Poland-US Tax Treaty — How to Avoid Double Taxation

Poland and the USA have a tax treaty from 1974 (and a newer, unratified one from 2013). If you live/work in the USA and have income in Poland — or vice versa — this guide explains how to avoid paying taxes twice.

Tax Residency — Who and Where

This is a key question. Your tax residency determines where you pay taxes on worldwide income.

How the USA Determines Tax Residency:

• Substantial Presence Test — if you were in the USA for 183 days (or a combination of 31 days in the current year + 183 days weighted from 3 years), you are a US tax resident
• Green Card holder — automatically a US tax resident from day 1, regardless of physical presence
• U.S. Citizen — always a US tax resident, regardless of where you live

How Poland Determines Tax Residency:

• Center of vital interests in Poland or
• Stay in Poland for more than 183 days in a year

What the Poland-US Treaty Prevents

1. Employee Salary — taxed only in the country of employment (unless you work short-term <183 days abroad as an employee of a Polish company)
2. Business Activity — taxed in the country of "permanent establishment"
3. Rental Income — taxed in the country where the property is located
4. Dividends — max 15% in the source country + the rest in the country of residence
5. Interest — taxed in the country of residence (with exceptions)
6. Pensions — taxed in the country of residence (Polish pension paid in the USA → taxed in the USA)
7. Capital Gains — most often in the country of residence

Typical Scenarios for Poles in the USA

1. I work in the USA, I have a rental apartment in Poland

• USA salary: reported on 1040 with the IRS
• Rental in Poland: taxed in Poland (8.5% flat rate up to 100k PLN, 12.5% above). You file PIT-28 or PIT-36 in Poland.
• USA: you report this Polish rental on 1040 (Schedule E) as "foreign rental income". You pay US tax on rental income.
• Foreign Tax Credit (Form 1116): You deduct the tax paid in Poland from your US tax. In most cases, the effective rate = the higher of the two.

2. I live in the USA (Green Card), I have a pension from ZUS

• Polish pension: taxed in the USA (treaty Art. 19). ZUS pays gross, you report it on 1040.
• In the USA: you report it as "foreign pension" on 1040 (Schedule 1, Line 8a — Other Income, or 1040 Line 5b if salary)
• Poland does not withhold tax at source (check ZUS form for non-withholding, certificate of residency in the USA)

3. I am returning to Poland after years in the USA

• Transition year: you are a US resident until the day of the move, then a resident of Poland
• USA: Form 1040 NR (Non-Resident) after leaving or "dual-status return" (last year as resident-part + NR-part)
• Poland: from the moment of entry, you are a resident, you file a Polish PIT for part of the year
• Possible US pensions (SS, 401k): taxed in Poland (country of residence)

4. I live in the USA, I sell an apartment in Poland

• Sale of property: taxed in Poland (Art. 6 of the treaty)
• Poland: 19% PIT on income, relief if sold after 5 years from acquisition or if money spent on a new home within 3 years
• USA: you also report it on 1040 (Schedule D — Capital Gains). Foreign Tax Credit for Polish tax.
• If you sell an inheritance from a parent in Poland — also check inheritance tax (if the value exceeds thresholds)

5. A Polish employer sends me to the USA for 6 months

• If <183 days and Polish employer + no "permanent establishment" in the USA → salary taxed only in Poland
• If >183 days or a US employer → salary taxed in the USA

Foreign Tax Credit vs Foreign Earned Income Exclusion

Foreign Tax Credit (FTC) — Form 1116

You deduct dollar-for-dollar the tax paid in Poland from your US tax. Most often best for those living in Poland with rental/business income.

Foreign Earned Income Exclusion (FEIE) — Form 2555

You exclude from US taxation up to $120,000 of foreign income (2024, indexed). Requires physical presence outside the USA for at least 330 days out of 365 or bona fide residence. Practical only for those living in Poland with income from Polish work.

IMPORTANT: you cannot use both simultaneously on the same income. You choose a strategy.

Polish Forms for Residents in the USA

• PIT-36 — when there are income from Polish business/rental (by April 30)
• PIT-28 — flat rate from rental (by February 28)
• IFT-1R — information from the Polish payer about income paid to a non-resident
• Certificate of Residency in the USA — Form 6166 from the IRS. You show it to the Polish payer (bank, ZUS) to avoid withholding tax at source.

US Forms for Residents in Poland (US citizens / GC holders)

• Form 1040 — annual obligation regardless of where you live (US citizen/GC = global income)
• Form 1116 — Foreign Tax Credit
• Form 2555 — FEIE
• FBAR (FinCEN 114) — if you have Polish accounts >$10k in total on any day of the year. IMPORTANT: penalty for non-filing up to $129k!
• Form 8938 (FATCA) — if Polish assets >$50k (single) / $100k (married)

Common Mistakes

1. Failure to file FBAR — automatic high penalties. FBAR is filed electronically by April 15 with the possibility of auto-extension to October 15.
2. Not reporting Polish pension on 1040 — the IRS receives information from ZUS through FATCA-equivalent. Detected = penalties.
3. Lack of residency certificate — Polish bank/ZUS withholds 20% at source on income, which you won't easily recover later.
4. Confusing tax years — USA: calendar year, Poland: calendar year. OK. But deadlines: USA by April 15 (with auto-extension to June 15 for expats), Poland by April 30.
5. Attempting to avoid taxation in Poland through "fake" US residency — Poland may challenge this (center of vital interests, family in Poland, Polish address). Proof of actual residency required.
6. Selling a Polish apartment without planning — if you sell before 5 years from acquisition, 19% PIT in Poland + US Capital Gains. Can be significant.

Who to Hire

This is complicated — in 95% of cases, you need a tax accountant familiar with both systems. Look for:

• Polish community accounting offices in major hubs (NYC, Chicago, NJ)
• CPA certified in Polish tax law
• International firms (Deloitte, EY) — expensive but solid for complicated cases

You only file yourself if the situation is simple: 1 income in 1 country, no investments, no property.

Official Links

• IRS — International Taxpayers
• Podatki.gov.pl — Polish Taxes
• IRS — Poland Tax Treaty Documents
• FBAR (FinCEN)
• IRS — Foreign Earned Income Exclusion

Related: [[first-tax-filing-usa]] · [[itin-tax-number-what-is-it-how-to-get-it]] · [[pension-transfer-poland-usa-totalization-agreement]]