Form 673 – Claim Exemption From Income Tax Withholding From Your U.S. Employer

Form 673

If you are working abroad for a U.S. employer, you may be eligible to have your federal income tax withholding reduced by the expected tax benefit for the foreign earned income exclusion and foreign housing exclusion.

File IRS Form 673 To Claim Exemption From U.S. Income Tax Withholding

IRS Form 673, Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion(s) Provided by Section 911 can be completed and provided to your U.S. employer to claim an exemption from U.S. income tax withholding on wages earned abroad to the extent of the foreign earned income exclusion and foreign housing exclusion.

Who Can File IRS Form 673

U.S. citizens claiming Section 911 exemption for foreign earned income and qualified housing expenses. Resident aliens are not allowed to file Form 673.

How To File IRS Form 673

Similar to the Form W-4, the Form 673 is provided to your U.S. employer. The IRS Form 673 authorizes your employer to not withhold federal income tax from wages you earn while working abroad. However, it doesn’t apply to Medicare and Social Security tax withholding. There is no exemption applicable for these taxes while you are employed by a U.S. employer.

IRS Form 673 Risks

There are risks that must be considered when filing the Form 673. Namely, if you end up not qualifying for the Section 911 exemption (the “foreign earned income exclusion”), then you will owe tax on your income tax return. In addition, you may also have a penalty for the underpayment of taxes during the reporting tax year.

If you provide the Form 673 to your employer, it is important to be certain that you will qualify for the foreign earned income exclusion.

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If you are working for a U.S. employer overseas and need assistance with the preparation of your Form 673, U.S. tax return or determining your qualification for the foreign earned income exclusion, please click on the button below for a free quote and/or free 30-minute consultation.

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Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.

All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.

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