TL;DR — Key Takeaways
- →FEIE wins in zero/low-tax countries (UAE, Bahrain); FTC wins in high-tax countries (Germany, France).
- →The FEIE + FTC stack sometimes beats either strategy alone — particularly for mixed income types.
- →FTC carryforward (5-year window) is tracked per strategy, useful for country-hoppers.
- →FEIE does not reduce self-employment tax — a critical hidden cost for freelancers.
- →The optimizer runs §911 and §904 math deterministically — it's a pre-flight check, not a filing.
US citizens abroad have a tax problem that citizens of almost no other country deal with: you owe the IRS regardless of where you live. The only question is how much — and two elections exist specifically to reduce that number.
FEIE or FTC. Your CPA has a preference. Your nomad Slack has a different one. The honest answer is that neither is universally better, and the difference between picking the wrong one can be thousands of dollars.
The FEIE / FTC Optimizer runs all three strategies against your actual numbers and shows you which one costs the least. For the full explanation of how FEIE and FTC work mechanically, see our FEIE vs. FTC guide. This post is about what the optimizer does.
Run the optimizer on your actual income — it calculates §911 and §904 math side by side and tells you which strategy wins, and by how much.
Try it free →The Three Strategies, in Plain Terms
FEIE Only excludes up to $132,900 (2026) of foreign earned income from US federal tax. It wins in zero-tax and low-tax countries — UAE, Bahrain, Cayman Islands — where you're not paying much foreign tax and the exclusion directly reduces your US bill. The catch: FEIE doesn't touch self-employment tax (15.3% on net SE income), and it can interact awkwardly with the standard deduction in ways that actually hurt you at certain income levels.
FTC Only credits foreign taxes paid against US liability, dollar for dollar. It wins in high-tax countries — Germany, France, the UK — where foreign tax is often larger than what the US would charge. It can also generate carryforward credits: excess FTC rolls forward up to 5 years, which matters a lot for nomads who move between low-tax and high-tax countries.
FEIE + FTC Stack applies FEIE to earned income and FTC to passive income (dividends, interest, rent). This combination sometimes beats either strategy alone, particularly if you have significant passive income alongside employment income. Most nomads don't realize this option exists.
What to Enter
The form asks for filing status, tax year, income country, foreign wages, self-employment income, US-source income, passive income, total foreign taxes paid, days abroad, Bona Fide Residence status, state, and any FTC carryforward from prior years.
One field that trips people up: whether you've revoked FEIE in the last five years. If you revoked it — even once — you're barred from re-electing for five years. The optimizer adjusts for this automatically, so the ineligible strategy is clearly marked.
What You Get Back
Three scenario cards, side by side. Each shows federal income tax, FTC applied and unused, FTC carryforward generated, self-employment tax, NIIT, additional Medicare tax, state tax, and total net cost.
The best option gets a highlighted badge. Each card includes a plain-English note explaining why it produced the result it did — enough context to understand the tradeoff, not just accept the number.
The FTC carryforward section is worth reading carefully if you move between countries. A nomad who spent a year in Germany (high tax) generating unused FTC can apply that carryforward to reduce US liability in a subsequent UAE year (zero foreign tax). The optimizer shows you the carryforward balance per strategy so you can plan for it.
The optimizer runs §911 and §904 math deterministically. It's the right starting point before you sit with a CPA — you walk in knowing which direction to lean, and why.