Summary: I am filing Married Separately for 2011. Me: 1040 Wife:1040 NR.
This is because I want to avoid taxation on worldwide income.

Situation:
Myself:

Stayed in US for whole of 2011 and 2010.
Filed as "Single" 1040 for 2010
Resident for tax purposes for 2011. (Meet substantial presence test. Not a GC holder)
Got married in Mar 2011 in India.

Wife:

Worked in UK on work permit, salaried, from Jan 2011-Sep 2011.
After marriage in Mar 2011 in India, went back to UK.
Came to US on H4 for 3 weeks in July 2011.
Came to US on H1 on Oct 4, 2011 and working full time till present.
Days of stay in US in 2011 = ( 21 89 = 110).

Question is :
Does she qualify for foreign earned income exclusion?
Can I file married filing jointly as residents and avoid tax on her UK earned income ?

For 2011, you can only file as married filing jointly or married filing separately. You are not single.
Your spouse can file nonresident tax return or choose to file joint return as residents.
I do not think that she meets the requirements for foreign income exclusion. However on joint, she can claim foreign tax credit by filing Form 1116. Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income (http://taxipay.blogspot.in/2008/03/us-citizen-or-resident-with-foreign.html)
Do your return both ways to figure out what is best for you.

Thanks a lot Mukta!

Or, you can have the return done professionally.

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