Revoking the Foreign Earned Income Exclusion (FEIE) and opting for the Foreign Tax Credit (FTC) instead can sometimes provide greater financial advantages for US expats. For example:
- When you want to claim the Child Tax Credit.
- When you want to contribute to an IRA.
- When your host country’s tax rate is higher than the US.
Note that if you previously excluded your foreign earned income, that choice remains in effect unless you revoke it.
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