Top Audit Risks for US Expats

As an American citizen living abroad, you’re already at a higher risk of getting audited by the IRS. It benefits expats to learn why that is and how to lower their risk of being audited.

Simply living abroad and being responsible for completing certain tax forms can put U.S. expats at a higher risk of getting audited by the IRS. Late filing, which can be common among expats, can also increase that risk. The IRS tends to watch expats’ finances carefully, so any mistake on required tax forms can trigger an audit. Keeping careful records and adhering to filing deadlines can reduce your chances of getting audited. As can hiring an experienced tax accountant to help you during tax season. If you are being audited, your tax CPA can help you navigate the process easily.

Our experienced professionals are here to simplify tax season for U.S. citizens living abroad. To learn more about how the tax CPAs for American expatriates at US Tax Help can assist you, call today at (541) 362-9127.

Why Are US Expats at a Higher Risk of Getting Audited?

You may have heard that U.S. expats are at a higher risk of getting audited than other American citizens. But what is that? Well, expats with foreign incomes and foreign financial assets are often watched closely by the IRS. That fact, coupled with complicated tax forms and missing deadlines, can put U.S. expats at risk of getting audited by the IRS.

Living Abroad

When you live abroad, you may have additional tax liabilities to the IRS. As long as you’re an American citizen, the IRS has a right to keep tabs on your finances and financial assets overseas to a certain extent. Because of concerns regarding money laundering and other activities, the IRS may be more likely to audit American expatriates with foreign bank accounts.

Complex Forms

Certain tax forms can also increase the risk of an audit. Unsurprisingly, many of the tax forms most likely to trigger an audit are generally completed by expatriates. The following tax forms can put expatriates at a higher risk of getting audited by the IRS:

  • Form 1116, Foreign Tax Credit
  • Form 2555, Foreign Earned Income Exclusion
  • Form 8938, Statement of Specified Foreign Financial Assets

Even minor errors on any tax form, including a normal annual tax return, can trigger an audit from the IRS. Expat tax forms are often complicated, leaving those without a tax CPA for American expatriates with a higher chance of getting audited.

Late Filing

Late filing can also put expats at a greater risk of getting audited by the IRS. Remember, expatriates generally must file additional tax forms when they move abroad. If you fail to submit certain forms to the IRS by the proper deadlines, the tax agency may get concerned about your foreign holdings and audit you.

How Can You Lower Your Risk of Getting Audited as a US Expat?

Getting audited as an American expatriate can be a lengthy, overwhelming process. After moving abroad, the last thing you want is for tax-related worries to tarnish your new life overseas. So, expats should learn helpful tips to lower their risk of getting audited after moving abroad.

Keep Careful Records

Sometimes, when expats make an honest mistake on tax returns or other forms, they’re audited. What may seem like a simple error to you can be a big deal to the IRS. So, it’s important to keep careful records, which you can hand over to your tax CPA for American expatriates if you’re audited.

If you’re unsure which records to keep, keep them all. That means keeping documents that show the day you moved, or began earning income from your new job overseas. Keep bank records, too. Having ample information to refer to when navigating an audit can be very helpful for American expatriates.

Be Aware of Deadlines

As a U.S. expat, you may have to file different tax forms than when you lived domestically. Because of that, you may be beholden to different filing deadlines. That can be confusing for Americans who are used to filing their tax returns on Tax Day. It’s important to remember that deadlines for expat forms may be unusual. When you miss a deadline, it puts you at a higher risk of getting audited. So, be sure to stay on top of deadlines and file for an extension if necessary.

Hire a Tax CPA

Tax season can be confusing for everyone, especially for expats who have just moved abroad. Hearing that you may be at a higher risk of getting audited can cause unnecessary concern and stress. Instead of worrying about a potential audit, turn to a reliable tax accountant.

An experienced tax CPA for American expatriates can help you properly file and submit all necessary tax forms to lower the risk of an audit. Your tax accountant can inform you of additional IRS forms and potential reporting responsibilities to the Financial Crimes Enforcement Network that you may have been unaware of previously.

What Can You Expect from an Audit as a US Expat?

In the unfortunate circumstance that you get audited by the IRS as a U.S. expat, it’s important to know what to expect. With the right tips, audits can be more easily navigated. Without the right tips, an audit from the IRS can be a difficult process for expats.

Getting audited by the IRS doesn’t have to be stressful. Once you notice that the IRS will audit you, reach out to a tax CPA for American expatriates. Your tax accountant can help you understand why the IRS may be auditing you and what to do next. Your tax CPA can also gather the necessary documents to verify your provided information and hasten the process.

Unfavorable audits become far less likely for expats when they hire an experienced professional to help them complete their tax liability. Your tax accountant can prepare for an audit before you’ve even been contacted by keeping careful records of your tax forms while abroad.

Our Tax CPAs Can Help US Expats Prevent an Audit

If you want to lower your risk of getting audited while living overseas, our tax professionals can help. To learn more about how the tax CPAs for American expatriates at US Tax Help can assist you, call today at (541) 362-9127.