Finding the right balance between traveling and working can be challenging; however, you don’t have to pick just one.

Numerous countries provide digital nomad visas, allowing those who work remotely to turn any location into their office.

According to Sally French, Travel Expert at NerdWallet, “Digital nomad visas act like temporary residency permits for remote workers.” Visa holders can live in another country and work remotely, typically for an employer based in their home country or even as freelancers.

“With the rise of remote work facilitated by the COVID-19 pandemic, the appeal of digital nomad visas has surged,” she stated in an email. However, there are important aspects for Americans to consider when thinking about working abroad.

Which countries provide digital nomad visas?

Many countries have introduced these visas, including sought-after locations like Spain, Portugal, and the Netherlands, as noted by French. “Mexico is also a favored choice for Americans due to its proximity and cost-effectiveness,” she added.

Some nations permit stays for up to a year or more, but the specific conditions vary from one country to another.

How can I obtain a digital nomad visa?

Those planning to travel can typically start the application online. French suggested searching for “digital nomad visa” along with the name of the country to discover its specific requirements.

“Many of these visas come with standards, such as proving a minimum monthly income, showing valid proof of remote employment, and possibly having health insurance,” she noted.

What are the costs of digital nomad visas?

The cost varies by destination, but application fees generally stay under $100, according to French. Additionally, there is usually around a $100 visa fee.

However, there might be other costs involved. “In countries that require health insurance, you may need to get a separate plan that your employer may not cover, leading to more expenses,” she explained.

Also, account for other expenses related to relocating abroad, like foreign transaction fees on credit cards and shipping costs.

How long does it take to obtain a digital nomad visa?

The processing time can differ by country, but it can take as little as a couple of weeks if applicants are prompt, according to French.

Do I need to pay taxes while working overseas?

Indeed, Americans must fulfill tax obligations based on their citizenship, as per H&R Block. “This means your location is irrelevant – if you’re legally recognized as a U.S. citizen and your global income exceeds a certain amount, you must file taxes as a U.S. taxpayer,” the firm stated on its website.

Income from wages, rentals, interest, and dividends qualifies as taxable foreign income. Those who fail to comply could face penalties or even the possibility of losing their passport.

“In some cases, you might owe taxes in both your home country and the country where you are staying,” French added. “Many individuals may find it necessary to employ a tax attorney to help with these tax responsibilities, adding to their costs.”

The foreign earned income exclusion may assist those working abroad in reducing their taxable income if they meet certain conditions. “The FEIE allows you to exclude your foreign earned income from U.S. taxes, potentially lowering or even nullifying your U.S. tax obligations,” according to H&R Block. The Foreign Tax Credit might also be beneficial.