Any retired folks or digital nomads full time travelers?

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Digital Nomad

Dryer sheet wannabe
Joined
Jul 28, 2020
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13
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Foot Loose and Fancy Free
My wife and I are currently digital nomads now that our federal government jobs have moved online due to the COVID-19 virus. Our bosses tell us we can be online and don't have to return to the office for another eight months and maybe longer.

So we decided to put our things in storage and move around the country and stay in corporate furnished short term apartments in four different cities two months at a time. This way we can actually live in a number of communities that may consider moving to full time once we retire in 2023.

Our adventure will start in September when the lease of our apartment home ends. We will be living two months in the following cities: Chapel Hill NC, Sarasota Florida, Nashville TN, and Fayetteville AR.

The plan sounded great until we thought about practical bureaucrat issues like:

How to get our mail?

Do we need to get a new driver's license in each place?

Do we have to pay state income taxes in each state?

Do we have to register our car in each state?

Will our auto insurance be good if we have no formal long term address?

What address can we use for credit cards, bank statements, Social Security, and other important government agencies?

We will be working full or part-time via the Internet as digital nomads as we live in each state. I am on Social Security and working part-time and my wife is working full time and is too young for SS benefits. Remember that once we leave our current apartment in SD we have no formal home or address or link to anyplace else. No relatives will help us with a home address or mail stop.

Any feedback or advice?
 
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Starting this fall we will not be an official resident of a specific state but will be sem retired and still earning money as a digital nomad. We are planning to get an official domicile in a state that has no income tax to save money. (Maybe South Dakota)

We will be working out of AIRBNB's or Corporate Apartments for a couple of months at a time and then moving on to the next city. We have four cities picked out and that list will be extended if we are still allowed to work from home due to the virus.

Is it as simple as it sounds? Get an official domicile in South Dakota while we live a few months at a time in various cities around the country? WE won't have any ties to any one state for at least 8 months, most likely longer.

Here is just one of many Internet pages talking about travelers getting a South Dakota Domicile:

https://gnomadhome.com/becoming-sou...our receipt, mail forwarding,of ID to the DMV.
 
Digital Nomad said:
stay in corporate furnished short term apartments in four different cities two months at a time.
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Where do you find listings for such places? I've occasionally toyed with going semi-nomadic, but I figured on 6 or 12 month apt leases.

I have a cat, though, so maybe finding a pet-friendly place every handful of months would be difficult on all.

I did sign up for https://travelingmailbox.com/ ahead of an intended Interstate move, but the pandemic has me staying put for now. I never got around to getting a document they need notarized, so I can't have them open and scan my mail online yet. But I do intend to make that my stable address when I move out of my house.
 
BigMoneyJim said:
Where do you find listings for such places?
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A number of companies offer such places. Here's just one example:
https://www.oakwood.com

When I was in the military, I would sometimes get transferred to a new city at fairly short notice, and I used such places several times. A great way to have some stability for a couple of months while looking for a more permanent place to live.
 
From a state tax prospective there are three classifications of residency, resident, non-resident and part year resident. You will be considered a non-resident in each of these 4 states. That means that each of the four states can only tax your "earned" income while you reside in the state. Earned income only includes wages/contract work and not investment income. Technically your employer should withhold on wages earned in each of the four states. My previous employer required employees to report any out of state work on our time sheets and they would withhold on that based on where we were.

Your "home" state can tax you on 100% of your income, earned and investment, and then you get a credit for any taxes paid to other states. Usually the credit is only up to the home state tax rate if the other state's rate is higher.

The more complex part is whether you are truly leaving your current home state. If I was a state auditor for your home state the questions I'd challenge you on are after these 8 months where do you and your employer intend you to return to prior to your retirement? This intent question is subjective but needs affirmative proof that you don't intend to go back home. There are a host of other objective questions like drivers license, mailing address, bank accounts, club memberships, etc. that states look at as well. The home state you are trying to leave generally fights like hell to keep you until you can prove you have left for good. CA and NY are historically two of the worst at not letting you go.

I read the South Dakota article and that might work for a full time nomad but I don't get the picture you are there yet. My guess is you intend to return to your home state after the 4 state tour and stay there again until you retire and eventually move somewhere.
 
Digital Nomad said:
...

How to get our mail?

Do we need to get a new driver's license in each place?

Do we have to pay state income taxes in each state?

Do we have to register our car in each state?

Will our auto insurance be good if we have no formal long term address?

What address can we use for credit cards, bank statements, Social Security, and other important government agencies?

We will be working full or part-time via the Internet as digital nomads as we live in each state. I am on Social Security and working part-time and my wife is working full time and is too young for SS benefits. Remember that once we leave our current apartment in SD we have no formal home or address or link to anyplace else. No relatives will help us with a home address or mail stop.

Any feedback or advice?
Click to expand...

There are lots of forums for permanent RV'ers, and you may get more comprehensive advice in one of those.

My understanding is that you need to get a driver's license, register your car, buy auto insurance and register to vote in the state that will be your permanent residence. You need to sever ties with your current state if you don't want them to come after you for income tax in future years. Although, if you plan to go back to your current state when your 8 months are up, it's certainly easier to just keep it as your permanent residence than to establish a new permanent residence in some other state.

