Just a heads up - if your HR/payroll person tries to tell you that this is correct because of a "special tax situation," they're full of it. I've seen companies try all kinds of explanations to justify taking extra money from employees. Some common BS excuses: - "It's because we're a small business under 50 employees" - "It's a special arrangement allowed by the IRS" - "It's company policy because we offer other benefits" - "It's temporary and will be refunded at tax time" None of these are legitimate. Employment tax laws apply to all businesses regardless of size. Document everything if they try to give you excuses.

This is definitely wage theft and completely illegal. Your employer cannot deduct their portion of Social Security and Medicare taxes from your paycheck under any circumstances. As a W-2 employee, you should only pay 7.65% (6.2% Social Security + 1.45% Medicare), and your employer must pay a matching 7.65% from their own funds - not from your wages. I'd recommend taking action immediately: 1. Gather all your paystubs showing the improper deductions 2. Calculate how much you've been overcharged (sounds like about $250/month x 8 months = $2,000+) 3. Approach HR/payroll first with documentation - frame it as "I believe there's an error in my payroll deductions" 4. If they don't fix it immediately, file a wage complaint with your state Department of Labor 5. Consider reporting to the IRS using Form 3949-A for tax law violations Don't let them give you excuses about "company policy" or "small business exemptions" - there are none. This is a clear violation of federal tax law and you're entitled to full reimbursement of the improperly withheld amounts plus interest. Document everything in writing and don't let them drag this out. You've already lost too much money to this illegal practice.

I've been in your exact shoes and completely understand that anxiety! Here's what helped me navigate this mess: The math breakdown: You're looking at 0.5% per month failure-to-pay penalty PLUS interest (currently around 5% annually, compounded daily). If you're filing after your extension deadline, add another 4.5% per month for failure-to-file (they reduce it from 5% to 4.5% when both penalties apply, so total is 5% monthly until you file). The silver lining: These penalties are capped at 25% each, so while it stings, it won't spiral infinitely. My biggest mistake was waiting to file because I couldn't pay - don't do this! File immediately even if you owe money. That 5% monthly failure-to-file penalty is brutal compared to the 0.5% failure-to-pay penalty. Once you file, call the IRS about a payment plan. I was terrified to make that call, but the agent was actually helpful and got me set up quickly. The setup fee is minimal compared to what you save in penalties. Also ask about "first time penalty abatement" if you've had a clean record for 3+ years - they might waive the failure-to-pay penalty entirely. You've got this! It's scary but totally manageable once you take action.

I'm dealing with a very similar situation right now and this thread has been a lifesaver! Just want to add one thing that might help others - if you're using tax software like TurboTax or H&R Block, many of them have penalty calculators built in that can give you a rough estimate of what you'll owe before you file. It's not perfect, but it helped me mentally prepare for the damage and plan out how much I needed to set aside for a payment plan. The unknown was killing me with anxiety, but having even a ballpark figure made it feel more manageable. Also seconding what everyone said about filing immediately even if you can't pay - I finally did this yesterday and honestly felt a huge weight off my shoulders just knowing that 5% monthly penalty stopped ticking up. Now I just need to work up the courage to call about a payment plan!

As someone who's been helping dual citizens with tax compliance for years, I want to emphasize that your situation is actually quite common and very manageable! The key is understanding that while the US requires you to file, the tax treaty with Australia typically means you won't pay double tax. A few additional points that might help: 1. **Start early with compliance** - Since you're 18, this is the perfect time to establish good filing habits. Even if you owe $0, filing creates a compliance history. 2. **Consider the streamlined procedures** - If you haven't been filing US returns, the IRS has streamlined procedures for overseas taxpayers to come into compliance without penalties, provided you can certify your non-compliance was non-willful. 3. **Australian super and US reporting** - Your Australian superannuation is one of the trickier areas. Generally, employer contributions are reportable but may be excluded under treaty provisions. This is where good advice really pays off. 4. **Future planning** - Keep your US citizenship! The filing requirements become routine once you establish the process, and having both citizenships gives you incredible flexibility for education, career, and life choices. The investment in understanding these rules now will serve you well throughout your life. Don't let the complexity scare you into making irreversible decisions about your citizenship.

