Tax season just ended. The most stressful time of the year if you’re an American abroad. Don’t get me wrong. Overall, there are more benefits to being an American than disadvantages. However, when it comes to things like taxes, if you’re an American living abroad, you have to file a tax return in not only your country of residence, but also your dear home country, America. And surprise, surprise, it’s a fucking nightmare.
I found out about this much later than I should have and was in a panic like no other. I spent hours, whole weekends reading all I could on this subject and could not figure out what exactly it was I had to do. You think Polish bureaucracy is complicated? Being an American in Poland is double hard.
The rules are like this: Americans citizens don’t have to pay double taxes thanks to a tax treaty between our two lovely countries. But that’s only if you earn less than $100,800 (in 2015) and you pay social security (czyli ZUS) in your country of residence. However, even if you don’t owe taxes, you have to report your earnings to the IRS (Urząd Skarbowy in the States). Essentially, they just want to know everything about you.
Important points to remember:
- You have to file no matter how much money you earn. Even if it’s nothing, you should file.
- You even have to report the highest amount of money you had in the bank during the year (in dollars).
- If you’re married and want to file together, you have to give them your spouse’s earnings well – even if they aren’t American and don’t have a green card.
- If you’re self-employed abroad, you might as well jump off a bridge right now.
So, how can you manage it yourself you ask? Well, you get a tax advisor of course. One living in Poland who can read your Polish tax return and who is an expert on US taxes. Who has that kind of knowledge? People who charge a shit ton of money, of course. (At least, that’s what the IRS recommended me to do when I called them asking them for help. Because even they didn’t know exactly what I had to do to be in compliance with the law. Cool!) You can bet on spending at least $250 per year (so about 1000 PLN at the moment) on having someone prepare your US tax return. So you might not have to pay taxes, but you have to pay someone to help you report your earnings, that is if you want it done correctly, which is a tax in itself. A punishment, so to speak, for living abroad.
So now you know why many Americans living abroad denounce their US citizenships in exchange for some peace. The moral of the story is: get a tax advisor and don’t screw around with the IRS. It’s not worth the stress and if they find out, you could find yourself in deep shit. Best of luck to all my fellow Americans in Poland!