Calculator
FEIE vs Foreign Tax Credit
For most Americans in the UK, the Foreign Tax Credit is the stronger relief: UK tax rates are usually higher than US rates on the same income, so the credit typically offsets the US bill and can leave excess credits to carry forward, while also covering unearned income the FEIE cannot. The FEIE suits lower-tax situations. This tool gives a directional steer; the right choice depends on your facts and is often a multi-year decision.
FEIE vs Foreign Tax Credit
A directional guide to which relief is likely to suit an American in the UK. Enter your income in US dollars and set an approximate UK effective tax rate. This is a planning aid, not a tax calculation.
Your UK tax as a share of total income. Most UK higher-rate taxpayers sit around 25–40%.
Indicative only, using coarse effective-rate assumptions and the 2024 FEIE cap. It does not model the interaction with the child tax credit, the FEIE’s five-year revocation rule, housing exclusions, state tax, or self-employment tax. The right choice — and it is often a multi-year decision, not a single-year one — depends on your specific facts. Treat this as a prompt for advice, not the answer.
This is one of the most consequential choices you’ll make
The FEIE and FTC interact in ways that play out over years, and switching between them has rules and costs. Before you choose, it’s worth modelling both on your real numbers. The first consultation is free.
Keep going
Explore the services, definitions and tools related to this calculator.
Related tools
In the glossary
Read more
Frequently asked questions
For most Americans living in the UK, the Foreign Tax Credit is the stronger tool. Because UK effective tax rates are typically higher than US rates on the same income, the credit usually offsets the entire US bill on UK-source income and can leave excess credits to carry forward. The Foreign Earned Income Exclusion tends to suit lower-tax jurisdictions or specific circumstances — but the right answer depends on your facts, and it is often a multi-year decision.
In a limited way. You cannot claim a Foreign Tax Credit on income you have already excluded under the FEIE — the same income cannot get both reliefs. Some people exclude earned income up to the cap under the FEIE and then use the credit on income above it, but combining them is intricate and can waste foreign tax, which is why the choice benefits from proper modelling.
No. The Foreign Earned Income Exclusion only applies to earned income — salary and self-employment. Dividends, interest, rental income and capital gains are not covered, so if you have meaningful unearned income the Foreign Tax Credit is usually the relief that does the real work.
Yes. Once you revoke the FEIE, you generally cannot claim it again for five years without IRS permission, so switching is not something to do casually year to year. This is one reason the FEIE-versus-FTC decision should be made with the long term in view rather than optimised for a single year.
Choosing between the FEIE and the FTC?
It's one of the most consequential and long-lasting choices in US expat tax. We'll model both on your real numbers — the consultation is £100 for a focused 30 minutes.