Remote working has easily become one of the biggest trends to have emerged from the pandemic as companies work to keep their employees safe and happy with their work environments.
Now, as some travel restrictions loosen, remote working opens a new opportunity for employees to move abroad to live internationally or become a digital nomad.
Not only does this provide workers with the ability to explore new lands, it also offers them tax benefits. Although American citizens working abroad still have to file a U.S. tax return each year, you may be able to pay nothing in income taxes.
This requires some planning first. For instance, some states may still require you to pay state taxes after you’ve moved abroad depending on their rules and laws. However, some workers who are planning on moving abroad can avoid this by first moving to an income tax-free state prior to their international migration.
Additionally, in order to decrease their U.S. federal tax bill, workers will need to spend at least 330 days outside of the U.S. after moving abroad. This allows them to claim a tax benefit called the Foreign Earned Income Exclusion, which states that the first $108,700 of earned income can be excluded from federal taxation.