This is actually not entirely accurate. While some taxes can be discharged in bankruptcy, there are strict requirements. Self-employment taxes specifically have additional complications because they include both income tax and what would normally be FICA taxes (Social Security and Medicare). The FICA portion is much harder to discharge. Also, filing fraudulent returns or willful evasion will prevent discharge regardless of timing. Given that OP deliberately chose not to pay the taxes to fund their business instead, a bankruptcy judge might view that as willful evasion.

Is there a statute of limitations on how far back they can come after you for unfiled taxes? I'm worried they'll want returns from like 10 years ago even though I wasn't making much money back then.

The statute of limitations for the IRS to assess taxes is generally 3 years from the date you file your return. However - and this is important - there is NO statute of limitations on unfiled returns. The clock doesn't start until you actually file. For your situation, they typically focus on the last 6 years for unfiled returns, but technically they could go back further. That said, if you weren't making much money in those earlier years, it might not be worth their effort. My tax preparer advised me to focus on the last 6 years, but your situation might be different.

This is so important. My brother dealt with the IRS fine on his back taxes but completely forgot about state taxes. California actually put a lien on his property before he even knew what was happening.

Nothing about my job changed at all - same duties, same desk, same boss giving me the same tasks and schedule. The only difference is they stopped withholding taxes and then sent me this 1099 instead of a W-2. I use all their equipment, work entirely on-site, and have zero control over my hours or how I complete my work.

Yeah, that's textbook misclassification then. They can't just arbitrarily decide to treat you as a contractor while maintaining all the control of an employer relationship. They're doing this to save money on their end (employer-side taxes, benefits, etc.) while shifting the tax burden to you. I'd recommend documenting everything about your work arrangement - hours, supervision, equipment, etc. Then either talk to your employer about correcting this (if you think they'd be receptive) or follow the advice others have given about filing SS-8 and 8919 forms with the IRS.

Not just 7.65% - it's more like 15.3% total for self-employment tax! Half would normally be paid by the employer, and half would be withheld from your paycheck. So if your pay didn't increase AT ALL, you're taking a massive hit.

Nope, my pay stayed exactly the same. I had no idea about this tax difference until now. So I'm making the same hourly rate but will end up paying way more in taxes? That doesn't seem right at all...

Thanks for bringing this up! I'm definitely worried they won't send the 1099 now. Should I just email them and explicitly ask if they'll be sending a 1099-NEC since I'm classified as a vendor in their system? I have all my payment records but would obviously prefer to have the official form.

Yes, I'd recommend sending them a polite email asking for confirmation that they'll be issuing you a 1099-NEC for the 2024 tax year. Something like: "I understand I'm classified as a vendor in your system, and I just wanted to confirm you'll be issuing a 1099-NEC for tax purposes since the payments exceeded $600 this year." If they come back and say they don't issue 1099s to vendors, you can politely inform them that IRS rules require a 1099-NEC for independent contractors/vendors who were paid $600 or more for services. Sometimes the accounting department just needs a friendly reminder about the requirements.

Do you need a different form to track expenses for a vendor vs a contractor? I always get confused about this stuff.

This is a really good point about state taxes. I'm originally from California and they kept trying to claim me as a resident for tax purposes for years after I moved to France. I had to provide extensive documentation proving I had no intention of returning to California. Also, the FATCA thing is real - my French bank made me fill out a W-9 form once they realized I was a US citizen, and they definitely report my account information to the US authorities.

California is particularly aggressive about maintaining tax residency. They look for any connection (driver's license, voter registration, family ties, etc.) to claim you're still a resident. Other problematic states include New York, Virginia, and New Mexico. The FATCA reporting is a double-edged sword for expats. On one hand, it means the IRS likely already knows about your foreign accounts, which increases the importance of proper filing. On the other hand, it's caused some foreign banks to refuse US clients altogether due to the reporting burden. It's unfortunately part of the reality of being a US citizen abroad.

The UK-US tax treaty does help with investment income but it's complicated. Generally, you can claim foreign tax credits in the US for taxes paid to the UK on the same income. For US-source investment income like your US investments, you'll typically pay US tax on those first, then declare them on your UK return and get credit for the US tax paid. For dividends specifically, the treaty usually reduces withholding rates. Interest and capital gains have their own rules too. I recommend keeping very clear records of all taxes paid in both countries so you can properly claim credits.