2

I've worked full-time in the United States for a software development company with a F-1 Visa (OPT). Now, I am going to be traveling and working remotely for that company.

Facts:

  • I am not a U.S. citizen

  • I will be traveling to many countries but I am planning on staying maximum of 6 weeks in each country.

  • I am currently a full-time status paying federal taxes as well as California taxes.

  • As of now, I'm thinking of traveling indefinitely and no plans to settle in one country

Now, I have some questions regarding taxes:

  1. To whom do I need to pay my taxes?
  2. Do I need to pay my tax in the United States at all? If so, do I need to pay Social Security and other social coverage? Do I need to pay my tax to California where the company is located?
  3. What benefit do I get from having a "contractor" title as opposed to "full-time" in terms of taxes? (All the perks such as vacation days will be the same)
  4. Should I get paid to my personal savings account in the U.S. or in another country? What are some benefits and restrictions?

Thanks a lot in advance.

2

To whom do I need to pay my taxes?

To each country you'll be working in. In addition, you should check the laws of your country of citizenship, some have rules that define their citizens as tax residents unless they're tax residents elsewhere.

If you're moving to a different country every 6 weeks - you may end up with paying taxes to 8-9 different countries each year.

Keep in mind that many countries forbid employment for tourists, so you'll be very limited about where you can go with this. Unless you want to break the law, that is, but that is a dangerous game to play. Once you get arrested/deported due to an immigration law violation, you're likely to be deported to your country of citizenship and will require visas to many other places even if you're exempt due to citizenship (for example, if you get deported from any Schengen country, you'll be required to get a visa for any other Schengen country after that).

Also, in many countries you're required to register for, collect and pay VAT on services provided.

Do I need to pay my tax in the United States at all? If so, do I need to pay Social Security and other social coverage? Do I need to pay my tax to California where the company is located?

No, but you may end up being considered California resident even if you're not US resident for Federal tax purposes (as is the case when you're on F1 OPT).

What benefit do I get from having a "contractor" title as opposed to "full-time" in terms of taxes? (All the perks such as vacation days will be the same)

Depending on the country you're working in this may have different implications. However, it is very unlikely that you'll be able to pull this off as an employee since it will require your employer to register in all the countries you'll be working at and I doubt they'd want to do that.

Should I get paid to my personal savings account in the U.S. or in another country? What are some benefits and restrictions?

Depending on the countries you'll be working at and the countries of your citizenship there may be some limitations. You'll have to check that.


To clarify certain issues with regards to taxes that came up in the comments:

  1. Employment defined: providing personal services for a pay.

  2. Income source: Income is sourced to the country where it is earned. Income is earned in the country where the services are provided. Services are provided where the provider is physically present.

  3. Foreign income vs. Domestic income: Income that is not sourced to the country (i.e.: not earned for services you provided while being in that country), is considered foreign by that country.

  4. General rules of income taxation: With the notable exception of the US, most countries tax everyone on income sourced to them, and residents on worldwide income. The US considers its citizens to be its residents regardless of where they physically reside.

  5. Why is this different from a writer answering emails: writer doesn't provide services.

  6. Why is this different from a 1%-er answering emails: 1%-er doesn't provide services.

  7. Why is this different from a contractor answering emails: it is not.

  8. Why contractors don't end up in jail for answering emails: tax treaties protect them in these cases. Most tax treaties between most countries exempt short periods of work from the sourcing definitions.

  9. Why tax treaties won't help the OP: he plans on not being resident anywhere, tax treaties only protect residents of one country from the tax laws in the other.

  10. Why people don't like hearing this (or similar) answers: because people don't like hearing that they have to pay taxes. Please don't downvote this answer if you're one of these people, its not my fault that you have to pay taxes.

With regards to immigration - talk to an immigration adviser/attorney for each country you're considering working in. For most - working without an explicit authorization would be against the local law. For definition of working see #1 above, however many countries (including the US) don't consider you being paid or not as a factor.

  • 1
    Are there actually countries where "forbid employment for tourists" extends to people who simply are present in the country while they do work for an out-of-country employer? It's not totally clear from the question, but I was interpreting the OPs situation as akin to, say, a writer or consultant traveling around while sending emails and the like back home. If this counts as employment then many one-percenters who answer work emails while lounging poolside in the Bahamas may be vulnerable to prosecution :-). – BrenBarn Feb 21 '15 at 23:43
  • 1
    Thanks for the in-depth response. When you mention "employment", do you mean working for a company and getting paid in the country I am staying in? Then, I would need an explicit authorization (i.e. visa). But, if I am getting paid in the U.S. from a U.S. based company, like @BrenBarn said, how would that be illegal? Is there some reference you could point me to? Thanks again. – user 013948 Feb 22 '15 at 0:12
  • 1
    "However, if the non-permanent resident has the amount paid outside Japan relating to domestic source income in the year, the payments made from abroad to Japan are first deemed to be remittance relating to domestic source income" That's on page 3 here: nta.go.jp/tetsuzuki/shinkoku/shotoku/tebiki2014/pdf/43.pdf, read the whole document about the taxation rules in Japan. As to working without visa: see here: tokyo-foreigner.jsite.mhlw.go.jp/english/seekers_1/spec/… I'm sure you can do similar Google searches yourself for any other country. – littleadv Feb 22 '15 at 1:07
  • 1
    I'd appreciate the downvoter to explain what is incorrect. Please don't downvote just because you disagree with the reality of the world. – littleadv Feb 22 '15 at 1:45
  • 2
    @BrenBarn but the OP asked about the letter of the law. He asked whom to pay taxes to and whether being paid in this or that way or for this or that kind of work matters. If the OP wants to work illegally and not to pay taxes - he doesn't need our permission. – littleadv Feb 22 '15 at 3:16
0

First of all, OP is an F1/ OPT student and could fall within the Non-Resident Alien category which means that your tax filing is a little bit complicated from a Resident Alien or US citizen. US citizens and Residents have to report their domestic and worldwide income but I think you don't qualify for the significance presence test. You are permitted to file for taxes as a resident If you've been in the US for 5 consecutives years as an F1 student. I'm not sure you meet this test. Ok, enough of the immigration talk, lets get back to taxes! because you're a non-resident alien in the US, you would have report to every country you visit and work . check with the tax laws of every country you visit and be sure not to fall into any tax evasion trap. In case you decide to report all your income in the US, make sure you're exempted from social security and medicare contributions. Visit the IRS Website and look for publication 519.

  • In fact, I have been in the U.S. for longer than 5 years with a F1 visa, so that would allow me to file for taxes as a resident. Does that mean I need to pay social security and other welfare taxes? What about the California state? I appreciate your help. – user 013948 Feb 23 '15 at 0:12
  • I think the OP is referring to employment after his OPT is finished. – littleadv Feb 23 '15 at 2:43

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.