Foreign excluded income is not eligible for IRA contributions.
See IRS Pub 590A:
What Isn’t Compensation?
Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.
I assume that this was a 2019 contribution so the deadline to remove it without penalty has passed and you will owe a 6% penalty on the 2019 excess that REPEATS each year until the excess is removed with a normal distribution. That means the excess must be removed before Dec 31, 2020 or there will be ANOTHER 2020 6% penalty.
You are partially right and this is something I didn't realize before. However, if I go in and not include the amount I contributed into the IRA into the FEIE, I am still getting an error telling me there is an excess contribution. As I understand it, this is not supposed to happen since the amount of my income outside of the FEIE is equal to the amount of my contribution. Any thoughts? Thanks.
You are posing from the self-employed edition so according to the IRS link I posted, the eligible self-employed income is the *net* income (schedule 1 line 3) *minus* the deductible part of the SE tax (schedule 1 line 14).