Haven't done my taxes in 3 years - how do I catch up on unfiled returns?

Thanks so much for the detailed response! I'm relieved to hear there's an actual procedure for this. For the Foreign Earned Income Exclusion, do I need to have been abroad for the entire tax year? I was only out of the country for about 4 months in that first unfiled year. Also, how do I actually get the tax forms for previous years? Can I still use tax software for past years?

You don't need to be abroad for the entire tax year to qualify for the Foreign Earned Income Exclusion. There are two ways to qualify: the Physical Presence Test (requiring 330 full days outside the US in a 12-month period) or the Bona Fide Residence Test (requiring that you've established residence in a foreign country). For your situation with only 4 months abroad in the first unfiled year, you likely wouldn't qualify for that particular year. For obtaining prior year tax forms, you can download them directly from the IRS website - they maintain forms going back several years. And yes, most major tax software programs allow you to prepare and file returns for previous tax years, though you may need to purchase the specific year's version of the software. Just be aware that electronic filing is typically only available for the current and prior two tax years, so your oldest return might need to be printed and mailed.

Can it actually help with international stuff too? Like I have income from Canada but I'm a US citizen, and I'm so confused about how to report everything correctly.

I'm skeptical about these tax services that promise to solve everything. How did it actually work with submitting to the IRS? Did you still have to print and mail everything in for the older returns?

Yes, it handles international scenarios pretty well! It has specific sections for foreign earned income, foreign tax credits, and FBAR requirements if you have foreign bank accounts. For Canadian income specifically, it helps convert currency and determine which income gets reported where. It's pretty comprehensive for expat situations. For submission to the IRS, you're right that there are limitations based on how far back you're filing. I was able to e-file the most recent two years, but had to print and mail the oldest year. The system generated all the forms ready to print with clear instructions on where to mail them. It also created a cover letter explaining my catch-up filing situation which I included with the mailed return.

How does this actually work? Like do they give you a callback number or something? Seems weird to trust a third party to connect you with the IRS.

Yeah right. The IRS doesn't help anyone. They just want their money. I highly doubt some service magically gets you through when millions of people can't get through on their own. Sounds like a scam to me.

They give you a dedicated phone number to call, and when you dial it, you get connected directly to the IRS agent who's already on the line. There's no third party involved in the actual conversation - they just handle the waiting part. I was concerned about security too, but you're talking directly to the IRS with no one else on the call. I understand the skepticism - I felt the same way initially! But the reality is they're using technology to navigate the IRS phone tree and wait on hold so you don't have to. The IRS is actually quite helpful once you get a human on the line. The agent I spoke with explained my options for catching up on unfiled returns and even helped me understand which penalties could potentially be reduced or removed through various programs.

Oh crap, I didn't even think about state taxes. I lived in Illinois for two of those years and New York for part of another before moving abroad. Are the processes similar for catching up on state taxes? Do I need to file state returns before federal?

The processes are similar but each state has its own forms and procedures. Illinois and New York both have relatively straightforward processes for filing past-due returns, but they'll have different forms than what you're filing federally. Both states maintain prior year forms on their tax department websites. You don't necessarily need to file state before federal - you can work on them simultaneously. However, since most state returns start with your federal AGI or taxable income, it often makes practical sense to complete your federal return first. Just be aware that both states may have their own penalties and interest for late filing, separate from the IRS penalties. New York in particular can be quite aggressive with penalties, so don't delay getting those filed once you start the process.

This! The FBAR penalties are no joke. My cousin got hit with a $10,000 penalty for a non-willful violation. If they determine it was willful, penalties can go up to $100,000 or 50% of the account balance. Definitely something to take seriously!