Working for a contract company in Japan. Lived here year-round for 2 years now. Home of residence is MS. Should I be exempt from federal taxes (Form 673)? Pros& Cons TYIA

[ssthesf29]

I would like to know if I should do a W4 or Form 673. I have been given the option. Living in Japan and starting a contract position.

[KeshaH]

The foreign earned income exclusion for 2025 is $130,000. 

If your income is expected to be under that amount, you can provide Form 673 to your US employer to be exempt from tax withholding since all of your income would be exempt. 

If you expect your income to be over $130,000, you should provide Form W-4 to your employer to have tax withheld so that you can avoid having a balance due on your 2025 tax return.