I am living outside of the US. My salary consists of foreign earned income as well as an employer contribution to a retirement plan. I am paying foreign taxes on the earned income and I am not paying foreign taxes on the employer contribution to the retirement fund. Am I able to declare both sources of income, use a form 1116 to take my foreign tax credit and use a form 2555 to exclude only the employer pension contribution?
Why wouldn't you just include all of your foreign income for the Form 1116 and claim the foreign tax credit on all of the income?
You can take both the foreign earned income exclusion and the foreign tax credit however I have only see the foreign tax credit taken when not all the income has been excluded because wages were higher than the exclusion. But I don't see why you cannot do want you stated.
Please note too that if you have been taking the exclusion in prior years and you do not take the exclusion this year, that in effect, you have revoked the exclusion and cannot use it again for 5 more years.
If you participate in a foreign retirement plan, you may have a Form 8938 filing requirement.