ll be honest—I’ve made mistakes. I once missed the FBAR deadline and got a scary letter from the Treasury Department. Another time, I didn’t realize I needed to file state taxes because I still had a US bank account linked to my old address. Both times, I paid fines and learned the hard way.

But I’ve also learned that with a little planning, digital nomad taxes don’t have to be a nightmare. Most years, I owe little or nothing thanks to the FEIE and careful planning. And now, I always double-check the rules before settling somewhere new for more than a few months.

Final Thoughts: Yes, You Have to Pay Taxes—But It’s Manageable

So, do you still owe your home country as a digital nomad? In most cases, yes—especially if you’re from the US. But with the right planning, you can minimize what you owe and avoid double taxation2 6. The key is to understand the rules, keep good records, and don’t be afraid to ask for help.

And hey, if you ever feel overwhelmed, just remember: you’re not alone. Every digital nomad I know has had at least one tax panic moment. Just breathe, grab another coffee, and tackle it one step at a time. The freedom of this lifestyle is worth it—even if the paperwork is a pain.

If you’ve got your own tax horror story or a tip that saved your bacon, I’d love to hear it. We’re all figuring this out together!

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Digital Nomad Taxes: Do You Still Owe Your Home Country?

Why Digital Nomad Taxes Are So Confusing