Yes, you CAN file jointly with your wife.
A couple of things to remember:
1) She has to apply for an ITIN, which requires submission of Form W-7 with the joint tax return, along with a notarized photocopy of her passport. If the notarization is done in India, then you must get an aspotille done as well (the apostille is Indian government certification of the authenticity of the passport).
2) You CANNOT efile the return; it MUST be mailed due to the Form W-7.
3) Both the Form W-7 AND the joint tax return MUST be signed by your wife, and the signature MUST be original; a faxed or scanned signature will NOT be accepted. Further, you must BOTH sign a Residency Choice Statement which is included with the tax return.
4) You must declare ALL world-wide income, which includes interest earned in Indian banks plus any income she earned while working in India. You can mitigate any added tax by submitting either Form 1116 to claim the Foreign Tax Credit or Form 2555 to claim the Foreign Earned Income Exclusion.
All of this dictates that it will take about 6-10 weeks to file your return, but the process IS doable (I have done it multiple times).
If you need professional help filing, email me at
[email protected]. This IS what I do!