[gsb]

Relating to #3, if you expect to be overseas long term and you are in a situation where foreign tax credit will cover your US tax liability, it can be advantageous to use the foreign tax credit instead of the FEIE even if your income is less than the ~100k FEIE limit. This is because the unused credit can be rolled forward and used as a buffer for cases where you do something tax-advantaged in your country of residence which is not honoured by the IRS. Most commonly this could be capital gains on the sale of a primary residence which is tax-free in many countries but only partially so in the US. But there are many other such possibilities, like retirement savings not covered by totalization agreements, special treatment for redundancy payouts, lump sum retirement payments, etc. There is this general idea that tax agreements eliminate double taxation, but they only do so imperfectly because the legislation is tailored for people temporarily working overseas, not people who make their home overseas.

These cases are perhaps not relevant to the typical digital nomad when they set out, but things happen and you may choose not to return to the US. In those cases, it is good to have chosen to file your taxes in a way that maximises future choices.

In my view the FEIE should only be used if you KNOW you will go back to the US soon and want the easier filing it provides, or if your foreign tax credit is simply not enough.