I am confused about whether you are in South Dakota now or if that's the place you want to make your residence. If you're not already there, then that should be your first stop in your travels. When you get a SD driver's license, make sure to figure out whether you need a Real ID for use as ID when flying domestically in the future. If you do need a Real ID, you'll need additional documentation proving residency and it might take a lot longer.

You will have to file income tax returns in each state where you work for more than a de minimis amount of time as defined by the state. Two months is almost certainly over the threshhold for all states that collect an income tax. Your employer needs to know what state you are working in at all times so that they apply the proper withholding and remit it to the correct states. Normally you would also be subject to the different state labor laws as you move from one to the other, but since your employer is the Fed Gov't that may not apply? It's something you should ask your Gov't HR Rep about before you embark on this journey.
 
Thanks for the replies so far. Yes, I will have to look at the RV Message Boards for more information.

I may have listed South Dakota as my home in the registration for this board but currently I am living in Minnesota in an apartment. My lease ends in about a month.

The reason I mentioned South Dakota is it is a popular US State for people who are travelers who want to set up a domincile and get their mail there through a virtual mailbox. It is a cheap place to get your car insured, has easy drivers license and car registration rules and is located one state over from where I am living now.

It is hard to believe that a person who is working as a digital nomad would have to notify their Human Resources Department and change their state tax withholding everytime they moved if they were only going to be somewhere for a month or two.

Why can't I just say I am a South Dakota resident- a State with no State Income Tax, after getting SD plates, Drivers License, etc and then call my regular movements from town to town a trip? What if I were a snow bird and went down to Arizona for a month or two and worked from my temporary home in Phoenix for the month of January and then returned to my home state for the other 11 months, would I have to pay Arizona state taxes during for my one month stay? That is just crazy to believe!
 
I was a digital nomad (hobo with a laptop) the last 8 years of working (retired last year). Had a home base in a condo I own but was able to work from anywhere and I took advantage of that. I didn't travel globally independently while working but would visit family long term in various cities around US (mainly NYC, LA, DC, FL and MO) and stayed in other cities fairly long term.

If possible you could establish a home base with a relative (ideally in state with lowest taxes) if you don't own your own place - register car, voting, etc. to relative's address. Look into details if possible per state. Maybe offer to pay for one of the utilities in your name as proof of residency. Even better if you can have your relative scan your mail then email if you're good with that or forward if needed.
 
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Digital Nomad said:
I may have listed South Dakota as my home in the registration for this board but currently I am living in Minnesota in an apartment. My lease ends in about a month.
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Are you currently paying MN income taxes as a resident?


Digital Nomad said:
It is hard to believe that a person who is working as a digital nomad would have to notify their Human Resources Department and change their state tax withholding everytime they moved if they were only going to be somewhere for a month or two.
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This is where the employer has to decide how much they care. My employer as a large worldwide accounting firm and they wanted to do everything by the book. Each day I traveled outside my home state I had to report it and they withheld in that state.

I was a state tax consultant for 30 years, mostly corporate and partnership work but helped lots of individuals who tried to move to TX. A common discussion I had with my clients (the employer not the employee) was if they had to withhold when they sent an employee out of the state. I'd tell them yes, unless the employee was in the state for under the state's "de minimus" standard which is most state was one day. A few states had a 5 day limit. I'd advise them that if they don't withhold the employer can be held liable for any unpaid taxes. The employer's decision was how much tax dollars are at stake and if that risk warrants them having their payroll provider go through the steps of withholding. Often they would make a corporate risk decision to only withhold if the employee was going to be in that state for more than a certain amount of days (say 20) and anything under that amount they would ignore and take the risk the state would not figure it out.


Digital Nomad said:
What if I were a snow bird and went down to Arizona for a month or two and worked from my temporary home in Phoenix for the month of January and then returned to my home state for the other 11 months, would I have to pay Arizona state taxes during for my one month stay? That is just crazy to believe!
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Yes. Worse yet, I've read court cases where an individual took a foreign assignment and say moved from CA to Spain for a two year assignment. They put everything in storage, sold the house and moved to Spain. They stopped paying CA taxes during that two year period. CA held that they had not severed their CA residency because they had not proven they did not intend to come back to CA when the two year assignment was up. There are dozens and dozens of cases like this all with varying facts but usually the state wins.

Proving you intend to move and live somewhere else is the key to proving you have formally left your current home state.
 
How states determine residency and what taxes are required probably varies by state.

I can't help but be curious about the states you are choosing - all are spiking in covid numbers at the moment. Please be careful.
 
This MN Tax Fact Sheet actually talks about nomadic life. Generally, you must prove you permanently moved somewhere to have left somewhere else. Having a drivers license, insurance, etc. in SD and never actually living here much less not for 183 days would be bad facts, IMO. Not to say people don't do it and hope for the best. The state's can't audit everyone.


https://www.taxesforexpats.com/expat-tax-advice/statedocs/MN residency.pdf.
 
conversationalphrase said:
There are many mail services, this one in particular is very popular.

https://www.sbimailservice.com/

Many of your other questions be answered if you search in RV or boaters forums.
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This one is good because it’s a Florida address, no SIT.

