hedgeslaw
Level 3

Here are my thoughts to help guide your investigation:

There is an IRS publication on these topics, but this is the way I understand it ...

Look into the "substantial presence" test as well as the "green card" test to determine "residency" status.

Look into the "First Year Choice" rule.

It is my understanding that the MFJ status may be available if one spouse is a legal resident and the other (a non-resident) "elects" to be treated as a legal resident and are married at year end.  

Election - If, at the end of your tax year, they are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, they may be able to ELECT on a joint return to treat the nonresident as a U.S. resident using the MFJ -Married Filing Jointly tax rates. This may include situations in which one is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other is a nonresident alien at the end of the year. This may be your approach: Attach a statement, signed by both spouses, to their MFJ married filing jointly return for the first tax year for which the choice applies. It should contain the following information:
-A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year, and that you choose to be treated as U.S. residents for the entire tax year, and
-The name, address, and identification number of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.)

They can suspend or revoke the election if the situation warrants it

If no election, consider Head of Household status.

It may be the case that since the embassy is foreign soil, her earnings may be considered foreign sourced so look into a possible tax treaty exclusions for personal services at the embassy and need to report that income. Determine the nature of the embassy employment ... researcher, independent contractor, employee, etc. ... refer to the French/US tax treaty ... and file an 8833 for the treaty based exclusion.

RULE If Client pays tax to a non-USA country on non-USA-sourced income, Client can sometimes reduce or eliminate their US income tax by (1) Foreign Income Exclusion or (2) Foreign Tax Credit.

There may be an issue to resolve the French withholding on her wages and a refund may be in order.

Hope this helps. If so, please mark your questions SOLVED so others can find an answer quickly

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