Form 673

What Is IRS Form 673?

Form 673 is an essential tax document provided by the Internal Revenue Service (IRS) that allows eligible individuals to claim a tax exemption for income earned while working abroad. It is commonly used by U.S. citizens and resident aliens who work for an employer outside the United States and its territories.

What is form 673 used for?

Nowadays form 673 is used for the following purposes:

• Foreign Earned Income Exclusion: One of the primary uses of Form 673 is to claim the Foreign Earned Income Exclusion (FEIE). This exclusion allows eligible individuals to exclude a specific amount of their foreign-earned income from their taxable income, thereby reducing their overall tax liability.
• Tax Exemption for Certain Housing Expenses: In addition to the foreign-earned income exclusion, Form 673 is also used to claim an exclusion or deduction for certain housing expenses incurred while living and working abroad. This can further reduce the individual's taxable income.
• Avoidance of Double Taxation: By completing Form 673, individuals can claim a foreign tax credit for taxes paid or accrued to a foreign government. This credit helps minimize double taxation's impact, ensuring that individuals are not taxed twice on the same income.
• Compliance with IRS Regulations: Form 673 formally declares to the Internal Revenue Service (IRS) that the individual meets the requirements for the Foreign Earned Income Exclusion and other related tax benefits. By properly completing and submitting this form, individuals ensure compliance with IRS regulations and avoid potential penalties or audits.
• Record-Keeping and Documentation: Apart from its use for tax purposes, Form 673 also serves as a record-keeping and documentation tool. It provides a clear record of an individual's foreign-earned income and the corresponding tax exemptions or exclusions claimed, which can be valuable for future reference or potential audits.

How to Fill Out Tax Form 673

PDFliner is a user-friendly online platform that offers a convenient way to complete Form 673 electronically. Here's a step-by-step form 673 instructions to fill it out properly:

1. Enter your personal information in the designated fields, including your name, Social Security Number, and employer's name and address.
2. Determine your tax home and enter the location in the appropriate field.
3. Check the box next to the appropriate Statement about residency or qualifications for nonresident status.
4. Enter the amount of income you expect to earn in the "Estimated compensation expenses" field.
5. Sign and date the form in the designated fields.
6. Save the completed 673 form as a PDF or PNG file or print it out for submission.
7. If your employer requires form 673, submit a copy of the completed document to them.

Benefits of using the PDFliner's tax form 673

The key benefits of using form 673 include the following:

• Tax Exemption: Qualified individuals can exclude a specific amount of foreign-earned income from their taxable income, thereby reducing their overall tax liability.
• Foreign Tax Credit: Form 673 enables individuals to claim a foreign tax credit for taxes paid or accrued to a foreign government, further minimizing the impact of double taxation.
• Simplified Tax Filing: By utilizing form 673, taxpayers can simplify their tax filing process by avoiding the need to report foreign-earned income eligible for exclusion.