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When reporting foreign income on your US tax return, you can choose between the foreign earned income exclusion ($107,600 for 2020) OR the foreign tax credit. You cannot use both at the same time.
Please read this TurboTax article on Filing taxes while overseas.
Thanks for your info. Quick question what is the difference between
1. foreign earned income exclusion ($107,600 for 2020)
2. OR the foreign tax credit.
Is there a certain benefit between the two if foreign income is at a certain level. Fore example anything over 200,000 is best to use foreign tax credit. Thanks for the info
The Foreign Earned Income Exclusion is filed on Form 2555 and The Foreign Tax Credit is filed on Form 1116. Both the credit and the deduction are entered in the same place.
In most cases, taking the credit works out better than the deduction. TurboTax will help you decide which one's best for you when you go through this section.
For more information please check the link below :
Where do I enter the foreign tax credit (Form 1116) or deduction for 2020?
Thank you so much and well understood that Turbo Tax will be able to determine which is the right path to take either credit or deduction. Thank you and be safe
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