I work as a CPA and have seen several clients get burned by these PMA arrangements over the years. What makes this particularly concerning is that the IRS has been cracking down hard on these schemes recently. They've issued specific guidance (Notice 2004-30) warning about abusive trust arrangements that claim to eliminate tax obligations. The reality is that if you're providing services in exchange for compensation - whether they call it wages, donations, or gifts - that's taxable income. Period. The organizational structure doesn't change your personal tax obligations as an employee. My advice would be to run from this opportunity, no matter how appealing the job itself sounds. I've helped clients who got involved in similar schemes, and the back taxes, penalties, and interest can be financially devastating. The IRS doesn't care that someone told you it was legal - you're still responsible for properly reporting your income. Look for similar outdoor education positions with organizations that operate transparently and provide proper tax documentation. There are plenty of legitimate nature-based programs that would love to have someone with your enthusiasm without the legal risks.

Thank you all for the incredibly helpful responses! This has been exactly what I needed to hear. I was already suspicious when the director made those claims about not paying taxes, but seeing all the detailed explanations about why this is problematic really confirms my instincts. I'm definitely going to decline this position. As much as I love the idea of outdoor education, it's not worth risking my financial future over what sounds like a clear tax evasion scheme. The fact that the IRS has specific notices warning about these arrangements really seals the deal for me. I think I'll also look into using some of the resources mentioned here like taxr.ai to analyze any future job offers that seem questionable. And if I do decide to report this organization, I'll check out that Form 211 process. Thanks again everyone - you probably saved me from a very expensive mistake! I'll stick to looking for legitimate outdoor education programs that handle their taxes properly.

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 - 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!

One more important thing: if you deducted any medical expenses in previous years that were later reimbursed by this settlement, you may need to report that reimbursement as income in the year you receive the settlement (called the "tax benefit rule").

Based on your breakdown, you're on the right track! The $6,500 for lost wages is definitely taxable income that you'll need to report. The medical expenses ($14,500) and pain/suffering ($8,000) portions are not taxable since they're compensating for physical injuries. For the $3,000 car repair portion, as long as it doesn't exceed what you originally paid for the car (minus any depreciation), it's typically not taxable income either - it's just making you whole for your property loss. One thing to watch out for: if you itemized deductions in previous years and deducted any of those medical expenses that are now being reimbursed by the settlement, you might need to include that reimbursed amount as income under the tax benefit rule. Also don't forget to check your state tax requirements - while federal rules are fairly clear on settlements, some states have different approaches to taxing settlement proceeds. Keep all your settlement documentation organized. The IRS likes to see clear records showing how the settlement amount was allocated between the different categories when there are questions.

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.