US Expat Taxes for Americans Living in Poland – What You Need to Know
It has been estimated that there are several thousand Americans living in Poland.
Living in Poland is an incredible experience for a number of reasons, including the friendly locals, the landscapes and architecture, and having the rest of Europe on your doorstep. As an American expatriate living in Poland though, what exactly do you need to know regarding filing US expat (and Polish) taxes?
All US citizens and green card holders who earn a minimum of around $10,000 (or just $400 for self-employed individuals) anywhere in the world are required to file a US federal tax return and pay taxes to the IRS, regardless of where in the world they live or their income is generated.
The good news is if you are paying income tax in Poland, there are various exclusions and exemptions available to prevent you paying tax on the same income to the IRS too.
US taxes – what you need to know
If you earn over US$10,000 (or just $400 of self-employment income), wherever the income originates in the world you have to file IRS form 1040. While any US taxes due are still due by April 15th, expats get an automatic filing extension until June 15th, which can be extended further on request until October 15th.
If you have overseas assets worth over US$200,000 per person, excluding your home if it is owned in your own name, you also have to file form 8938 to declare them.
If you had a total of at least US$10,000 in one or more foreign bank and/or investment accounts at any time during the tax year, you also have to file FinCEN form 114, otherwise known as a Foreign Bank Account Report or FBAR.
“Polish income tax law provides that an individual whose place of residence lies within Poland shall be liable to Polish income tax on his/her worldwide income.”
If you pay income tax in Poland, there are several exemptions that allow you to pay less or no US income tax on the same income to the IRS. The main one is the Foreign Earned Income Exclusion, which lets you exclude the first around US$100,000 of foreign earned income from US tax if you can prove that you are a Polish resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Poland. These exemptions can be combined if necessary. Remember though that even if you don’t owe any tax to the IRS, if your income is over US$10,000 (or $400 if you’re self-employed) you still have to file a federal return.
The US and Polish governments share taxpayer info, and Polish banks pass on US account holders’ account info to the IRS, so it’s not worth not filing or omitting anything on your return. The penalties for incorrect or incomplete filing for expats are steep to say the least.
If you’re a US citizen, green card holder, or US/Polish dual citizen, and you have been living in Poland but you didn’t know you had to file a US tax return, don’t worry: there’s a program called the IRS Streamlined Procedure that allows you to catch up on your filing without paying any penalties. Don’t delay though, in case the IRS comes to you first.
Polish taxes – what you need to know
Polish residents are taxed on their worldwide income at 17% for the first around $20,000, and at 32% on their income above this threshold. Residents also pay social security and health taxes, as well as property tax if they own their home.
Foreigners living in Poland are considered a resident for tax purposes if they spend over 183 days a year in Poland, or if Poland is the center of the personal or business interests.
The Polish tax year is the same as the US, which is to say the calendar year. If you’re employed by a Polish firm, they will deduct tax at source before paying you. Tax returns are due by April 30th. The Polish tax authority is simply called the Tax Administration.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Poland that you contact a US expat tax specialist.