@Blueclouds , Namaste ji
Having gone through your post, I would have the following suggestion:
1. You can still file as Married Filing Joint ( MFJ)
(a) Under personal income Tab, enter your W-2 details.
(b) Then ( I think it is next screen ), choose "I will choose what I work on". This would then provide you a list of different types of incomes ( grouped by major categories) Go down the list till you see Foreign Earned Income and Exclusion -- FEIE.
(c) Select FEIE and now you will be asked questions about your wife's income etc. This is filling out form 2555 ---> Her Tax home is India, Her total Foreign Income in US$, when did she arrive in India XX/XX/XXXX, when did she establish Foreign Tax home ( the first 24 hr day after arrival, because you arrive in India early in the morning, few hrs. past mid-night etc. ) Go through all the screens carefully. What you should end-up with is that her income is all excluded from US taxes. Go to forms mode and make sure that this is so.
(d) You will essentially end -up paying US taxes ONLY on your income except that your tax rate would be a bit higher -- because it uses the world income for the couple to compute tax bracket and then deducts the US taxes allocated to her excluded income. This also allows the standard deduction for MFJ and not MFS.
If you need more help on this , you can add to this thread or PM me ( if the questions are not of interest to general user -- just NO personally Identifiable Information).
Is there more I can do for you ?
Namaste ji
pk
