A U.S.citizen working in a foreign country with a higher tax rate on income than the U.S.tax rate, is usually better off claiming the foreign tax credit than the foreign earned income exclusion.

Question

Quizplus · Accepted Answer

The foreign tax credit can offset taxes paid to the foreign country, potentially reducing the U.S. tax liability dollar for dollar, which is often more beneficial than excluding a portion of income from U.S. taxes under the foreign earned income exclusion, especially in countries with higher tax rates.

A USCitizen Working in a Foreign Country with a Higher Tax