What is Form 673 used for?
File Form 673 with 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.
How is foreign housing exclusion calculated?
The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. The amount is 16% of the maximum exclusion amount divided by 365 (366 if a leap year), then multiplied by the number of days in your qualifying period that fall within your tax year.
How do you declare foreign income in the US?
If you earned foreign income abroad, you report it to the U.S. on Form 1040. In addition, you may also have to file a few other forms relating to foreign income, like your FBAR (FinCEN Form 114) and FATCA Form 8938.
Who fills out Form 673?
Who fills out Form 673? US citizens working for a US company but living in a foreign country fill out Form 673 each year to ask their employer to exclude all or part of their wages from US income tax withholding while they’re working in a different country.
Do I need to file Form 673?
Form 673, Statement for Claiming Exemption from Withholding on Foreign Earned Income Eligible for the Exclusions Provided by Section 911, is an acceptable statement. You can use Form 673 only if you are a U.S. citizen. U.S. resident aliens are not allowed to file Form 673. You do not have to use the form.
What are the key factors for the physical presence test?
Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period including some part of the year at issue. You can count days you spent abroad for any reason, so long as your tax home is in a foreign country.
Do I need to file Form 2555?
Who needs to file Form 2555? You need to file IRS form 2555 if you want to claim the foreign earned income exclusion. You can claim an exclusion for income you earned abroad if you qualify under the bona fide residence test or the physical presence test and if you have a foreign tax home.
What is the maximum foreign housing exclusion for 2020?
You are a calendar year taxpayer. The number of days in your qualifying period that fall within your 2020 tax year is 140 (August 14 through December 31, 2020). Your maximum exclusion for 2020 is $41,158 (140/366*$107,600).
What is the maximum foreign housing exclusion for 2021?
This means that the maximum amount you can exclude for the Foreign Housing Exclusion is equal to 14% of the Foreign Earned Income Exclusion. For the 2021 tax year, this amount is $15,218. For the 2022 tax year, the maximum housing exclusion is $15,680.