IRS Form 673 Instructions

By George Lawrence J.D.
Use Form 673 to inform your employer that you want to qualify for the foreign earned income exclusion.

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The Internal Revenue Service (IRS) allows certain US taxpayers working in a foreign country to take a tax exclusion from a limited amount of their foreign earned income. The IRS defines “foreign earned income” as income earned from work performed in a foreign country. To qualify, the taxpayer must live in and maintain a tax home in a foreign country for an entire tax year or be in the foreign country at least 330 full days during a 12-month period. The limit on the exclusion as of 2012 is $95,100. Taxpayers must file Form 673 with their employers so that the employer withholds the proper amount of federal income taxes.

Print your name and social security number on the lines provided above “Part I” on Form 673.

Write the calendar year you intend to qualify for the foreign earned income exclusion on the line provided under Part I next to the text “calendar year.” Use the other lines if you are going to qualify for the tax exclusion for a number of tax years.

Check the appropriate box indicating that you qualify for the deduction. Use the “Bona Fide Residence Test” box if you live in the foreign country for an uninterrupted period of 12 months and plan on continuing to live in that foreign country for another uninterrupted 12-month period. Use the “Physical Presence Test” box if you live in the country for at least 330 days during the course of a 12-month period. Write the name of the foreign country on the lines following “my tax home in” and write the dates on the lines that follow.

Estimate the expenses you intend to incur during the time you live abroad and write the amounts on the lines provided in Part II of Form 673.

Sign and date the form. Send the form to your employer.

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About the Author

Based in Traverse City, Mich., George Lawrence has been writing professionally since 2009. His work primarily appears on various websites. An avid outdoorsman, Lawrence holds Bachelor of Arts degrees in both criminal justice and English from Michigan State University, as well as a Juris Doctor from the Thomas M. Cooley Law School, where he graduated with honors.

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