I did not file income tax return for the past 10 years?

Question

I am an USA citizen (California resident). I moved to Taiwan 10 years ago to teach English. In the past 10 years, I file tax return in Taiwan, but I thought I don't need to file tax return in USA and California. I earn approx. US$30,000 every year. Now I am applying green card for my wife. The embassy here ask me to file tax return for year 2005. My questions are:

1. Do I need to file income tax return (Fed and CA) for the past 10 years now?

2. Would I be penalized for not filing in the past?
3. Is private tutor income qualified for foreign earned income credit? If my students did not give me invoice, what kind of supporting document is needed?

Answer 1

I'd strongly suggest that you consult with a CPA or tax attorney. Among other things, you must file a timely return to claim the foreign earned income exclusion. You may well be penalized for late filing and payment of any taxes due. Those tax years are all still open and need to be closed. As I said, you need professional help and you need it quickly.

Answer 2

If your fiance has never moved, then the IRS would have sent delinquency notices to the address on the account. Ask your fiance if he ever got any of those letters. Keep in mind that the IRS does not waste money asking for tax returns where they think the taxpayer is due a refund. So, in all likelihood, you file 2002-2007, get refunds on 2005-2007 and voila, you are up to date. In the event he moved and the IRS filed substitute returns, file original returns anyway. If the new returns come up with less tax, at least you can wipe out some of the debt.