If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. See the Instructions for Form 1040 and complete the Foreign Earned Income Worksheet to figure the amount of tax to enter on Form 1040, line 11a.( If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251). So your tax is calculated based on as if all income was earned in the US and you only get a credit up to the lower of the US tax rate or the foreign income tax rate.
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