Here is the situation

I am a US citizen and my spouse is a nonresident alien.
We both live abroad and have no US income, but have foreign earned income.
Since both of us lived abroad 365 days in the same foreign country, we both meet the physical present test.

So , taking 2012 for example
If my foreign income is 114850 USD
and my wife's foreign income is 94850 USD
Then if I choose to treat my wife as a US resident and MFJ
The taxable income should be:
114850+94850-11900 (standard deduction)-7600 (2 personal exemption)=190200USD
And since we can both claim the foreign earned income exclusion,
tax needed to pay shoulde be 190200-190200 (2 full FEIE )=0
Is that correct?
If not, how our tax should be calculated?
Thanks for the answer

1. You can file joint return. You will complete 2 separate forms 2555 for each of you. For 2011 the maximum income exclusion is $92900. Let us assume it is $93500 in 2012 so the exclusion amount is $187,000.
Yes, after standard deduction and exemptions you will not have any taxable income.
2. Do not forget to report foreign bank interest.
3. You may also be required to file form Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts.

1. You can file joint return. You will complete 2 separate forms 2555 for each of you. For 2011 the maximum income exclusion is $92900. Let us assume it is $93500 in 2012 so the exclusion amount is $187,000.
Yes, after standard deduction and exemptions you will not have any taxable income.
2. Do not forget to report foreign bank interest.
3. You may also be required to file form Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts.

So, it means that if my NRA spouse has very little worldwide income, or even no income at all, I can take enormous advantage since I could use the doubled FEIE?
That will be too good to be true.
Thnaks for the answer~

MukatA's post is accurate. It would appear that you would be able to avoid taxation based on the standard deduction and two personal exemptions.

Also, heed his advice about reporting foreign bank interest and submitting the FBAR (Form TD F 90-22.1.

Your advantage would be due to the standard deduction and personal exemption.
The amount you can exclude on form 2555 is limited to $92900 (in 2011) per person.
If your income is higher than the exclusion limit, you cannot use the exclusion for your spouse on that income.