IRS Audits for US Expats: Common Red Flags and How to Avoid Them

Most US expats will never face an IRS audit — but when audits happen, they’re often triggered by very specific mistakes.

Understanding these red flags can significantly reduce risk.

Are US Expats Audited More Often?

Not necessarily — but expats face unique audit triggers, including:

• Foreign income discrepancies

• Missing disclosure forms

• Large exclusions or credits

Complexity increases scrutiny.

Common IRS Red Flags for Expats

The most frequent triggers include:

• Claiming FEIE incorrectly

• Large income swings year over year

• Missing FBAR filings

• Foreign accounts reported by banks but not on returns

FBAR mistakes are especially visible to the IRS:
👉 /fbar-foreign-bank-account-reporting-expats

Foreign Income Mismatches

When foreign income:

• Is reported to foreign tax authorities

• Appears in bank records

• But doesn’t match US filings

…it can trigger automated reviews.

This is common among freelancers and business owners.

FATCA and Third-Party Reporting

Foreign financial institutions often report account details under FATCA.

If your return doesn’t align, the IRS may flag it.

Learn more here:
👉 /fatca-form-8938-expats

What Happens If You’re Audited?

Audits may involve:

• Document requests

• Proof of residency

• Bank statements

• Income verification

Audits are usually manageable — if filings were done correctly.

Fixing Issues Before the IRS Finds Them

If mistakes were non-willful, resolving them proactively through:
👉 /streamlined-filing-compliance-procedures-expats

…can significantly reduce penalties and stress.