Foreign earned income exclusion or foreign tax credit? A planning framework
The right question is not simply which option lowers this year’s federal tax bill.
Read the guideQuestions to frame first
Begin with facts, dates, and ownership.
- When does residence begin or end?
- Which country taxes each income stream?
- What should happen before the move?
Explore the subject
Common planning threads
Rules vary by country, status, year, account, and personal facts. Confirm material decisions against current primary sources.
Tax residency
Understand the relevant countries, timing, account or legal structure, and which professional should confirm the conclusion.
Read a related guideTax treaties
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Read a related guideForeign tax credits
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Read a related guideForeign earned income
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Read a related guideForeign financial account reporting
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Read a related guidePFIC considerations
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Read a related guideControlled foreign companies
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Read a related guideCross-border gifts
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Read a related guideCapital gains
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Read a related guideRetirement-account taxation
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Read a related guideExit and expatriation planning
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Read a related guideWorking with tax professionals
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Discuss this topicArticle library · 30 guides
Read about tax planning
Use these source-linked guides to understand the recurring decisions, then confirm how the rules apply to your countries and circumstances.
FBAR and Form 8938 are not the same filing
Compare who files, which assets count, thresholds, deadlines, and where each report is submitted.
Read the guidePhysical presence or bona fide residence for the FEIE?
Understand how the two qualification paths differ and why the tax-home requirement still matters.
Read the guideThe foreign earned income exclusion for married couples abroad
Analyze each spouse's eligibility, income, travel, housing, filing status, and foreign tax credits separately.
Read the guideHow the FEIE, foreign tax credit, and IRA eligibility interact
Model tax relief and retirement contributions together rather than choosing each in isolation.
Read the guideEnding state residency before moving abroad
Separate federal citizenship-based taxation from state domicile, statutory residence, and source income.
Read the guideUnderstanding the covered expatriate tests
Review net worth, average tax liability, five-year compliance, exceptions, and the mark-to-market regime before expatriation.
Read the guideHow FATCA affects everyday banking abroad
Understand why foreign institutions ask about U.S. status and how account reporting differs from individual filing duties.
Read the guideThe first reporting review for a foreign trust
Identify trust classification, U.S. owners and beneficiaries, distributions, contributions, and information returns.
Read the guideU.S. founders with foreign companies: the first compliance map
Connect ownership, control, payroll, entity classification, information reporting, and retirement planning.
Read the guideWhy Americans Abroad Still File U S Tax Returns
New expats who need a plain language explanation of citizenship based taxation. A practical long-form guide to explain citizenship based taxation, distinguish filing obligations from tax owed, introduce exclusions credits and treaties, and the decisions that connect them.
Read the guideHow Tax Residency Is Determined When Two Countries Claim You
Mobile individuals facing overlapping domestic residency rules. A practical long-form guide to start with each country's domestic tests, apply treaty tie breaker rules where available, track homes days family and economic ties, and the decisions that connect them.
Read the guideForeign Earned Income Exclusion or Foreign Tax Credit
U S workers abroad choosing how to relieve double taxation. A practical long-form guide to explain what each mechanism does, compare eligibility and income limits, show the effect on married couples and housing costs, and the decisions that connect them.
Read the guideFBAR and FATCA Reporting Without the Acronyms
Americans with foreign accounts who need a clear compliance overview. A practical long-form guide to identify which accounts and assets count, explain the different filing thresholds, clarify ownership signature authority and joint accounts, and the decisions that connect them.
Read the guideEnding State Tax Residency Before Moving Abroad
Americans leaving a high tax state who want to establish a defensible new domicile. A practical long-form guide to separate domicile from physical presence, review statutory resident tests, change the facts that demonstrate permanent ties, and the decisions that connect them.
Read the guideHow U S Tax Treaties Help and Where They Do Not
Expats who assume a treaty automatically eliminates double taxation. A practical long-form guide to explain treaty purpose and saving clauses, distinguish income tax estate tax and social security agreements, use sourcing and residence rules correctly, and the decisions that connect them.
Read the guideTax Planning for Mixed Status Married Couples
Couples in which one spouse is a U S person and the other is not. A practical long-form guide to map each spouse's citizenship residence and filing status, compare joint and separate u s elections, review ownership of accounts property and investments, and the decisions that connect them.
Read the guideThe U S Tax Entry Checklist for Foreign Nationals
Foreign nationals approaching U S tax residency. A practical long-form guide to determine the first day of u s tax residence, review green card and substantial presence rules, identify foreign assets with unfavorable u s treatment, and the decisions that connect them.
Read the guideYear End Tax Planning for U S Expats
Americans abroad who want a repeatable process before December 31. A practical long-form guide to confirm residence workdays and tax home, estimate foreign tax credits and exclusion capacity, review gains losses and retirement moves, and the decisions that connect them.
Read the guideWhen Foreign Business Ownership Triggers U S Reporting
U S owners of companies partnerships or self employment structures abroad. A practical long-form guide to classify the foreign entity for u s purposes, explain controlled company and partnership reporting, identify payroll social tax and permanent establishment issues, and the decisions that connect them.
Read the guideBefore You Become a U S Tax Resident
Foreign nationals who can still restructure assets before arrival. A practical long-form guide to identify the first possible residency date, review foreign funds companies trusts and pensions, consider gains basis and liquidity before entry, and the decisions that connect them.
Read the guideGreen Card Tax Planning From Entry to Exit
Permanent residents who need to understand the long tax life of a green card. A practical long-form guide to explain tax residence after receiving a green card, track years for long term resident status, coordinate foreign income assets and reporting, and the decisions that connect them.
Read the guideThe Substantial Presence Test for Frequent U S Visitors
Foreign nationals who spend significant time in the United States. A practical long-form guide to count current and prior year days, explain exempt days and closer connection claims, review treaty residency positions, and the decisions that connect them.
Read the guideForeign Investments That Become Tax Toxic in the United States
Inbound residents holding funds insurance or savings products abroad. A practical long-form guide to identify pooled funds and insurance wrappers, explain pfic and trust classification risks, compare sale restructuring and continued ownership, and the decisions that connect them.
Read the guideU S Estate Tax Exposure for Foreign Nationals
Noncitizens who acquire U S property investments or business interests. A practical long-form guide to distinguish income tax residence from estate domicile, identify u s situs assets, review treaty coverage and exemptions, and the decisions that connect them.
Read the guideSocial Security and Medicare for Non U S Citizens
Foreign nationals with U S work histories planning benefits. A practical long-form guide to review insured status and work credits, apply nationality residence and payment restrictions, coordinate foreign coverage through agreements, and the decisions that connect them.
Read the guideLeaving the United States With Foreign and U S Assets
Foreign nationals preparing to end U S residence. A practical long-form guide to select the departure date and final residency year, review green card surrender and treaty positions, plan gains distributions and compensation, and the decisions that connect them.
Read the guideCovered Expatriate Rules for Long Term Green Card Holders
Long term residents evaluating permanent departure. A practical long-form guide to define long term resident status, apply net worth tax liability and certification tests, explain mark to market and deferred compensation rules, and the decisions that connect them.
Read the guideForeign Trusts and the U S Tax System
Inbound or resident families connected to non U S trusts. A practical long-form guide to classify the trust for u s purposes, identify grantors trustees and beneficiaries, map distributions loans and use of trust property, and the decisions that connect them.
Read the guideBuilding a U S Investment Plan as a New Resident
Foreign nationals beginning to save and invest in the United States. A practical long-form guide to set goals liquidity and emergency reserves, choose taxable and retirement accounts, integrate assets left abroad, and the decisions that connect them.
Read the guide