How Taxes Work When Working on International Waters

Audio version available here (1 min. 30 sec.)

After the pandemic, many people around the world have taken to working full time remotely rather than returning to an in-person office setting. Some individuals who are completely remote have decided to take their work on year-long cruise ships, meaning that they technically work on international waters. So, how does this affect your taxes if you work this way?

Working from a cruise ship is different than working on foreign land. If you are a US citizen or permanent resident, you still have to pay the IRS taxes on your income. For those who work remotely on a ship, your tax filing situation is not that different from when you are on home soil. In the United States, income tax is based on “worldwide income”, no matter where you earn it. However, once you work and make money in a foreign country, you could be liable for that nation’s tax laws in addition to US reporting. For some, this can create a “double tax” situation. You can try to prevent this unfavorable circumstance by qualifying for a “foreign earned income exclusion or foreign tax credit”, but approval can be hard to obtain.

Additionally, gifts you may receive from foreign countries could also be taxable if you earn money by reviewing or posting the gifts as a promotion. Entertainment activities on cruise ships, such as winning money in a casino, are also subject to US tax laws.

While remotely working on a cruise ship can be enjoyable, there are some unique tax obligations that come with maintaining this lifestyle. If you need help understanding how these taxes work, contact our tax experts at XQ CPA. We would be happy to assist you, so give us a call at the number below or schedule a virtual consultation on our website.

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Source:

https://www.cnbc.com/2024/08/01/working-remotely-from-a-cruise-taxes.html