Haven't Filed Taxes in Years

Sorry wasn't finished yet and hit the wrong button.

I feel so stupid but I have tried to do my taxes for the past 2 years but have not been able to figure out the forms.  I left the US in 2006 so have no US income in 2007 or 2008 and I'd really like to clean everything up and file this year but I have no clue where to get started.

I would give anything to be able to afford an accountant to sort this out for me but the last guy I called charged like £400 which is wayyy out of my budget.

Am I going to be in a huge amount of trouble/debt for not filing?  I think I know what forms I need to fill out but I feel so lost when I start reading them.

Does anyone know if there is any kind of service (inexpensive) that can help me figure this out?

I think it's important to do if you want to sponsor someone for a US visa, you have to show proof of your tax returns.  I don't know if you can get fined or anything though.

If you don't owe any taxes then there is no penalty for late filing. The IRS calculates late filing penalties and penalties/interest for late payment of taxes as a percentage of any taxes owed.

This directly from IRS publication 17:

Filing late.   If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. The penalty is based on the tax not paid by the due date (without regard to extensions).

Paying tax late.   You will have to pay a failure-to-pay penalty of ½ of 1% (.50%) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. This penalty does not apply during the automatic 6-month extension of time to file period if you paid at least 90% of your actual tax liability on or before the due date of your return and pay the balance when you file the return.

I was a registered IRS tax preparer in the states before I came to the UK and have filed many late returns for people who didn't owe anything but needed to play catch-up because they were due a refund for the current year return. There were never any penalties related to the late returns as the amount of taxes due was zero.

That said, I don't do taxes anymore. The only returns I prepare now are my own and those for my immediate family members.

I use Turbotax.com ..it's not expensive, and sometimes they have promos where they will file federal for you for free! It's easy to follow too. You just answer the questions and then Turbotax does the calculating for you which is definitely better for me, I am so math challenged lol.. Anyhow, it's also great for filing abroad too...there is an option for filing non US earnings (Foreign earned income)...which I did, and if you don't make above a certain amount
   
(from the IRS site:If you are a U.S. citizen or a resident alien of the United States   and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $91,400 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts.)

, you won't owe or gain anything back. I know so many people here who have not gone back to the states in ages and never filed but I've been told it's not a good idea...a couple of them got audited when they got back, and I know at least one who actually got audited while they were here, they were still using a permanent address back home such as their parents' address. They had to provide all their paystubs from the the time they started to not file their taxes in the states, which can be tricky here since some places are not very good at giving out paystubs and they aren't very official looking and they said it was just a hassle...

at any rate...the IRS.gov site says many US Embassies have IRS offices to get tax help and the info they list for the UK is...

U.S. Embassy
24/31 Grosvenor Square
London W1A 1 AE
England   Walk-In Assistance:
Tu-Th: 9 a.m. to 4 p.m.
Phone Service:
M-F: 9 a.m. to 12 p.m. & 1:30 p.m. to 3 p.m.
Tel: +44-207-894-0476
Fax: +44-207-495-4224
Email: irs.london@irs.gov

http://www.irs.gov/businesses/small/international/article/0,,id=97324,00.html
has more info on filing taxes for US citizens abroad

Hope some of that is helpful

Yes - you need to file tax returns plus FBARs if applicable.

Given that your name is QTSmom I figure you may have children?  If so filing is likely to result in refundable child credits - so I can't see why you wouldn't want the money!

Thanks for the advice.  And I will check out Turbotax.

Guya - What is an FBAR?  I do have one child who was born in 2009 so I am assuming I can claim him as a dependent for 2009.

Does anyone happen to know if the forms have changed or if I need to fill out the 1040 and 2555 for all three years?

I'm going to call the IRS on Tuesday but I just like to hear it from as many places as possible because this stuff is so so confusing to me!

The FBAR is if you have held $10,000 or more in foreign bank account(s) in any year.

The forms are different for each year but mostly haven't changed.  You will need the 1040 and 2555 (and possibly 1116) for each year.

Thanks for that Geeta.

If I am not head of household, how do I claim for housing expenses?  My husband earns more than I do and contributes more to these expenses. Should I use a percentage of the total? 

Thank you.