Now we get to the tax deduction for digital nomads.
If you are on a temporary work assignment, defined as more than one day but less than one year, your housing, meal, and travel expenses are deductible. Note that you have to have a permanent residence in the US to have a temporary assignment. If you don’t have a permanent US residence, you are considered an itinerate worker, and your home is where you are now. None of your travel, housing, and meal expenses will be deductible.
You can reimburse actual expenses if your business is in a corporate structure (S Corp, C Corp, or LLC that has elected to be taxed as an S Corp or C Corp). If your business is in a Schedule C (Sole Proprietorship) or Partnership, you can take a per diem expense deduction. The IRS regularly publishes the per diem table, which tells you the amount you can take as a per diem for housing and/or meals based on the city you’re in.
Since a digital nomad is, by definition, living in a location temporarily, this could be a significant deduction for you. It’s tax-free to you (live tax-free!), and it’s a tax deduction for the business.
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