Considering that the US is the only country in the world that taxes its non-resident citizens on worldwide income, it is no surprise that so many US expats are unaware of their tax filing obligations. You are far from alone.
Since you spent so much time in the US, you may not qualify for the Foreign Earned Income Exclusion - this depends on the facts. As it happens, for most UK residents and tax payers, it is not really so necessary to claim the FEIE anyway, as Foreign Tax Credits should reduce your US tax to nil, assuming everything is straight forward (there are some incomes that are tax-free in the UK, but taxable in the US, eg ISA/SIPP interest and capital gains). Depending on the amounts, personal allowances can often take care of these. The fine on late tax return filing is limited to the tax due, so if there is no tax due, there will be no fines or late filing penalties.
Many people, especially those who have children, are actually entitled to a refund (tax credits).
The issue of you having more than $10,000 is slightly more problematic, as there is no automatic right to have penalties abated if no tax is due, although the IRS did promise not to impose penalties for those filing late FBARs by September 9th, (if no tax due), this date has now passed. Nevertheless, it is doubtful that the IRS are going to try and impose penalties in cases of no tax lost, and if they do, there is a strong case for challenging them.
My advise to you is: don't panic, get professional advice, and sort out this issue as soon as possible. Then forget about taxes until next year.
With regards
Andrew
