Check if you're enrolled in the right plan type! This happened to me - I thought I was in a Silver plan, but was actually enrolled in a Gold plan. The premium tax credit is calculated based on the second-lowest cost Silver plan in your area, regardless of what plan you actually choose. If you picked a more expensive plan than the benchmark Silver plan, you pay the difference out of pocket. The Marketplace might have calculated your advance credits correctly based on the benchmark, but if you selected a more expensive plan without realizing the impact, you could end up owing at tax time.

I went through almost the exact same situation last year - $3200 discrepancy that made no sense given my income was actually lower than projected. After digging deeper, I discovered the issue was with how my Marketplace calculated the "applicable percentage" for my income level. The premium tax credit formula uses your income as a percentage of Federal Poverty Level to determine what percentage of the benchmark plan premium you're expected to pay. Even small differences in how this percentage is calculated can create huge swings in your final credit amount. What helped me was getting a detailed breakdown of the calculation from the IRS. They showed me that my Marketplace had used an outdated FPL table for part of the year, which threw off the entire calculation. The correction saved me over $2800 in repayments. Also worth noting - if you're close to any of the income cliff edges (like 250% or 400% FPL), even a small miscalculation can push you into a different subsidy tier with dramatically different credit amounts. This might explain why your lower actual income somehow resulted in owing money back instead of getting additional credits.

Quick question - does Saudi Arabia have an income tax? I thought they didn't tax income which would make this easier since you wouldn't be double taxed, right?

As someone who went through a similar dual citizenship tax situation, I'd strongly recommend getting professional help sooner rather than later. The complexity of US tax law for expats is no joke, especially when you factor in FBAR requirements, potential FATCA reporting, and making sure you're properly claiming exclusions. One thing that wasn't mentioned yet - make sure you understand the "bona fide residence test" vs the "physical presence test" for the Foreign Earned Income Exclusion. Since you're living in Saudi Arabia as a Saudi citizen (not just working there temporarily), you'll likely qualify under the bona fide residence test, which can be more flexible than the physical presence test that requires you to be outside the US for 330 days out of 365. Also, even though Saudi Arabia doesn't have personal income tax, you still need to be careful about other types of income (investments, rental properties, etc.) that might not qualify for the FEIE. The US tax code doesn't care which passport you used to open accounts or earn income - your US citizenship creates the obligation regardless. Don't panic about past years - the Streamlined Procedures really are designed for situations like yours where people genuinely didn't know about their filing requirements. But definitely get started on this soon!

Just a heads up - I'm not a tax pro but I went thru something similar. If ur settlement included any interest (like if the discrimination happened years ago and they added interest to the settlement), that part is DEFINITELY taxable and should be reported as interest income. My settlement had like $5k in interest and I missed it initially. Had to amend my return.

One thing to keep in mind with discrimination settlements is that the IRS has been increasingly scrutinizing these cases, especially larger amounts like yours. They're looking for proper documentation that supports the tax treatment you claim. Make sure you keep detailed records of everything - your settlement agreement, any correspondence with your attorney about the tax implications, and documentation of what portions relate to different types of damages. If the IRS ever questions your filing, you'll want to be able to show exactly how you determined what was taxable vs. non-taxable. Also, since you mentioned this was age discrimination, be aware that the EEOC has specific reporting requirements for employers on discrimination settlements. This means the IRS likely already knows about your settlement, so make sure you report it correctly rather than trying to minimize it inappropriately. Given the complexity and the amount involved, it might be worth investing in a consultation with a tax professional who specializes in settlement income. The cost of getting it right up front is usually much less than dealing with IRS problems later.

Quick question related to this - my dad (Canadian) is thinking of investing in my small manufacturing business. I was planning to use an S-Corp but now I'm confused if that's even allowed with a foreign investor? Do I need to switch to C-Corp?

This is a complex international tax situation that definitely requires careful planning! A few additional considerations that might be helpful: The French uncle should also be aware of French tax obligations on his US investments. France taxes worldwide income, so he'll likely need to report the US dividends and investment gains in France as well, though he may be able to claim foreign tax credits for US taxes paid. For the mixed-use LLC (business investment + personal stock investments), consider the administrative burden this creates. Having separate entities might actually save costs long-term since it simplifies record-keeping, especially if the uncle ever wants to bring in additional investors or exit one investment but not the other. Also worth exploring: if the acquisition is substantial enough, there might be advantages to structuring this as a partnership rather than having the LLC own corporate stock directly. This could provide more flexibility for profit distributions and potentially better tax treatment for both parties. Given the complexity with treaty benefits, withholding requirements, and the various reporting forms mentioned by others, I'd strongly recommend getting a consultation with someone who specializes in US-France tax matters before finalizing the structure. The upfront cost will likely save significant headaches and potential penalties down the road.

Don't overlook your state tax obligations too! When I had federal tax issues, I stupidly ignored the state taxes thinking I'd deal with them later. Big mistake - some states are actually MORE aggressive than the IRS with collections. Make sure you're addressing both federal and state tax debts at the same time. In my case, the payment plan with the state was actually harder to get than the IRS one.

I've been through this exact situation - owed $27k to the IRS after some freelance work got misclassified. The anxiety is absolutely brutal, but you have more options than you think. First thing: breathe. The IRS actually wants to work with you because they know they can't collect from someone who's broke or homeless. They'd rather get paid something over time than nothing at all. Here's what worked for me: I immediately called the IRS (yes, the hold times are terrible but it's worth it) and requested an installment agreement. With your income level, you'll likely qualify easily. They'll want financial statements showing your monthly income and expenses, so gather those up. The key is being proactive. If you wait for them to come after you, your options become more limited and expensive. But if you reach out first, they're usually pretty reasonable. Also, file your tax return ASAP even if you can't pay. The penalty for not filing is 5% per month vs 0.5% per month for not paying. That adds up fast. One more tip: ask about first-time penalty abatement if this is your first major tax issue. It can save you thousands in penalties. You have to specifically request it though - they won't offer it automatically. You've got this. It's scary but totally manageable with the right approach.