The Foreign Earned Income Exclusion provides an eligible taxpayer a significant tax benefit with the ability to not pay income tax on the eligible exclusion amount.
That earned income does not however become excluded from all tax conditions for the tax year, only from being subject to income tax on that amount of dollars excluded.
The excluded income is included with other income not excluded to compute the amount of capital gains tax, and the amount of income tax on taxable income after deductions.
