I have new construction windows. I am installing them with 1″ Rigid Foam (XPS),  2×4 walls and I’m using Azek Trim with Fiber Cement siding (Hardi). The trim is only 0.75″ thick. I could by thicker trim, but at a significant cost.

Option 1:
The question, the offset between the Nailing Fin to the Window Flange is about 1-1/4″. The exterior frame of the window sticks out quite a bit. Is there anything wrong with putting in house wrap, installing the window over top. Then butting the rigid foam boards over the nailing fin to the window frame. Now install the trim overtop?

Option 2:
Alternatively, I can build the windows out with wood strips such that the nailing fin is flush with the foam board. Then install a wood strip overtop the nailing fin and then install the trim overtop. This method is usually the way its done, however, I do not see why option 1 would be any different.

What would you recommend to combat the 1-1/4″ flange?

My trim will have a drip cap up top with 1×4 trim and a sill nose.

EDIT:
Option 3:
Return the 0.75″ trim and buy 1″ (5/4) Trim
I feel like this is the thing to do. Similar to option 2, but just use thicker trim.

Thanks all
Tom