If I interpret correctly what you both said, if I earn say 200K, I will be able only to exclude 112K from my income, and since my wife doesn't currently have any income, her 112K exclusion allowance will go unused, even if we file jointly. Do I understand this correctly?
Yes ... that is how it works.
This is a deviation (imo) from how other limits are handled in general for joint filing, e.g. the tax brackets do get doubled for joint filers, but in case of the FEIE, it won't. There's a big difference, as in one case I'll have 92K to pay taxes on, while in the other case (if the exclusion limits could be combined for joined filing), the family's entire 200K income could have been excluded You are trying to make sense of our income tax situation ??? LOL ... congress doesn't do things that make sense. And you do get the more favorable joint filing tax rates and the exemption ... you don't lose those AND you can exclude a good deal of your income even if it is not all of it.
