The Tax Implications of Working Remote While on a Cruise

Jenny Hunnicutt, a travel enthusiast and consultant, recently embarked on a 274-night cruise aboard Royal Caribbean’s Serenade of the Seas. This unique journey allowed her to work remotely while traveling the globe, presenting an enticing opportunity for individuals like her in a post-pandemic world.

While onboard the cruise ship flying a Bahamas flag, American passengers engaging in remote work are still subject to U.S. federal income taxes. As a U.S. citizen or permanent resident, individuals must pay taxes on their “worldwide income,” regardless of where they are earning money, whether it be from a cruise ship or another country.

If remote workers decide to disembark from the cruise ship and work remotely in another country, they may encounter additional tax implications. Working in a foreign country could lead to tax liability in both the U.S. and the host country, depending on local laws and the duration of work. Seeking advice from a cross-border tax professional before departing on such a trip is crucial to avoid potential tax complications.

For self-employed individuals on the cruise ship, income can come in various forms. As seen in the case of Joe Martucci, a retired certified public accountant offering tax advice to influencers monetizing content during the trip, receiving gifts or prizes aboard the ship may incur taxable income. Casino winnings and other forms of income generated while on the cruise are also subject to federal income taxes for U.S. citizens and permanent residents.

To prevent double taxation, some expats may qualify for the foreign earned income exclusion or foreign tax credit. However, these exemptions may not apply to cruise passengers due to specific requirements. It is essential for individuals working remotely while cruising to be aware of their tax obligations and potential surprises, such as unexpected tax bills from casino wins or sponsored gifts.

While the idea of working remotely from a cruise ship may seem glamorous, it is crucial for individuals to understand the tax implications associated with earning income from international waters or foreign countries. Seeking advice from tax professionals and staying informed about tax laws can help remote workers navigate potential tax challenges and ensure compliance with U.S. federal income tax regulations.