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FEIE vs Foreign Tax Credit estimator

Two ways to avoid being taxed twice: exclude the income (FEIE, Form 2555) or credit the foreign tax you paid (FTC, Form 1116). As a rule of thumb the credit wins in high-tax countries and the exclusion wins in low-tax ones — here's a rough read on yours.

1 · Foreign earned income (USD)

Wages or self-employment earned abroad — not passive/investment income.

2 · Foreign income tax paid on it (USD)

3 · Rough US marginal bracket

Directional read

Foreign Tax Credit (Form 1116) likely helps more

Your implied foreign effective rate (~25%) is at or above your rough US bracket (24%). When you already pay as much or more tax abroad, the Foreign Tax Credit usually wipes out the US tax on that income — and any excess credit can carry forward up to 10 years.

FTC keeps your income on the return, which can help with IRA contributions and the refundable Child Tax Credit (the FEIE can disqualify both).
Excess foreign tax becomes a carryover you may use in other years.
You generally can't double-dip: tax on income you exclude via FEIE can't also be credited.

How the FEIE (Form 2555) works Get this modelled properly

Rough educational estimate — not tax advice. This compares only your foreign effective rate against your bracket. It ignores the FEIE cap and stacking rule, the housing exclusion, carryovers, state tax, the Child Tax Credit, and self-employment tax. Passive and PFIC income are excluded entirely. The right answer for your situation needs a full calculation.

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