The Aussie singer, who judged the show last year alongside Natalie Bassingthwaighte, Ronan Keating and Mel B, said that he feels like he might benefit more from trying to build a fanbase in the UK.
Sebastian told The Daily Telegraph: "I really want to do X Factor, I had so much fun last year and I had really good talent. It means I'm at home, you have a reliable income.
"But... my focus this year is the UK. I've locked in a little team of lawyers and agents and had a meeting with a label who's keen. I'm at that crossroads: do I take a massive hit in income and release in the US and UK, or do I do the show and try to do both? It's going to be a tough decision."
Sebastian admitted that he is currently enjoying a "creative spurt", adding: "I'm in love with music more than I ever have been. I know I'm really loving music when I listen to heaps."
The musician is currently looking for a rapper to guest on his latest track 'Battle Scars', but admitted that he has his reservations about the single, adding: "I love the song, but it's a little bit dark. I've got to be prepared not to have massive radio support for every song."
Sebastian recently became a dad for the first time when his wife Jules gave birth to a little boy called Hudson. He said that fatherhood is helping inspire him with his songwriting.
> Guy Sebastian: 'My son doesn't like my music'
> Aussie 'X Factor' judge Guy Sebastian: 'My life is great'
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