Digital Nomad Considerations
Some key things that digital nomads need to consider before hitting the road include a comprehensive insurance plan, tax payments & tax savings, alternate channels to receive mail, voting registration while being abroad, and essential gadgets. We have provided below a detailed overview of these considerations, along with their necessity.
1) Life, Health, and Travel Insurance
- A total insurance plan, which includes life, health, and travel insurance, should be one of the key considerations of a digital nomad.
- Digital nomads need to maintain their health and bodies irrespective of their location, and hence need health insurance that covers routine care and medical emergencies. A digital nomad must opt for a health insurance plan that covers long term life abroad for both hospital and out-patient care, covering illnesses and medical emergencies.
- Travel insurance should be a key consideration for digital nomads to handle issues like lost baggage, trip cancellations, delayed flights, emergency healthcare, adventure & sports coverage, accommodation problems, and natural calamities, including emergency evacuation.
- A life insurance plan helps digital nomads to not only ensure their own lives but also secure the well-being of their family members after them. Hence, life insurance should be a consideration in a comprehensive insurance plan for digital nomads.
- Additionally, it helps in taking care of the exorbitant death-related expenses. In the US, the average traditional funeral costs $8,755. A digital nomad who passes away outside the US must have their body repatriated, and this process costs between $10,000 and $20,000 or more on top of funeral costs. A life insurance plan helps family members to take care of these expenses without financial stress. In case of no event, digital nomads can use the policy’s death benefit for final travel expenses, paying off remaining debt, leaving money behind for children, or something else.
2) Tax Payments & Tax Savings
- US-based digital nomads need to also consider their tax payment and tax savings avenues while earning in other countries. This is because all US citizens or green card holders are subject to US tax on their worldwide income.
- It is a mandatory requirement for all digital nomads to file a US tax return each year if their income is over the minimum filing requirement. Hence, all digital nomads need to consider their tax filing and ensure that the same is done on time.
- One key consideration for digital nomads while filing tax returns should be to look out for ways/norms through which they can reduce their tax liability. One such avenue is the Foreign earned income exclusion (FEIE) clause that allows digital nomads to pay zero US income tax on about $100,000 of foreign earned income annually. To qualify for the FEIE, they need to pass the physical presence test, which requires them to spend at least 330 days outside the US in any 12-month period.
- Some other tax considerations that US digital nomads need to take into account include foreign tax credit that allows them to deduct the taxes paid in another country from any US taxes payable, Foreign Account Tax Compliance Act (FATCA) that requires them to declare more than $200k held in foreign assets in their return, and Foreign Bank Account Report (FBAR) that mandates them to declare assets above $10,000 in all foreign accounts (checking, savings, pensions, etc.).
- Due to their frequent traveling, digital nomads should consider keeping track and organizing their foreign income into various categories and also manage their tax-deductible expenses in a spreadsheet or some other digital tool. This will ensure that none of the vital tax information is missed and can be easily referred to by the tax preparer at the time of filing tax returns.
3) Receiving Mail
- Another key consideration that digital nomads need to have before going on travel is to ensure that they receive their important mail on time. They need to make sure that they are connected to all their clients through a secure channel of communication, including one for receiving mail. This ensures that they do not miss out on important business or other communications while they are traveling.
- Digital nomads are also likely to receive confidential and vital mail from their bank, credit card company, and other financial institutions while they are traveling. There are several documents like tax documents, bank checks, credit card statements, driver’s license, signed client agreements, etc., that are sent through the mail. Since there is a high risk of such sensitive information getting stolen, misplaced, or damaged, digital nomads need to consider alternate ways of receiving mail during their travel.
- Also, changing their address too often can translate into unprofessional behavior or unreliability on the part of digital nomads. Hence, they need to consider a solution through which their mail forwarding requirements are taken care of at a single facility.
- A virtual mailbox is one of the ways that digital nomads can consider to continue receiving mail while they are traveling. A virtual mail address allows digital nomads to receive mail securely during travel. Additionally, it is a more flexible process as compared to the change of address, which requires detailed documentation to be filled for a P.O. Box.
- A virtual mailbox provides a street address to the digital nomads where they can receive all the important mail without having to travel to a physical location. It provides them with a proper street address where they can receive mail from any carrier.
- A virtual mailbox service also provides digital nomads with instant notification irrespective of their location. They can then consider whether they want to order additional mail forwarding services like mail scanning service, forwarding to another local or international address, forwarding to an online account, etc. Also, since the mail is uploaded to a cloud account, digital nomads have the flexibility to view it as per their convenience and always have a backup copy to refer to whenever they need it.
4) Voter Registration
- Digital nomads need to consider voter registration to ensure their participation in the democratic election process of the country. Registered voters can make their voices heard by participating in the election process of the President and their state and local representatives, as well as decide on local and statewide issues.
- To be able to vote in the US while being abroad or request an absentee ballot, digital nomads need to register with the electoral register. In order to register, digital nomads need to have a fixed address. Since many digital nomads travel frequently and do not have a permanent US address, they can consider using a relative’s address.
- Digital nomads, while being abroad, need to send in a request ballot form every calendar year they plan to vote in by filling out the Federal Post Card Application (FPCA). They can consider filling-out these forms through organizations like Vote from Abroad and the Federal Voting Assistance Program, among others. These resources allow digital nomads “to track their voter registration and ballots and can point them to state-specific voting guides, important election dates, identification requirements, and candidate finders.”
- According to the U.S. Department of State, ballots are generally mailed to voters at least 30 days before the primary, special, and run-off elections. Also, states will send overseas voters a blank ballot electronically or through the mail, 45 days before November general elections, such as the one taking place this year.
- Once the ballot is filled out, digital nomad voters “can drop off their ballot request or official ballot at the nearest US embassy or consulate using US postage or a postage-paid envelope.”
5) Important Gadgets and Tools
- Digital nomads need to ensure that they are equipped with all essential gadgets and tools before hitting the road. They need to consider and choose from the various gadgets and tools that would be useful for them during their travel.
- Some key gadgets and tools that they can consider taking with them while traveling include a power bank, universal plug adapter, and a cord organizer. A power bank comes in extremely handy while traveling to avert phone battery outages and remain connected with the family, especially while traveling to exotic destinations. A universal plug adapter allows digital nomads to be prepared for whichever country they visit, as it can be adapted to fit the majority of plug sockets globally. It also comes with USB slots, which allow charging multiple gadgets from one outlet. A cord organizer organizes the various cords into one handy pouch so that they do not entangle and get damaged.
- Digital nomads, owing to their frequent travel, also need to consider having a small first aid kit for minor injuries or illnesses. They can have a small pre-made first aid kit that will contain items such as bandaids, tweezers, and antiseptic cream, along with medicines of regular use as well as traveler’s favorites like Imodium.
- As per NomadLife, some basic but essential gadgets that digital nomads must consider including in their backpack include noise cancellation headphones, anti-glare filter, adjustable laptop stand, packing cubes, USB stick, external hard drive, portable WiFi router, a tablet device, and a comfortable day pack or laptop bag, among others.
- Also, digital nomads who are avid readers must consider including a Kindle Paperwhite in their list of digital travel gadgets. It saves the space of paper books and can last for several weeks without a recharge. Additionally, it has an in-built backlight, which means that digital nomads can continue to read at places during their travel where bedside light is not available.