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Yes, you can file jointly regardless how your wife's name is listed on her W-2, as long as her social security number is correct on the form. Also, be sure that she files with the name that in fact matches her social security card.
As to which status is better - Married Filing Jointly (MFJ) status is much more beneficial for the taxpayers, as it allows practically all credits and deductions if you qualify for them.
Married Filing Separately (MFS) is usually the most expensive method of filing taxes. The tax rate is higher, many credits are disallowed, such as Earned Income Credit, Child and Dependent Care credit, Education credits, etc. Numerous deduction are reduced or disallowed as well. It would be very rare for the MFS status to reduce tax burden.
For a detailed comparison of both statuses, please click here.
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