In one place, IRS instructions seem to say that you can take the Foreign Income Exclusion and also make an IRA contribution. And in another place ( page 7 of Pub 590a) it says that "excluded" income can not be counted as "compensation" required to make IRA contributions. My question: can one exclude most but not all of one's foreign income, pay regular taxes on the remaining portion of NON-excluded income, and make IRA contributions against the NON-excluded income?
