215. Digital Nomad

July 20, 2021

In today’s episode, we get together with our third host William Jeffries, who has been traveling the globe for the past few months, to discuss the pros and cons of living the lifestyle of a digital nomad. We hear from William about the challenges of working in different time zones and how daylight savings time in the US affected his capacity to co-host The Rabbit Hole podcast. William breaks down the difference between being a fast or a slow digital nomad and shares some of the logistical challenges he faced, like finding fast reliable internet in India and building a social network abroad. Later we discuss the tax and visa challenges inherent to the digital nomad lifestyle and how the US tax code differs from the rest of the world. Join us today as we dive into the digital nomad lifestyle and find out our hosts’ dream digital nomad travel destinations!

 

Key Points From This Episode:

  • We talk to our third host William about the digital nomad lifestyle.
  • A rundown of the pros and cons of being a digital nomad.
  • How daylight savings and a change in time zones affect the work that you can do.
  • The difference between the fast and slow nomad lifestyle.
  • The logistical challenges of being dependent on reliable internet in different countries.
  • How companies can utilize employees across the globe so that they always have experts on call.
  • How regulations and difficulties in transferring knowledge can limit how you use your global employees to be on call.
  • The complications around visas and taxes while pursuing a digital nomad lifestyle.
  • How the tax code differs for Americans versus digital nomads from other countries.
  • Why filing for a foreign income exclusion makes it more likely that you will be audited.
  • Our hosts share their dream destinations!
  • And much more!

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Transcript for Episode 215. Digital Nomad

[INTRODUCTION]

[0:00:01.9] MN: Hello and welcome to The Rabbit Hole, the definitive developer’s podcast, living large in New York. I’m your host, Michael Nunez. Our co-host today.

[0:00:09.3] DA: Dave Anderson. 

[0:00:10.1] MN: And our producer.

[0:00:11.3] WJ: William Jeffries.

[0:00:13.2] MN: Today, we’ll be talking about how to be a digital nomad and what are the pros and cons? I mean, we got a pro in the building, ladies and gentlemen. I mean, we got William who has been literally across the globe the past couple of months, many months now.

[0:00:30.5] DA: I feel like I’m whatever is the opposite of a pro. I don’t want to say I’m a con because that’s not right but.

[0:00:39.8] MN: I’m definitely a con, I mean, you’ve traveled some, I think we’re going to get into that as well, you have some insight and you did some programming away from home. I’ve been in Larchmont the whole time, that’s been me.

[0:00:54.7] DA: William has like emerged from the clouds again.

[0:00:59.4] WJ: I’m back baby.

[0:01:00.9] MN: He’s back, baby. Let’s go. Yes. We finally – one of the difficulty, I’m going to jump into the con I imagine. This was a con for us. It definitely was the time zone. William has been to many places so far and back when you were in South Korea, for those who are listening was when they’re, where’s William in these episodes? He’s not appearing anymore.

When the United States went to daylight savings, we lost William, that was it because the time difference was really bad for us to work together, which was you know, can be a problem at your workplace wherever you’re’ working.

[0:01:37.2] WJ: Yeah, absolutely. Time zones are a huge limiting factor. If you have core hours, that’s just going to shave off part of the globe that you're not really going to be able to work remotely from, unless you are really willing to screw with your time, your sleep schedule.

[0:01:54.0] MN: Yeah, it was just like, the time changed, you were barely pushing it with the time that we had before and then the daylight savings moved it an hour back, you were like, “No, I’m not waking up that early.” You’re going to have to see me the next season.

[0:02:13.5] WJ: Yeah, it’s true that one hour made a big difference, it was like, difference between painful and impossible so no, not happening.

[0:02:22.8] DA: Yeah, there’s a certain hour that after you’re up past like, it’s no longer gaining you character, you’re just damaging yourself.

[0:02:32.4] MN: I imagine going to one of the pros of digital nomad life is being able to wake up and start the workday but not at home, you’re in a new world and a new life. What was that like working away from your home and your desk?

[0:02:51.1] DA: I do appreciate being able to see a mountain or some kind of natural space. I did like a short working vacation travel thing in the catskills and that was pretty nice just being able to step out of your space and be in a different place and more recently, I was traveling with some friends and it was nice to also just kind of be like in a different context where the people who you’re with is different as well. I kind of miss the ability to just kind of have casual interactions with people who are also working on the same space as you.

That was kind of nice to be able to recreate that with a really chosen set of people. Normally, you just work with whoever you're working with but you get to pick ideally who you’re working with or who is traveling with you. It was kind of nice.

