Under W2 it's asking me if I worked outside the US. I currently work for an organization that is based in Arlington, VA but I work in Germany and am paid in USD.

[nekkron]

I am not employed by the US government but work closely with them.

[DS30]

Yes, you will check that worked outside the USA (unless actually paid by the US government). Income is sourced to where the work is performed so if you worked in Germany, then the income will be German-sourced.

Depending on your particular situation, you may be able to claim a foreign earned income exclusion. The tests, the exclusions, and the deduction are explained in Foreign Earned Income Exclusion.

TurboTax will guide you on taking the foreign earned income exclusion and foreign housing deduction under Federal Taxes> Wages and Income>I'll choose what I work on (or jump to full list)> Less Common Income (show more)> Foreign Earned Income and Exclusion.