She does! All US persons must declare all income from any sources foreign or domestic. But you can also take a deduction for any foreign taxes paid. Your wife can pay the taxes abroad and then take a deduction for the taxes that she pays over here. If the US taxes on what she earns are higher then she'll still owe a little. If the foreign taxes are higher then she'll have an extra credit. Either way she avoids paying the same taxes twice.
@PaulTaguchi
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