I was thinking the same thing but I got reminded by one article that the FEIE does not simply remove the FEI. I’ll have to search for that article but I think the way it works is you do two calculations:
1) FEI only tax
2)( FEI plus other income) tax
3)subtract 1) from 2) ; this keeps the other income suspended at the higher tax rates. I guess I’m assuming here that your FEI > deductions.
“Figuring the tax: Beginning with tax year 2006, a qualifying individual claiming the foreign earned income exclusion, the housing exclusion, or both, must figure the tax on the remaining non-excluded income using the tax rates that would have applied had the individual not claimed the exclusions.”
- This reply was modified 2 years, 9 months ago by kaneohe.