Foreign tax credit / housing exclusion / FEIE

I live and work in the United Kingdom indefinitely, with some ties to the US. I have no plans at this time to move back to the US or California (though I could possibly return someday).

In the USA, I have: a. Bank accounts and credit cards with either a Michigan or California address, b. Personal Investments and Roth IRA with Vanguard (with some 2018 income from sale of securities). Within the UK, I have: a. UK bank accounts, b. UK government pension.

How does one use form F1116, Foreign Tax Credit? If I earned ~$130,000 in the UK, on which I paid UK taxes, and I was able to take ~$100,000 off as foreign income exclusion, how do I treat the remaining $30K? Can I claim back the UK taxes that I paid somehow?

How do I optimise the FEIE / housing exclusion / foreign tax credit?

Thank you so much.

I believe, but do not know for certain, that you can always use form 1116 to claim foreign tax credits on earned income instead of using FEIE. While using the FEIE may be simpler to use it is limited to $100k of income, as you point out.

It's prudent to explore the results of calculating US tax using both methods, FEIE + FTC/ and FTC solely, then proceeding with the one which gives the best result. Generally for UK residents/UK taxpayers, most find using Foreign Tax Credits on their own without FEIE yields the best result, although both may give a $0 tax due balance. FTC enables the carry forward/carry back benefit of obtaining excess tax credits to apply to other US tax years.

I'll sidestep the housing exclusion for now to simplify things.

If one persists in using FEIE in conjunction with FTC, they need to become aware of the "stacking rule". For someone with a total income from all sources of $130,000, the first $104,100 (the FEIE limit for 2018) is covered by the FEIE and the remaining $25,900 is applied to the FTC. This calls for "apportionment" of the total income, total UK tax paid, and segregation into appropriate 1116 'baskets' resulting in multiple 1116s. It sounds worse than it is until you have your head around how FTC works. The $25,900 will be taxed at a US rate commensurate with tax rates in the $100,000 to $130,000 range, but you'll only have a partial amount of UK tax available to offset it, although it does usually work out fine.