Hi,

I've been living in the US since 2004 and filing taxes as a resident alien. I got married in 2008 July and but my wife was physically present in the US only for about 3 months, Jul-Sep. I've learned that we can still choose to treat her as a resident for the whole year by filing as MFJ and reporting worldwide income.

I have 2 questions:

1. When reporting her Indian salary as foreign income, should I enter her gross salary (pre-Indian-tax) or the "net pay" (the actual money she received in her bank account after various Indian taxes and other taxable deductions like Indian pension funds)?

2. After entering her Indian salary amount in "Turbo Tax" as foreign earned income (form 2555), I noticed that my total refund went up from before. I was expecting that we'll have to pay more tax (because our combined income is more than just my income). But my "Adjusted Gross Income" went down by a percentage of her earned foreign income. Is this what's supposed to happen? Or did the software make a mistake?

Thanks
--skn

You report her gross income. Then you exclude it on the 2555.

Don't forget to do the FEIE worksheet and the 6013(h) election where she elects to be treated as a US resident.

If you file as MFJ you now have a $10,900 standard deduction and $7,000 personal exemption. Perhaps this is why your refund was increased.