Digital nomad or exfat? In this section we'll cover what changes if anything, should you decide to stay longer term in a given country? What happens when you decide to stop traveling so much and set up a base? Let's think about this for future considerations. So, what should you look out for when you consider staying in a given place longer term? What are some pros and cons of living more of the digital nomad versus the expat life?

We'll cover this in this section as well. Many people lived a life of a perpetual traveler or digital nomad. Some find a balance of the best of both worlds and maybe have a few bases around the world that they tend to come back to. And others may eventually find one place to call home. Whether they settle down for family, for love for business or for general lifestyle. Here's what you need to know if and when you're considering putting down roots.

Generally, we would think of a digital nomad as having no one fixed base. Often, they may not even have a permanent or long term residency visa in any other country than their home country. So perhaps perpetual travel may be their only option at first. For those considering becoming more of an expat in a given country, usually the first thing they need to sort out is a visa. There are a few countries around the world that offer the option to get a residency visa when you're self employed, and a few that are even beginning to offer a visa targeted towards our community of digital nomads. If you've got a longer term residency visa in place, then the next thing to consider is whether you'll become a tax resident of that country.

Sometimes it's unavoidable and if it is You'll need to understand how that impacts you as an American. So you should find out the difference between how residents and non residents are taxed in that country. You should be aware of if you have obligations to spend a certain amount of time in that country to maintain your visa. Find out if there are any restrictions on owning property based on your visa type or your citizenship, and find out if that country has a tax treaty with the US. From there, you can determine if you'll need to find a tax professional in that country. Keep in mind that very few competent tax professionals can ever truly specialize in more than one country's tax law.

So you'll most likely need to expand your team of advisors. Ensure you understand what tax and reporting requirements apply in that country. then discuss them with your US tax advisor to make sure that your overall worldwide tax picture makes sense to you. You should be aware of if and when treaty provisions will apply to you. And whether there is what's called a social security totalization agreement in place with that country. totalization agreements are separate from general double taxation treaties, and they address where you should pay self employment or Social Security tax.

There are many pros and cons to living more like an expat and less like a digital nomad or vice versa. And in my experience, many people will find out what both of those are like over the course of their location independent journey. They might start out as a digital nomad and become more of an expat or vice versa and they may go back and forth even a few times. Really just find the fit that works the best for you. And then make sure you've got got your bases covered in terms of taxation. But as a general rule, I suggest not letting tax be the driving force in your decision making.

Because no matter where your lifestyle leads you, when you have the right professionals in place, then we can help you sort out the tax side of things. But you really have to make sure that your lifestyle is set up that it works for what you need in terms of your personal growth and your business. But let's dive into a little more of the specifics of the pros and cons. So when you have more of a fixed base in another country, such that you may qualify as a bona fide resident VFR test for the foreign income exclusion, then generally that allows you to spend a bit more time back in the US each year without having to be so strict about counting your days. So it gives you a bit of flexibility there. Sometimes if you're settled down in a particular country and you have a legitimate residency visa, there may be can be a path to citizenship at some point if that's something that you're interested in.

Sometimes certain countries may only make certain investments on open to legitimate legal residents. It's easier to explain that customs what you're doing. If you are really a legitimate resident of a country versus just being a digital nomad, you'll find out once you start traveling as a digital nomad that sometimes it's easier to explain that customs if you have sort of a more traditional path. And then there's the lifestyle advantages at some stage if you want to have perhaps more stability or more of a place that you can call a permanent home. Of course, there are some downsides as well. Probably the most significant is if you are becoming a legitimate resident of another country, there's oftentimes an obligation to pay tax there as well.

And then if their taxes are on average higher than us taxes Usually you wouldn't pay fully double tax in both countries, but you would generally pay at the higher of the two rates. We'll talk about that a little bit more in the foreign tax section that's coming up later in the course. And then finally, another con is of course, it's just another country that you need to file additional paperwork in. So you know, you're giving up some of that freedom of being a digital nomad for a bit more of the stability of being more of an expat. So, I think both options are great for people and I think that you know, keep keep your mind open to them really. And just so you know, for your future planning, what it looks like if and when you do become more of an expat and less of a digital nomad.