You can vote by mail with it.

Your auto insurance will need an permanent address to set your rate. You can use above but I would tell them you travel.

You can use the above as your permanent address. It’s on my license, voters registration, taxes, is my CC billing address.

I never had an issue.

You must declare permanent residency in a state or territory (PR, VI, etc).
 
rodi said:
I can't help but be curious about the states you are choosing - all are spiking in covid numbers at the moment. Please be careful.
Click to expand...

He’s not going to actually live there, so it doesn’t matter.
 
SALTedOut -- first -- love your name! Second, have you had any experience on specifics of income earned? Is it always where the person is physically located? Does income from an owned business follow the owner's physical location? If a woman owns a web-based business that generates money passively (ie, for long stretches without the woman owner "working" on it), does that follow her (and does it matter if it's W2, LLC pass thru, K1, etc)? What about vacation and how is that defined for an owner?
 
Digital Nomad said:
The reason I mentioned South Dakota is it is a popular US State for people who are travelers who want to set up a domincile and get their mail there through a virtual mailbox. It is a cheap place to get your car insured, has easy drivers license and car registration rules and is located one state over from where I am living now.
Click to expand...

If it's a Real ID, it's not any easier to get one in SD than in any other state, so do think about whether you need one.

Digital Nomad said:
It is hard to believe that a person who is working as a digital nomad would have to notify their Human Resources Department and change their state tax withholding everytime they moved if they were only going to be somewhere for a month or two.

Why can't I just say I am a South Dakota resident- a State with no State Income Tax, after getting SD plates, Drivers License, etc and then call my regular movements from town to town a trip? What if I were a snow bird and went down to Arizona for a month or two and worked from my temporary home in Phoenix for the month of January and then returned to my home state for the other 11 months, would I have to pay Arizona state taxes during for my one month stay? That is just crazy to believe!
Click to expand...

I don't think there are that many digital nomads who are W-2 employees. I usually hear about this lifestyle for retirees, freelancers, or people who own their own small business. When you're on an employer's regular payroll, there are different rules and different labor laws that apply. You may think it's crazy to pay tax in every state where you work, but actually that's pretty normal. Professional athletes usually file a dozen or more state returns because every out-of-state road game represents earnings for them.

Similar to what SALTedOut described, when I worked for a government contractor, my employer made us track how many days we worked in each jurisdiction so that they could withhold state tax if we were over a certain number of days for the year. Fortunately I never exceeded the limits, but there were a couple of times where I was counting days and trying to reschedule business trips from December to January so I wouldn't have to do an extra state's return. You really need to have this conversation with your employer to find out what rules will apply to you.
 
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someguy said:
SALTedOut -- first -- love your name! Second, have you had any experience on specifics of income earned? Is it always where the person is physically located? Does income from an owned business follow the owner's physical location? If a woman owns a web-based business that generates money passively (ie, for long stretches without the woman owner "working" on it), does that follow her (and does it matter if it's W2, LLC pass thru, K1, etc)? What about vacation and how is that defined for an owner?
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Haha, I was wondering if anyone would ever understand my name. Yes, I burned out of the state tax world after 30 years so SALTedOut seemed appropriate here.

It is not always where the person lives depending on what is being sold. Back to be basic rule is your state of permanent residency can tax 100% of your earnings with a credit for taxes paid to other states. Whether another state tax tax you depends on what the web business is selling. Is it tangible property (i.e., a physical good), is it a service, information, other?

I'd be happy to give you some thoughts but I'd need more information. Feel free to PM me with more info.
 
cathy63 said:
Professional athletes usually file a dozen or more state returns because every out-of-state road game represents earnings for them.
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Interesting side note:

Prior to most of the professional leagues negotiating with the states the big controversy for athletes was how they get paid. Say a football player makes $16M/year. Is that $1M per game? Should it include preseason also? Or are they paid $16M/number of days of the season? Or $16M/365? Each of these results in a different amount of earned income for the 3 days a player spends in an away state for a road game. The away states of course wanted a pay per game amount because that gave them the largest amount of taxable wages. The players/agents wanted to argue the pay was spread over 365 days so they 3 days of pay resulted in the smallest amount possible. These were big fights that went on in most states.

Say a boxer trains for 6 months for a fight that happened in NJ. Then goes to NJ for a few days and earns a $10M payday. Can NJ tax $10M or only a portion? This is why so many fights are in NV.
 
SALTedOut said:
He's visiting each state for 60 days. Does the virus not impact visitors? I was not familiar with that safety feature.
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I thought you were referring to his “permanent mailing address “.
 
Put your junk mail on hold and most any utility bill is online. Sign up for USPS informed mail if you don't put a hold on your mail and have a friend grab what looks important. If you aren't doing billing and just working, I doubt the IRS is going to track you down in whatever state you are in. They have budget cutbacks and audits are decreasing. But keep track just in case.
 
The states know high dollar athletes are in their towns. Low level people can probably not bother to file.
 
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