Remote Work Abroad and Digital Nomad Taxes in 2026: What U.S. Expats Must Know

The Growth of Remote Work Abroad

Remote work continues to trend in 2026. More Americans are living overseas while earning income from U.S. employers or operating freelance businesses.

However, the United States taxes citizens on worldwide income.

Before assuming you are exempt, review whether U.S. expats must file taxes while living abroad.

Foreign Earned Income Exclusion (FEIE)

The Foreign Earned Income Exclusion allows qualifying expats to exclude a portion of earned income.

Eligibility requires meeting either the Physical Presence Test or Bona Fide Residence Test.

Our detailed breakdown of the Foreign Earned Income Exclusion rules explains qualification requirements and limitations.

Incorrect application can create audit risk.

Self Employment and Remote Contractors

Digital nomads operating as freelancers must consider self employment tax. Even if income is excluded under FEIE, self employment tax may still apply.

We regularly assist clients with self employment tax planning for expats, especially when totalization agreements may apply.

State Tax Residency Complications

A growing issue in 2026 involves state tax residency. Some states maintain strict standards for determining residency.

You may still owe state taxes unless you properly sever ties.

Learn more about state tax obligations for Americans living abroad before relocating.

Why Digital Nomads Need Specialized Filing Support

Remote income structures, foreign bank accounts, and shifting residency create complexity.

At Expatriate Tax Returns, we specialize in remote worker and digital nomad tax filing services, helping clients:

• Apply FEIE correctly
• Strategically use foreign tax credits
• Maintain federal and state compliance
• Avoid reporting mistakes

Frequently Asked Questions