1. Keep Excellent Financial Records
When living a nomadic life, it’s easy to lose track of receipts, income streams, or what you spent in which country. But for tax purposes, good record-keeping is essential.
Keep records of:
- All sources of income
- Expenses related to business or freelance work
- Travel dates (to prove non-residency)
- Foreign bank account info (some countries require reporting)
- Contracts, invoices, and payment proofs
Use cloud accounting tools like QuickBooks, Xero, or Wave.
2. Consider Creating a Business Entity
Depending on your situation, it might make sense to create a business or legal entity in a low-tax or tax-friendly country.
Common structures:
- LLC (U.S.) – popular for freelancers and remote workers
- Sole Proprietorship – easy to manage, but less legal protection
- Offshore company – complex, but useful for high earners with international clients
Always consult a tax advisor before registering a business abroad.
3. Use a Tax Professional Who Understands Nomads
The biggest mistake digital nomads make? Relying on a local tax accountant who doesn’t understand international tax law.
Instead:
- Look for specialists in expat or international taxation
- Use services like Nomad Tax, Bright!Tax, Taxes for Expats, or Global Expat Advisors
- Join nomad forums for real-world advice on finding trusted experts
4. Plan Ahead for Retirement and Social Security
Just because you’re living the nomad life doesn’t mean you should ignore retirement planning.
Options include:
- Contributing to IRAs or Roth IRAs (if eligible)
- Setting up private pensions or offshore savings
- Paying into social security systems (some countries allow voluntary contributions)
- Failing to file taxes in your home country
- Staying too long in one country and triggering tax residency
- Mixing personal and business finances
- Not reporting foreign bank accounts (like FBAR for U.S. citizens)
- Assuming cryptocurrencies are tax-free (they’re not!)
Be proactive and avoid penalties that can follow you around the world.