foreign earned income exclusion and the foreign tax credit.

I have an option to choose between the foreign earned income exclusion and the foreign tax credit.

Americans overseas can reduce their US tax burden using the foreign earned income exclusion, the foreign tax credit or a combination of both. This year, for example, claiming foreign earned income exclusion allows higher-earning expats to qualify for coronavirus stimulus payments that they would not otherwise qualify for. Unfortunately, it is not permitted to switch back and forth between one and the other. The foreign earned income exclusion requires waiting five years, or obtaining permission from the IRS, which is difficult and costly, before it can be used again. The decision to revoke the foreign earned income exclusion needs to be made not just for the immediate benefit, but also with the understanding of the longer-term impact.