Jenny Hunnicutt, a Florida-based writer and consultant, embarked on a unique journey last year by boarding Royal Caribbean’s Serenade of the Seas for a 274-night cruise around the world. This voyage gained attention on social media platforms like TikTok and showcased the potential for remote workers like Hunnicutt to thrive in a post-pandemic world. Despite the allure of working while cruising international waters, there are important tax implications that Americans need to consider.
Even though the cruise ship flew a Bahamas flag, American passengers earning income while working onboard are still subject to U.S. federal income taxes. As a U.S. citizen or permanent resident, individuals must report their “worldwide income,” whether it comes from a ship or another country. This means that Jenny Hunnicutt and her husband had to navigate the tax filing process as usual, given that their work is based in Florida.
While working from the cruise ship did not present any tax hurdles for Hunnicutt, the situation changes when individuals decide to leave the boat and work remotely from another country. International tax laws can vary significantly, and Americans working abroad may find themselves liable for both U.S. income taxes and taxes in the country where they are working. It is crucial to consult with a cross-border tax professional before making such a move to avoid potential double taxation issues.
For self-employed individuals on a cruise ship, income can come from various sources, including sponsored content and casino prizes. Joe Martucci, a certified public accountant and former expat, provided tax advice to influencers on the ship who were receiving gifts in exchange for promoting them on social media. It is essential for individuals to understand that even gifts and prizes obtained on a cruise ship are taxable under U.S. federal income tax laws.
Experts emphasize the importance of complying with tax regulations, particularly when it comes to reporting income from casino winnings onboard a cruise ship. Regardless of where the ship is located when a passenger wins a prize, U.S. citizens and permanent residents are required to report such income on their tax returns. Casinos typically issue Form W2-G to passengers who win large sums, which must be accurately reported to the IRS to avoid potential penalties.
While the idea of working remotely from a cruise ship may seem appealing, individuals need to be mindful of the tax implications involved. American citizens and permanent residents working on international waters are still subject to U.S. income taxes, and departing the ship to work abroad can trigger additional tax liabilities. Seeking advice from tax professionals and maintaining accurate tax records are crucial steps to ensure compliance with tax laws while enjoying the perks of working on a cruise ship.