Discover the Shocking Truth: Why the IRS Still Expects Taxes When You’re Working Remotely from a Cruise!
Jenny Hunnicutt, who has spent nearly nine months traveling the world on Royal Caribbean’s Ultimate World Cruise, is working remotely for her writing and consulting business based in Florida. Despite the ship flying a Bahamas flag, U.S. experts confirm that American passengers like Hunnicutt must still pay federal income taxes on income earned while on board due to the U.S.’s “worldwide income” tax rule.
Hunnicutt revealed that filing taxes has remained standard practice for her and her husband, as her business operations are rooted in Florida. However, complications can arise when working remotely from other countries, which may also impose their own tax liabilities depending on local laws and the duration of stay, highlighted Jane Mepham, founder of Elgon Financial Advisors in Austin, Texas.
Despite potential foreign tax credits or exclusions available to U.S. expats to mitigate double taxation, cruise passengers may not typically qualify for these benefits. Additionally, Joe Martucci, a retired CPA on the same cruise, warned that non-cash compensation such as gifts can be taxable income if tied to promotional activities, like social media posts.
Moreover, U.S. citizens and residents winning in shipboard casinos are also subject to federal income taxes, regardless of international waters. James Border, a maritime tax law attorney in Florida, noted the necessity of filing Form W2-G for gambling winnings, and that deductions for gambling losses are only possible with itemized tax breaks and proper records.
Overall, while working or earning income on a cruise, passengers must be mindful of their U.S. tax obligations and potential complexities involving international tax laws. Consulting with cross-border tax professionals is recommended for mitigating unexpected tax liabilities.
Original Story https://www.cnbc.com/2024/08/01/working-remotely-from-a-cruise-taxes.html
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