Summary: While the expat experience can be an exciting an exhilarating adventure, there is no greater frustration and disappointment than having the IRS ruin your experience by auditing your tax return while away, calculating additional taxes due, penalizing and charging you interest during the process, and even perhaps suggesting jail time for your mistakes.

While the expat experience can be an exciting an exhilarating adventure, there is no greater frustration and disappointment than having the IRS ruin your experience by auditing your tax return while away, calculating additional taxes due, penalizing and charging you interest during the process, and even perhaps suggesting jail time for your mistakes.

That's why it is so important to avoid these 13 common expat tax traps.

1. Foreign earned income exclusion. Many expats believe that because their foreign earned income is below the exclusion limit they do not need to file a return. The exclusion can only be taken by filing a return and completing Form 2555. If this is not done timely, the expat will NOT be able to use the exclusion.

2. Foreign bank accounts. An Expat opens a foreign bank account and does not file treasury form TD.90-22.1 (http://www.irs.gov/pub/irs-pdf/f90221.pdf) Any US citizen with a financial interest in or who can sign on a foreign bank account with a value of more than $10,000 must file this form.

3. Foreign tax credit. Expats may also be entitled to a foreign tax credit by filing form 1116. However, a foreign tax credit may not be taken on foreign earned income excluded from tax. If not all earnings are excluded from foreign tax, a calculation can be made to take a credit on your US tax return for taxes paid on non excluded foreign income.

4. Inexperienced local tax professional. The expat lets his local tax professional continue to prepare his tax return. Many expats work statewide with their local tax professional for many, many years before going abroad.

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About the Author With over 25 years' experience providing effective tax strategies and business consulting services to entrepreneurs, Nick Hodges helps successful business owners across the country navigate the many transitions of their growing companies. His specialty is helping successful business owners convert their success into personal wealth for retirement. Working as their Premier Tax CFO, Nick helps business owners go beyond just getting the numbers right for their businesses, he helps them get the financial answers right for their families and their futures. Mr. Hodges is a diverse financial professional whose resume includes: business coach, estate planner, co-founder of an accounting firm and a financial services firm, respected national speaker and adjunct professor at Cal State Fullerton University. A CPA since 1981, a Certified Financial Planner since 1997, and a Personal Financial Specialist since 1998, he is one of only 4500 CPA's nationwide who holds both the Certified Financial Planner and Personal Financial Specialist designations. Nick's experience features a passport stamped with some of the world's most famous destinations, degrees from two of the country's most respected business schools and a lifestyle that offers the perfect balance in fulfilling the needs of career, community, self and family. He has been featured in the Orange County Register, radio interviews, quoted in articles and books, and is the author of a highly popular series of books and manuals for the tax professional community. Nick is the President of NCH Wealth Advisors, a wealth management firm in Fullerton, California. With the broker-dealer, Money Concepts since 1999, Nick is also the President of Professional Financial Affiliates, Inc. (PFA) a continuing education firm serving the tax professional community. As an author, speaker, and co-developer, Nick generously shares his techniques and perspectives nationwide through seminars and conferences sponsored by Money Concepts, PFA and various state accounting societies

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