[0:03:43.7] WJ: I think for me, it kind of feels like home. I mean, I guess there are different nomading speeds, right? You can be a fast nomad and be changing every week. I don’t want to have to do that much planning. When I pick a spot, I’m there for months and so my Airbnb feels like home to me and I guess it’s become sort of a new normal.

When I’m walking around in Budapest, it doesn’t feel like I’m travelling, it feels like this is my neighborhood and this is my regular coffee shop, and here’s the old lady who hates me, very resentful of my obnoxious difficult ice Americano order. She has to go to the back to get the ice because fucking nobody drinks ice Americano’s in Budapest, it’s just me.

[0:04:38.9] DA: Yeah.

[0:04:40.2] MN: Just you, she had to go shave ice because of you.

[0:04:42.2] DA: I think you’re up to state size in general.

[0:04:45.8] WJ: Yeah, I know, right? They want to give me all the sparkling water, every time, I gag, why are there bubbles in this? 

[0:04:55.7] DA: Send it back. Yeah, I think that’s a great point because both times, I have worked remotely, it has been for on the order of a week and maybe shifting locations a couple of times during that and you have to deal with the very ability of, “Okay, this place they’re working at is actually really comfortable and it’s great and the Internet works.” Then you move to another place and then the Internet stops working and the space is less comfortable, it’s more noisy, there’s more background noise over – I think it’s in a cabin and cat skills that I spent a week at, it was just like, “Wow, there’s no room at all for us to exist.”

I was literally working in a Harry Potter closet underneath the stairs because it’s just like, it just was one room. I think that going at it from William’s side where you don’t have an apartment back home and you’re picking a place and you're sticking with it and settling in, you can kind of make that your life as opposed to still having all of those attachments back home that you have to come back to and pay for also, a way.

It makes it feel less real and permanent and it’s more of a temporary fantasy that you’re hanging out in and even still have to do the work. I think that if I’m doing a temporary thing in the future, I would rather just be on a vacation because you’re already kind of all in. I like just being all in wherever I am and I think that’s the same philosophy that William is bringing up the table. To just like, just being all in.

[0:06:44.8] MN: Right, just staying for the month or a couple of months until the next place. You mentioned fast versus slow, William, I kind of want to dive into what would it be like, do you know anyone or does anyone here know anyone of any fast nomads? Do you stay for a week and then you move to a different country altogether or do you move within the country because that makes it a little easier to deal with the logistics of moving? I’m curious what the fast nomading implies.

[0:07:18.2] WJ: I have met people who say that they are nomading and then they’re only in town for a week and I’m always confused as to how that is worth the time and energy that it takes to book a flight, find an Airbnb, get a co-working space, make sure that there is fast Internet everywhere and then somehow also have time to enjoy the place that you are. 

I think that maybe, if I were travelling with someone else, if I had a girlfriend or a wife and especially if they were not working and could really handle all of the logistics stuff or if I were now working and could handle all of the logistic stuff for them then maybe that would have more appeal. I mean, it does sound fun to get to see more places.

[0:08:03.7] MN: Right. It does sound like a headache though. 

[0:08:07.2] WJ: Yeah, the Internet and having a conducive working environment, it’s hard. I mean, it depends on what country you’re in. When I was in South Korea, it was very easy to find fast Internet because that’s a country that’s really well known for that.

When I was in India for example, that was a major concern. If you don’t’ have a good workplace with reliable Internet and reliable power, in some places, you can’t bank on there being electricity all the time. That can be a real headache. If you do the planning and you find a co-work that has good reviews and consistent Internet and they have a backup generator, if that’s necessary, then you can chill for a while and it would be nice.

I mean, you can lose a whole work day if things go wrong and if you’re only there for a week before you have to do it all over again.

[0:08:57.1] MN: Yeah, that’s true.

[0:08:58.0] DA: I think if you’re working with people who are not travelling and not living the life, then I feel like it would kind of be kind of a friction where you’re like okay, well, I don’t want to be really difficult. I want this to be as easy and frictionless as possible to collaborate with people, rather than being, “Oh, this is just like, that guy with those freaking nomad problems.”

[0:09:27.3] MN: Yeah, that’s true. They hate like having to update your schedule and then update your schedule for your workplace might be a little hard for your entire team, that’s like the overhead that you have to keep in mind. William, yeah, you mentioned the idea of reliable Internet. I imagine that that is a key component to traveling because you want to make sure that you’re always connected, ensuring that the co-working space that you live in or your home or your Airbnb has the Internet to support you and the things that we do.

