I'm a US citizen living in Japan. I need to wire US$50,000 from my own Japanese bank account to my US account. What is the best way to do so to avoid tax penalty from US and Japan? Will IRS flag this transaction for possible audit? Thanks!

From the U.S. side, there will be NO transfer taxes, though you MAY need to file Form 3520 to identify the SOURCE of the funds.

Not sure if Japan assesses a transfer tax. Suggest you ask the Japanese bank.

If you are transferring from your own account in Japan to your own account in the U.S. no 3520 is necessary. You should be filing an FBAR for the Japanese account and answering yes to the question at the bottom of schedule B.

I think transactions over 9,000 will get the attention of the IRS.

But anyway, my best advice is to talk it over with your banker before you do anything.