For US-Australia tax treaty resources, I'd recommend starting with IRS Publication 597 (Information on the United States-Canada Income Tax Treaty) as a reference point, then look at the actual US-Australia tax treaty text on the IRS website under "Tax Treaties." The Australian Taxation Office also has guidance on their website about US tax obligations for Australian residents. A few practical tips as you get started: **Documentation to keep**: Australian tax returns, payment summaries, bank statements, and any records of taxes paid to Australia. You'll need these for Foreign Tax Credit calculations. **Timing**: US tax year runs January-December, while Australian tax year is July-June. This can create some complexity in matching up income and tax payments between the two systems. **Professional help**: Even if you use software or AI tools, consider getting professional advice for your first filing to establish the correct approach. Many expat tax specialists offer consultations to review your specific situation. **FBAR reminder**: Don't forget that if your Australian accounts (including savings, super, investment accounts) total more than $10,000 USD at any point during the year, you need to file FinCEN Form 114 separately from your tax return. The most important thing is not to let perfect be the enemy of good - start with basic compliance and refine your approach over time. You're asking the right questions at the right age!

This entire thread has been incredibly valuable! As someone who's been dealing with Form 5471 filings for the past few years, I want to add one more critical point that I don't see mentioned yet. Be very careful about the "constructive dividend" rules that can apply when you have inter-company transactions between your US and foreign entities. If the IRS determines that services, loans, or other transactions between the entities weren't conducted at arm's length pricing, they can treat the difference as a constructive dividend to the US shareholder. This is especially important for tech companies where you might be sharing intellectual property, providing management services, or making loans between entities. The transfer pricing documentation that Paolo mentioned isn't just good practice - it's essential protection against these constructive dividend adjustments. Also, for those mentioning the various tools and services to help with compliance, I'd add that while these can be helpful for understanding requirements, nothing replaces having a qualified international tax CPA review your specific situation. The penalties are too severe and the rules too complex to rely solely on automated tools, especially in your first few years of filing. One last tip: if you're in a situation where you realize you should have been filing Form 5471 in prior years but didn't, there are voluntary disclosure programs that can help minimize penalties. Don't just ignore it hoping the IRS won't notice - international information returns are increasingly scrutinized.

This has been an absolutely fantastic thread! As someone who just went through my first Form 5471 filing last month, I wish I had found this discussion earlier. I want to add one more practical tip that helped me tremendously: create a detailed timeline document that tracks all ownership changes, control periods, and key dates for both your US and foreign entities. This becomes invaluable when you're trying to determine which categories apply in each tax year, especially if you have multiple ownership changes or corporate restructuring events. For example, we had a situation where we initially formed our foreign subsidiary in July, but didn't transfer certain assets until September, and then had a small equity round in December that slightly changed ownership percentages. Having a clear timeline helped our CPA quickly determine that we were Category 3 for the acquisition, Category 4 for control, and Category 5 for CFC status, but the effective dates were different for each category. Also, echoing what others have said about record keeping - I started using a shared folder system with our accountant from day one that automatically captures all inter-company emails, contracts, invoices, and board resolutions. It's made this year's filing process so much smoother than trying to reconstruct everything after the fact. The learning curve is definitely steep, but with proper organization and professional guidance, it's completely manageable. Thanks to everyone who shared their experiences here!

Great question! As someone who's dealt with both W-2 and self-employment income, I can confirm what others have said - those Social Security and Medicare withholdings from your W-2 don't appear anywhere on your 1040 because they're handled through a completely different system. Think of it this way: when you're self-employed, YOU are both the employee and the employer, so you have to calculate and pay both portions of FICA taxes on Schedule SE. But when you have a W-2 job, your employer has already handled their portion AND withheld your portion from your paychecks. They've sent all of that money directly to the government separate from your income tax withholdings. The IRS already knows exactly what was withheld for Social Security and Medicare because your employer reported it through quarterly payroll tax filings. That's why there's no need for you to report those amounts again on your 1040 - it would be redundant information that the IRS already has. One thing to keep in mind with mixed income: if you have both W-2 and self-employment income in the same year, your W-2 Social Security withholdings do count toward the annual Social Security wage cap, which can reduce what you owe on your self-employment taxes. But that calculation happens automatically when you complete Schedule SE.

This is exactly the kind of confusion I had when I transitioned from pure freelance work to having a regular job! What helped me understand it was thinking of FICA taxes (Social Security and Medicare) as completely separate from income taxes, even though they both come out of your paycheck. When you're self-employed, you see the full picture on Schedule SE because you're responsible for calculating and paying everything yourself. But with W-2 employment, it's more like a "set it and forget it" system - your employer handles all the FICA calculations, withholdings, and payments behind the scenes. The key insight is that your employer doesn't just withhold your portion of FICA taxes; they also contribute their matching portion (another 6.2% for Social Security and 1.45% for Medicare) and send the entire amount directly to the government through quarterly payroll tax deposits. The IRS gets all this information through Form 941 that your employer files quarterly, so they already know exactly what was paid on your behalf. Your W-2 shows those withholding amounts mainly for your records and so you can verify that the right amounts were taken out. But from a tax filing perspective, those FICA taxes are already "done" - there's nothing left for you to calculate or report on your 1040.