[0:09:58.7] WJ: That’s one of the cons is that you're constantly looking for good Internet, right? There are other cons too, it can be kind of isolating because you’re going to a new place where you don’t know anybody, sometimes on the other side of the world from everybody that you know and are friends with. That can be tough, there are some groups that you can join like if you join hacker paradise remote year WiFi tribe, they’re a bunch of these sort of services where they create a cohort of people who all travel together and then they handle all the logistics for you.

It’s pretty expensive but you get a lot for your money, you’re guaranteed to have fast Internet, a coworking space, there’s a built-in community and it makes it so you can switch every month and have that not be too burdensome. I guess that’s an option. I haven’t done one of those, I’ve always done on my own organizing and planning and I’ve just relied on meetups and local Facebook groups and meeting friends and making connections on my own.

There are some other good resources for that nomad list. The Slack organization there is tremendous, I’ve met a lot of great nomads just by talking in the Slack chat for the country and finding out who is there and setting up times to meet up. If you – especially if you are a fast nomading and you don’t’ really have time to do all that organization, I think it could get pretty isolating. 

I think another thing is it kind of changes your life experience in a way that sometimes makes it harder to relate to people because most people are not nomads. You go to a meetup and you want to talk to somebody and there are a lot of expectations about what your life is like and what your experiences are like that don’t hold true. There can be like little confusions. 

One thing that I’ve noticed is that, sometimes you can come across as arrogant or obnoxious because for you, you’re just talking about what you were doing last month and for them, it’s like, “This guy’s bragging about all of his world travelling” or there’s like a sort of an expectation that, “Oh, if you’re here, you are invested in this place” to sit like to a greater degree than a nomad usually is.

“What do you mean that you don’t care about the local sports thing that’s happening?” I’m in Budapest during the Euro cup, I don’t know anything about soccer and there’s like a sort of a, “Why are you even, I don’t understand, how can you not care about this?”

[0:12:47.6] DA: Yeah, why don’t you want to get into a fight?

[0:12:48.2] MN: Yeah, this is important to us.

[0:12:51.7] DA: I’ll knife you over this. In fact, if you only cared a little more, I wouldn’t knife you.

[0:12:55.1] WJ: There are stabbings over soccer, people do that, it’s crazy.

[0:12:59.4] MN: Yeah, people got to chill out bro with soccer. Stop shanking people.

[0:13:03.7] DA: Original handball or whatever esoteric sport.

[0:13:08.9] MN: Yeah, I imagine that being a thing though like, “Oh, you’re just here and having our resources at your disposal and ready to dip out to the next place you don’t really care about the community” and stuff like that. I imagine it’s a feeling people might have.

[0:13:24.5] WJ: Right, there’s a sense that like, “Why would I bother investing in you as a person? Why would I waste my time on you? That’s a transigent, you're leaving soon.”

[0:13:33.8] MN: That makes sense, you’re more likely to be connected with other nomads who happen to be in that area.

[0:13:41.4] WJ: Yeah, but even they are also transigents.

[0:13:45.8] MN: Yeah, right and you don’t want to – you, yourself as a nomad don’t want to invest the time in that because they could just be in a completely different place than you but yeah, I imagine while people are nomadic in these places, it helps. People should figure out ways to help the community that they’re in at that time. William, I’m not telling – I’m not saying that you should go out and do some soccer stabbings but I’m sure there are different ways to help in the community while you’re there. 

I think yeah, nomad list is pretty cool. I’d seen – I have been to the website just now and was fiddling with the tool and it seems pretty dope to be able to find things that will be curated to a nomad’s needs, which is pretty dope. 

[0:14:26.3] WJ: Apparently, the word I was looking for was transient, not transigent. Transigent is a person who is willing to compromise, which I guess I also am.

[0:14:36.0] MN: Yeah, as a nomad you got to compromise on certain things, you know?

 

[0:14:40.3] WJ: A transient is a person who’s staying or working in a place for a short time only. 

[0:14:45.7] MN: Got it. I do have a question William, as you’ve been travelling as a developer, you may have existed in time zones where the United States are sleeping. Do organizations find that they use the people who are nomading as their on-call people and then you just end up doing on-call related, you’re on-call throughout the day as you’re working regularly? 

[0:15:08.6] WJ: I think that in an ideal world, yes. If you work at a company where they have a global staff and can do follow the sun for on-call, that’s a big win for companies. I think that most of the time that’s not how it goes. I think it’s difficult to share knowledge across time zones in a way that makes everybody around the world effective at on-call and I think there are also some regulatory and compliance requirements that make it difficult. For example, you might not be able to grant production access to people who are offshore. 

[0:15:46.7] DA: These are like GDPR, things like that? 

