Should I take the Foreign Tax Credit or utilize the Foreign Earned Income Exclusion?
When choosing between the foreign earned income exclusion and foreign tax credit, it is an easy choice to use the credit only if you didn’t earn any wages and received only retirement income. On the other hand, if you didn’t pay any taxes to your foreign country and you did earn income, the exclusion is the better choice. Further, depending on your income and the rate of tax in your resident country, it may make more sense to use a combination of the exclusion and credit; then again, it may not. Either way, a proper analysis and comparison are recommended to determine what is most beneficial for the current tax year (but also prospectively for future years).
All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.