@Blueclouds ,
(a) under wages you ONLY enter the two W-2 s
(b) Under Foreign Earned Income Exclusion you enter the Foreign income that is included for the period in the tax year ( as you said June xx till 12/31/2023 )
(c) When you are filling out the form 2555 that determines the exclusion amount, your 12 month test period would be Jun XX+1 ( i.e. the day after she arrived in India ) 2023 to JunXX+1 , 2024. This would exclude the maximum that you can and that is earning from 2023.
(d) your actual tax rate will also go up a little because you will pushed into a higher bracket.
(e) Also note that if she is NOT participating in India Social Security equivalent, then for the earnings in India she will/may also be liable for the 15.3% of her foreign income as Self-Employment Tax ( FICA here in the US for wage earners but at double the rate.
(f) Because US is not taxing the foreign income ( up to the excluded income amount) there is NO Foreign Tax Credit on that --- only the foreign tax unexcluded income ( i.e. is being taxed by both USA and India ) is eligible for foreign tax credit.
Is there more I can do for you ?
