Of course, you must be genuinely living abroad to apply for this. This means either spending enough time outside of the US (> 330 days in a tax year, if I recall correctly) or have enough proof that you are really living abroad (things like primary residence in your name, bills, bank accounts, mortgage, insurance, kids at school -- regular every day stuff).
Now if you want to game the system and just "kind of" live abroad in order to take advantage of the income exemption, that's a different story.
I know about being an expat and how to avoid SOME of the taxes. Point is, unless you make under that limit and don't spend more than a month per year in the US, you are liable for US taxes. They give credit for foreign taxes paid, but you'll basically be paying the US income tax rates when it's all done. Not to mention the sheer stupidity of having to file in the first place.
On personal income. It sounds like the UK's "IR35" loophole - if you leave the money in the company you don't have to pay tax on that. So you can accumulate capital in the company.
Agreed, it always feels scandalous to me whenever I hear this fact.
No idea how it works in practise. I known plenty of Americans who have settled in Poland for a good portion of their lives, so it must be possible to overcome the burden.
Maybe it's one of those things where, as long as you can afford to pay a good accountant (and you really should be able to afford it in Poland), they take the pain away for you?
The penalty is 0.1666% per month you didn't have qualifying health insurance for any 3+ month period(s) you didn't have it, e.g., if you didn't have insurance in the months of February-April, you'd be assessed a fine of 0.5% of your income.
I mention that there are ways to avoid some of the taxes. I've BEEN an expat so I know how it works.
I also know that I still had to pay taxes even when I stayed out of country long enough just due to income levels. Additionally, with all of my family in the US it was pretty hard to stay out of country enough to avoid taxes.
Am I saying you shouldn't move out of the country? NO! I loved living in Europe. And if you live in a low cost of living country you will save lots of money if you get a US salary or contracts. What I am saying is that as an American you'll likely end up still paying US taxes and you'll still have to file with the IRS every year.
http://www.irs.gov/Individuals/International-Taxpayers/Forei...
If you can structure your work and business correctly, I'm sure you can bypass such taxes. Assuming you don't want to renounce your nationality!
And as an American you would still receive the support of the US government in case of war or other disasters.