Hi and welcome to Just Answer!I would start with filing your federal tax return. This is a form for 2009 - http://www.irs.gov/pub/irs-prior/f1040--2009.pdfDo you receive any reporting forms for your income? W2 or 1099MICS? We need to determine what type of income you have - and based on that - there will be different additional forms.
If that is your business activity - all business income and expenses will be reported on the schedule C - http://www.irs.gov/pub/irs-prior/f1040sc--2009.pdf
The net income (after deductions)will be reported on the form 1040 line 12 - http://www.irs.gov/pub/irs-prior/f1040--2009.pdf
If the business has net income over $400, it may be required to file schedule SE, Self-Employment Tax and net income is likely self-employment income and 15.3% self-employment tax would be required (13.3% in 2012).
Self-employment taxes from schedule SE will go to the form 1040 line 56.
Also - she will deduct half of self-employment taxes on the line 27.Generally - that all you needs. Please review all possible deductions - that might help to reduce income tax liability.
After you will complete your federal tax return - you will also need to file the tax return for California.Depending on the reason of not filing - if you owe additional taxes - you will be assessed penalties and interest charges.The best path forward might be to ask the IRS to abate penalties, however it would be very unlikely that interest charges are abated.. File a form 843 - http://www.irs.gov/pub/irs-pdf/f843.pdf to request the "accuracy related penalty" be abate based on reasonable cause. If you provide the reason like "I forgot" - I do not think it will be considered as reasonable - so be careful when prepare an abatement request. Here are instructions - http://www.irs.gov/pub/irs-pdf/i843.pdfUnfortunately - there is no easy and simple solution.It will take time and significant effort to resolve all issues.Please be sure to ask for clarification if needed.