[0:15:50.2] WJ: Yeah, like HIPAA or other, there’s just like it may be possible but would require a lot of extra legal hoops that you’ve had to jump through and so companies don’t want to bother. Also, a lot of companies will hire overseas through some kind of third-party service, so maybe you hire an employer of record to do all of your overseas employees so that you are not subject to local compliance requirements and you don’t have to worry about how you pay people in the Philippines and what benefit requirements are or maybe you’re just hiring contractors who have their own company. 

Then you’re talking about somebody who is not even really a direct employee. Do they get prod keys? Yeah, I think it can be tricky. I think at a minimum, you can get some support if you have people who are in other time zones even if they don’t have products, as in can’t solve the problem. They might be able to figure out whether or not this alert is really worth waking up a secondary for and then you know, filtering out some of the pages. 

[0:16:58.7] DA: Yeah, that makes sense. That first understanding of what the actual issue is and translating it into a proper English thing is challenging especially if you’re getting woken up at 3:00 in the morning.

[0:17:12.0] WJ: Right, yeah. You can do a first pass and have a general sense of what the problem is and then when you page somebody who actually has to login to production to mess with it, you can give them the rundown and be an effective pair who is not tired. 

[0:17:26.0] DA: Speaking of local regulations, something that I’m a little unclear on is how things work with respect to like visas and taxes and things like that. It seems kind of complicated. Mentioning is that like some victorious pieces like you do limited business things as long as you’re not doing things in the country or taking business away from people in the country so you don’t have to worry about travelling with your laptop through some places but other places, it seems like a little more of a grey area. 

[0:18:03.9] WJ: Yeah, I mean like the absolute strictest interpretation of the tax code would be that if you even work in another state in the US for one day, then you’re going to need to file taxes there. If you want to get really extreme with it, you could but the reality is that those requirements around to the tourist visa that you’re not at work, that’s to keep you from competing with locals for jobs. If your work is overseas, the country is not really interested in enforcing these rules. 

Maybe if you were there super long-term like over a year in one country, they might want you to establish residency and start paying taxes because you might not be working for a local employer but yeah, I guess you are kind of using public services at that point. For the most part, it seems like nomads who are on tourist visas just work remotely and don’t tell anybody and there is a little game you can play if you are from any country other than the US. 

Where if you are out of your country for a 183 days a year, then you are no longer a tax resident and as long as you stay out of any other country for more than a 183 days a year, you avoid being a tax resident there. There is like kind of not pay taxes, that’s a thing that is changing now where countries are starting to realize more and more people are doing this. We need to figure out a better test for a tax nexus. Do you have nexus in this country? 

It can’t just be about physical presence because that makes it really easy to just not pay taxes anywhere. Of course, this doesn’t work for Americans because the US is unique in that that taxes, citizens on worldwide income no matter where they live so long as you hold US citizenship, you are subject to US taxes. What you can do is if you’re paying taxes in a local country, which I mean would mean you were in one country for a pretty long time like more than a 183 days in one country, then you could deduct the taxes you pay there. 

If you are in a high-tax country like Germany, you could end up actually owing more taxes in Germany than in the US, so you would just pay German taxes. If you’re in a lower tax country like Budapest for example, you could end up paying however much you owe in Hungarian taxes and then you deduct to that from whatever you owe in American taxes or by far the most popular option is to use the foreign earned income exclusion or the FEIE. 

The way that works is US government says, “If you don’t want to have to deal with figuring out tax stuff for whatever the host country is because that’s complicated, we’ll just say about a $100,000 of income can be excluded from US taxes.” The number is tied to inflation and it goes up every bit right now, it is around a $100,000 you can deduct. If you are making less than a $100,000 a year then that would be all of your income, so that’s a pretty good deal. 

To qualify for that, you have to pass one of two test. There’s the physical presence test, which is simpler to prove but it requires that you spend more than 330 days a year outside the country. You really don’t get much time in the US and then the other one is to show that you have tax residence someplace else, which would mean that you are also paying taxes there so that one is harder. 

[0:21:44.7] DA: Right, so you’re not really escaping like you just have to be subject to something else, which is a little more complicated but you know, I’m sure there are good resources out there for people who want to take more into all of the joys of taxes. I feel like I’m hearing like you know, a depth even deeper than the pain that I feel working in New York and living in New Jersey. 

[0:22:11.6] WJ: Yeah. 

[0:22:12.6] DA: I feel like a small nomad. 

[0:22:14.8] MN: A baby nomad. 

[0:22:16.6] DA: Just a minor nomad for my tax situation. 

[0:22:19.8] MN: Don’t go committing tax fraud, what is it? Follow the laws of the country that you’re staying and that you plan to stay in. 

