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Fillable Form 673

This form is meant to be used by a US employer to claim exemption from US income taxes withholding on wages earned abroad as well as foreign earned income exclusion and foreign housing exclusion

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What is Form 673?

Form 673, Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion(s) Provide by Section 911, is an IRS form for taxpayers to claim an exemption from US income tax withholding on their wages earned while they are living outside the United States.

Form 673 must be filled out by US ex-pats or an overseas US employee who believes that they will be able to earn the overseas earned income and housing exclusions. Once you are hired overseas, you need to complete this form, and you have to continuously complete it for the following years as long as the conditions are still applicable to you.

This way, your employer will be responsible to keep your 673 forms updated in your file. Your employer will prevent withholding taxes from your paychecks, or they will adjust their withholdings.

Filing Form 673 IRS is necessary and recommended for employees because it will increase their cash flow over the years without waiting for a refund.

You may download a PDF copy of the 673 tax form on the IRS website. But you may electronically fill out this form on PDFRun for your convenience.

How to fill out Form 673?

Enter the necessary information on the required fields. Make sure that everything you enter on this form is true, accurate, and correct. This form, when completed and furnished by a US citizen to his or her employer, permits the employer to exclude from the income tax withholding all or part of the wages paid for the services outside the United States.

Your first name and initial

Enter your first name and initial.

Last name

Enter your last name.

Your social security number

Enter your social security number.

Part I - Qualification Information for Foreign Earned Income Exclusion

Enter the calendar year or the beginning and end of the tax year you expect to qualify for the foreign earned income exclusion under either the bona fide residence or physical presence test. You only need to qualify for one of the options below.

Check the applicable box to determine the test you are taking. You may select:

  • Bona Fide Residence Test
  • Physical Presence Test

Bona Fide Test

If you checked this test, enter the following information in order:

  • Your complete tax home address if you are a citizen of the United States
  • Beginning of the tax year when you were a resident in the above address
  • The date when you expect to remain a bona fide resident and retain your tax home in a foreign country

This portion also certifies that you have not submitted a statement to the authorities of any foreign country you named above that you are not a resident of that country. But if you made a statement, the authorities of that country determined that you are a resident of that country.

It also states that based on the facts in your case, you have a good reason to believe that for the period of foreign residence you will satisfy the tax home and the bona fide foreign resident requirements prescribed by the Internal Revenue Code and qualify for the exclusion the Code allows.

Physical Presence Test

If you checked this test, enter the following information in order:

  • Your complete tax home address
  • Tax year when you are expected to be present in your tax home
  • Beginning and ending of the tax year if you are not expected to be in your tax home for the entire year.

This portion states that based on the facts in your case, you have good reason to believe that for the period of presence in a foreign country, you will satisfy the tax home and the 330 full-day requirements within a 12-month period under the Internal Revenue Code.

Part II - Estimated Housing Cost Amount for Foreign Housing Exclusion

Enter the estimated housing cost amount for the following:

  • 1 - Rent
  • 2 - Utilities (other than telephone charges)
  • 3 - Real and personal property insurance
  • 4 - Occupancy tax not deductible under section 164
  • 5 - Nonrefundable fees paid for securing a leasehold
  • 6 - Household repairs
  • 7 - Estimated qualified housing expenses
  • 8 - Estimated base housing amount for the qualifying period
  • 9 - Estimated housing cost amount

For Item 7, add items 1 to 6. For Item 9, subtract Item 8 from Item 7.

Part III - Certification

This part states that under penalties of perjury, you are declaring that you have examined the information on IRS form 673. You also believe to the best of your knowledge that it is true, correct, and complete. You also further certify under the penalties of perjury that:

  • The estimated housing cost amount you entered in Part II and the amount reported on other statements outstanding with other employers is not more than your total estimated housing cost amount; and
  • If you become disqualified for the exclusions, you will immediately notify your employer and advice what part of the period for which you are qualified.

Signature

Affix your signature.

Date

Enter the date you signed this 673 form.

How to file Form 673?

Once you completed the Tax Form 673, give this form to your US Employer to claim an exemption from US income tax withholding on wages you earned abroad up to the extent of the foreign earned income exclusion and foreign housing exclusion. It will be now the employer’s duty to withhold the correct amount of federal income tax from your pay.

However, you need to complete Form 2555, Foreign Earned Income, if you are qualified for the foreign earned income exclusion or the foreign housing exclusion or deduction. Attach your completed Form 2555 to your Form 1040, US Individual Income Tax Return, or Form 1040-SR, US Tax Return for Seniors, to claim your deduction or exclusion.

For the employer, if you received a completed Form 673 IRS from the employee, you may discontinue withholding of the US income tax on the wages that qualify for any exclusions. But if the employee does not qualify for any exclusion, disregard the 673 tax form.

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