An expatriate who works in a country with an income tax rate higher than the U.S. rate probably will find the foreign earned income exclusion preferable to the foreign tax credit.

Question

Quizplus · Accepted Answer

The foreign tax credit is often more beneficial when the foreign tax rate is higher than the U.S. rate, as it allows the taxpayer to offset U.S. taxes with taxes paid to the foreign country, potentially reducing double taxation more effectively than the exclusion.

An Expatriate Who Works in a Country with an Income