Traveling the world and making a buck or two is freeing. It’s ten times better than sitting behind a desk working for The Man. You are in charge and get to mix the adrenaline rush of being the boss with partying and meeting new people. Oh, they’ll be some time to take in the sights too!
But, it’s not as straightforward as it sounds. As an entrepreneurial traveler, you’re liable to pay tax, and it’s as complicated as ever before. Who do I pay? How much do I owe? And how do I do it? These are all questions working travelers ask.
Here are a few tips which should help clear up the topic.
Bona Fide Clients
Travellers tend to accept money from various sources. As a self-employed hustler, it’s wrong to turn down work because there is no way to tell when you’ll need a job. The problem with this, especially in a foreign country, is trying to understand who is legit. Although it sounds far fetched, some clients will try to use you as a money-laundering outfit and you’ll be implicit in the tax repercussions. Basic AML checks can figure out who is genuine and who is shady. Don’t be afraid to do your research before accepting payment.
When you get paid in different countries, it’s tricky to tell which government deserves the money. Well, technically it’s none of them because they didn’t do anything to help you earn your dough. Still, you have to pay one or else the taxman will turn up on your doorstep. As a rule, pay the agency in the country where you are classed as a resident. For one thing, there’s a good chance you’ll return and don’t want a tax bill or jail sentence hanging over your head. Secondly, the odds are high you’re not on the radar of the nation in which you’re traveling, not if you’re small fry.
Settle A Debt
There is a way not to pay anything for the year. Do you like to travel for long periods? Are you going to be out of the country for half a year? If so, then you need to contact the tax authorities and tell them in advance. It might only be halfway through the tax year, but it’s better to be proactive. No one wants to have to deal with them from halfway across the world. By informing them beforehand, it won’t be as much as a shock when you declare you’ve earned zero dollars on your return.
The Land Down Under
Which country you visit has an impact on your tax contributions. In Australia, you’ll have to set up an Aussie bank account and pay the piper. The good news is this won’t go through your normal bank account so you’ll spend less at home. Some people will think it’s a case of switching one taxman for another, but it’s not. If you use a one-year visa for traveling, there’s a chance you’ll get a rebate.
Do you have any tips and tricks on dealing with tax as a traveler?