What you should know about paying taxes for informal work that you do abroad.
Should you try to pay taxes when working abroad? This question came into Vagabond Journey from a reader named Corinna:
I just found via an article and I have a question! I am a massage therapist and I would love to travel the world. But my question is… If I work as a massage therapist myself in different countries… what about the taxes? I don’t wanna find myself in prison at one point just because I wasn’t prepared!
Would be cool if you have time to answer me and if you could give me some tips!! I really like your blog!!!
All countries tend to have different tax laws, but if you’re working formally then local taxes are generally taken care of by your employer.
If you’re working for yourself, then you’re a part of the informal economy, just like the kids shinning shoes, the hippies playing guitars in the streets, and the women going around selling cigarettes. In most countries, especially developing ones, the informal economy isn’t really too actively taxed. Of the hundreds of travelers with independent travel businesses that I’ve met, almost none ever paid taxes. The one exception was some street vendors in Mexico who had to go to a little office and pay something ridiculous like $5 for the year. So don’t worry about it. Even in Mexico, don’t worry about it. Volunteering to pay taxes in this situation would be an unneeded complication — and would only spotlight the fact that you’re working illegally.
Yes, massaging people for cash is technically considered work in most countries, and you are not really permitted to do this without a work visa — but it’s pretty much impossible to get a work visa for informal self-employment everywhere.
Though, when it comes down to it, very few countries care enough to bother locals working in the informal economy, let alone foreigners, so it’s not something that you need to hide or be worried about. The police are not really too active about making sure no foreigners are juggling at intersections for spare change, or, in your case, massaging people in their hotel rooms. If a problem arises, it can generally be taken care of on the spot — you should know what I mean by this.
So I wouldn’t worry so much about taxes, as this is not something that travelers with independent businesses tend to pay, and, as I stated above, trying to do so could be rather awkward. Very few countries are as tax crazy as the USA.
That said, if you are an American you do need to pay taxes in the USA — well, if you make enough money. Though unless your massage job is incredibly successful you probably won’t even come close to making enough to have to worry about this. If you do happen to make over 12 grand or so you can file as an expat, given that you haven’t been in the country for over 30 days during the year, which would make you tax exempt up to something like $80k.
Again, don’t worry too much about paying taxes when running an independent travel business. Not paying taxes on informal earnings isn’t really something that lands very many tourists in peril.