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Can I switch from the Foreign Earned Income Exclusion to Foreign Tax Credit?

I'm filing my taxes and I'm not sure which tax break to apply - so can I switch from FEIE to FTC?

Watch: Can I switch from the Foreign Earned Income Exclusion to Foreign Tax Credit?

A short video explaining whether you can switch from using FEIE to FTC
Can I switch from the Foreign Earned Income Exclusion to Foreign Tax Credit?

To revoke the Foreign Earned Income Exclusion (FEIE) means that you will stop using this option when you submit your US tax return. However, it is important to determine whether this is the right course of action for you, because if you revoke the FEIE you cannot claim it again for at least five years.  

For example, there may be a year when you think it's less beneficial for you to use the FEIE, but you must plan ahead and estimate what impact this will have on your tax liability over next five years. Usually, US expats will revoke the FEIE if they choose to use Foreign Tax Credits instead, and often that is a better decision for them. However, it's important to engage in tax planning with a professional to understand the long-term impact on your taxes before making any decisions. 

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Last updated: 27 September 2024 at 16:34