[0:22:25.9] WJ: Yeah, you can avoid taxes when it is legal. You cannot evade taxes illegally so we’re not advising anybody to break the law. 

[0:22:34.3] MN: Yeah, don’t do that. I mean, I myself can’t see me being moving from country to country in 180 days or less. I find that to be that’s like a really difficult requirement for me and I am sure that is different for other people, right? William, you are probably capable of doing the 183 moving into different places but I like staying and I would have stayed in the Bronx for a 183 years if I could so I don’t think that’s nomadic as for me per se and I imagine it would be it’s different for different people in different situations. 

It is pretty interesting, I mean, all of these rules already applied and I know the changes that are currently happening as there is so many people I imagine who signed up to be digital nomads within the past two years. You know, if there is a pandemic that I imagine that is probably a reason why people are moving and exiting and going to different places and staying safe as possible and hopefully won’t get out of that mess sooner or later. 

[0:23:38.3] WJ: Yeah, one last thing about the taxes, if you do file the foreign income exclusion, you’re definitely going to want to have a real accountant look at that, ideally one who has done them before because they are an audit flag. You are at a higher risk for audit if you take that. 

[0:23:55.1] MN: Yes, this is like, “Hmm, something’s fishy over here” boop, Uncle Sam is going to come and ensure that you are doing the right thing. Quick question, you had the opportunity to digital nomad. Let’s say you had a little gnome who is capable of packing all of your things and moving your family or you out of the country to wherever you wanted to for let’s say two months, where would that be? Dave, go first. 

[0:24:22.3] DA: I feel like for me, it would be fun to travel around the US. The one thing that I have found missing in my travel most recently is that I couldn’t bring my dog with me and so that kind of felt a little weird, so maybe like a tiny van and go down by the river and get some solid Wi-Fi or something, I don’t know, visit a national park. That would be dope. 

[0:24:55.4] MN: Say that dog restriction wasn’t really that wasn’t an issue, wherever you go Ziggy can come with you, bark her ass off and everyone would find a jolly old time, would you have a place in the globe you would want to go? 

[0:25:09.1] DA: No, I’m good.

[0:25:11.4] MN: Yeah, the US baby, America. 

[0:25:13.7] DA: Maybe Iceland, I don’t know. 

[0:25:15.2] MN: Yes, that’s dope. William, have you already been there William? 

[0:25:19.2] WJ: For me, it would be – well, also I guess if there are no restrictions, I would love to do Antarctica because there is probably only two months where you could be there and have it not be insane. 

[0:25:30.2] DA: Big fan of the movie, The Thing. The Thing, great movie, John Carpenter. 

[0:25:36.4] WJ: More realistically, I think for me it would be Australia. Australia is really tough because of time zones, very difficult to make that work so that’s kind of like maybe unattainable dream. Maybe if I were in Perth on the west side, I could pull that off but I don’t know, I want Melbourne coffee. 

[0:25:56.2] MN: Oh yeah, that sounds good.

[0:25:57.6] DA: Yeah, you’d be in Perth. Just kidding mate. 

[0:26:02.2] MN: I know, I was looking at this list really quick for me, I probably would be and if it was three months like I’m there or I’m out of there in three months and back in the United States, I wouldn’t mind like a stint in a Spanish country I guess, right? There’s two that I see on nomad list, probably like Barcelona. Spain sounds pretty dope or Argentina but I know that my particular Spanish, no one would understand me anyway so it would be like I could really learn Spanish for the first time but I think that would be pretty dope. It seems like pretty dope countries to be in and exercise whatever Spanish I do know. 

[0:26:39.1] WJ: It would be good for baby Gio. 

[0:26:41.3] MN: Yeah, Gio would have a blast for sure too but like a said, that is the difficult part, getting a two-year-old to do the digital nomading with you would probably be really, really hard and I’d be interested in hearing any experience that people have with their families as they digital nomad in the age of being able to work from anywhere.

[0:27:01.1] WJ: There is definitely some blogs about that.

[0:27:03.7] MN: Yeah, not working from home, working from anywhere, which sounds crazy. 

[END OF INTERVIEW]

[0:27:08.6] MN: Follow us now on Twitter @radiofreerabbit so we can keep the conversation going. Like what you hear? Give us a five star review and help developers like you find their way into The Rabbit Hole and never miss an episode, subscribe now however you listen to your favorite podcast. On behalf of our producer extraordinaire, William Jeffries and my amazing co-host, Dave Anderson and me, your host, Michael Nunez, thanks for listening to The Rabbit Hole.

[END]

Links and Resources:

Nomadlist

Hacker Paradise

Wifi Tribe

The Rabbit Hole on Twitter