How to Fill Out and Submit Form 673: Certification and Employer Filing

To fill out Form 673, download the current version from IRS.gov, certify in Part I which qualifying test you’ll meet and where your foreign tax home is, estimate your 2026 exclusion amounts in Part II, sign under penalty of perjury, and hand the one-page form to your employer’s payroll department. The IRS never sees it. Once accepted, your employer stops withholding federal income tax on wages that fall within the foreign earned income exclusion and foreign housing exclusion under Section 911.¹

Confirm You Can Use the Form First

Form 673 is for U.S. citizens only. It applies to wages paid by a non-government employer, so federal civilian and military pay does not qualify, and self-employed workers handle the exclusion through estimated payments and Form 2555 instead.²

You also need to be confident you’ll meet one of two tests by year-end, each requiring a tax home in a foreign country. Under Section 911, your tax home is your main place of business or post of duty abroad, and you won’t be treated as having a foreign tax home during any period when your abode is in the United States, unless you’re serving in a designated combat zone.³

The bona fide residence test requires you to be a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year, meaning January 1 through December 31 for calendar-year filers. Short trips home don’t automatically break residence, but the IRS weighs the overall nature and intent of your stay.⁴

The physical presence test requires 330 full days in a foreign country during any 12 consecutive months. A full day is a continuous 24-hour period from midnight to midnight; partial days and time over international waters or in the air don’t count. That leaves roughly 35 days of flexibility, tighter than most people expect.⁵

Part I: Certification

Enter the tax year for which you’re claiming the exclusion. Check the box for the test you expect to pass. Identify the foreign country where your tax home is located and the dates of your expected qualifying period.⁶

If you’ve recently moved abroad and haven’t completed a full tax year yet, you can still check the bona fide residence box as long as you reasonably expect to meet the test by December 31. For the physical presence test, list the 12-month window that will contain your 330 qualifying days.

Part II: Your Estimated Exclusion for 2026

Part II is where you tell your employer how much of your pay to treat as exempt. For tax year 2026, the maximum foreign earned income exclusion is $132,900 per qualifying person.⁷ If you’ll qualify for only part of the year, the exclusion is prorated based on qualifying days.

Line 1: Your expected foreign earned income for the tax year, up to $132,900 for 2026.
Line 2: Your expected foreign housing cost exclusion. This is qualifying housing expenses above a base amount of $21,264 (16 percent of $132,900), capped at $39,870 (30 percent of $132,900) in most locations. The IRS publishes higher caps for designated high-cost cities. Qualifying expenses include rent, utilities, and insurance for your foreign residence, but not lavish or extravagant costs.⁸
Line 3: The total of lines 1 and 2. This is the figure your employer will treat as exempt from withholding.

Be realistic with your estimates. If you overstate the exclusion, too little tax gets withheld, and you’ll owe the difference at filing time, possibly with an underpayment penalty on top.

Sign Under Penalty of Perjury

Sign and date the form at the bottom. Your signature certifies that the information is true to the best of your knowledge, and the form includes a built-in commitment: if you become disqualified, you agree to notify your employer immediately and specify what portion of the qualifying period, if any, still applies.⁶ Knowingly filing false information on a perjury-backed tax document can result in felony charges under 26 U.S.C. § 7206.⁹

Submit It to Your Employer, Not the IRS

Give the completed form to your employer’s payroll or human resources department. Your employer keeps it on file as documentation for reducing your withholding and should begin adjusting subsequent paychecks, with exact timing depending on the payroll cycle.⁶

Your employer is not required to honor the form if they have reason to believe you won’t actually qualify. If your assignment ends in six months and you’re relying on the bona fide residence test, for example, payroll could reasonably question whether you’ll meet the full-year requirement.¹⁰ Most accept the form at face value, but the regulation gives them discretion.

You’ll need a fresh Form 673 each tax year. Without an updated form on file, your employer should resume normal withholding.

If Your Plans Change Midyear

Say you submit Form 673 in January expecting a full year abroad, then get reassigned back to the U.S. in August. You must notify your employer immediately so they can restart withholding, and you should provide a new Form W-4 to reset your normal withholding status.⁶

The tougher issue is the tax that wasn’t withheld earlier in the year. If you don’t end up qualifying, that income is fully taxable, you’ll owe the shortfall at filing, and an underpayment penalty may apply. The IRS doesn’t waive underpayment penalties just because you expected to qualify.

Form 673 Doesn’t Replace Form 2555

Form 673 only controls withholding during the year. It does not claim the foreign earned income exclusion on your tax return. That is done on Form 2555, which you attach to your Form 1040 when you file.¹ Even if your entire income falls within the exclusion and your withholding drops to zero, you still need to file a return with Form 2555 attached. Skip that step and the IRS has no record of your exclusion, which can trigger notices, penalties, and interest on income you thought was already handled.

1
Internal Revenue Service. About Form 673 – Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusions Provided by Section 911
2
Internal Revenue Service. Foreign Earned Income Exclusion
3
Office of the Law Revision Counsel. 26 USC 911 – Citizens or Residents of the United States Living Abroad
4
Internal Revenue Service. Foreign Earned Income Exclusion – Bona Fide Residence Test
5
Internal Revenue Service. Foreign Earned Income Exclusion – Physical Presence Test
6
Internal Revenue Service. Form 673 (Rev. August 2019)
7
Internal Revenue Service. Figuring the Foreign Earned Income Exclusion
8
Internal Revenue Service. Determination of Housing Cost Amounts Eligible for Exclusion or Deduction for 2026
9
Office of the Law Revision Counsel. 26 USC 7206 – Fraud and False Statements
10
Internal Revenue Service. Publication 54 – Tax Guide for U.S. Citizens and Resident Aliens Abroad