The Tax Credit vs the Foreign Earned Income Exclusion

In order to help protect people from double taxation, there's two main rules in publication 54. The first one is called the foreign tax credit and it basically says that you get a tax credit for any tax that you pay to a foreign government as part of your salary. The other way is called the physical presence test - 24 hours inside a foreign country counts as one day travel time. Time spent on offshore oil rigs or boats does not count as time spent inside aforeign country. If you meet that 330 day hurdle, then you can use the foreign earned income exclusion to exclude your earned income from us.