One thing nobody's mentioned yet - depending on your visa type, you might qualify for closer connection exception! I was on J1 and even though I passed the substantial presence test, I was able to file Form 8840 claiming closer connection to my home country (Brazil) and avoid being treated as a US resident for tax purposes. Worth looking into depending on your specific situation.

Quick tip from someone who's been through this: If you have any PFICs (Passive Foreign Investment Funds) in Australia like certain mutual funds or ETFs, be super careful. The US tax treatment is brutal and requires filing Form 8621 which is insanely complicated. I had to sell all my Australian index funds because the reporting requirements were such a nightmare.

One more thing that tripped me up with the Saver's Credit - make sure you're using Form 8880 to claim it. The credit won't automatically calculate even if you enter all your retirement contributions correctly.

Dylan, you're absolutely right that you should qualify! Since you were never enrolled full-time by your school's definition (12+ credits), the IRS won't consider you a full-time student either. The key is that "full-time" status is determined by your educational institution's standards, not a universal number. Just a heads up though - double-check that you weren't claimed as a dependent on anyone else's tax return (like your parents'), as that would disqualify you regardless of your student status. Also make sure your $3,800 contribution was made by the tax filing deadline to count for that tax year. With your $32k AGI, you'll get a 10% credit rate, so you could be looking at up to $200 back (10% of $2,000 max eligible contribution). Don't forget Form 8880 like Paolo mentioned!

This is a really complex situation that highlights why tax planning can be so tricky for married couples! From what everyone has shared, it sounds like you've got multiple factors working against joint filing in your specific case. One thing I haven't seen mentioned yet is whether you're both contributing to retirement accounts like 401(k)s or IRAs. The contribution limits and deduction phases can work differently between filing statuses, especially with your combined income level. Also, if either of you has access to a Flexible Spending Account (FSA) or Health Savings Account (HSA) through work, maxing those out could help reduce your taxable income regardless of filing status. Given all the variables people have mentioned - AMT, SALT caps, withholding issues, student loan interest, and income-based phase-outs - it might be worth consulting with a tax professional for this year and potentially adjusting your withholdings for next year. Sometimes the cost of professional advice pays for itself when you're dealing with situations this complicated. The silver lining is that now you know to run both scenarios every year. Tax situations can change, and what's optimal one year might not be the next!

This is exactly the kind of situation where the complexity of the tax code really shows itself! Based on all the great analysis in this thread, it sounds like you're dealing with a perfect storm of factors that make joint filing less advantageous in your specific case. One additional thing to consider that I haven't seen mentioned yet is the timing of when you make estimated tax payments or adjust withholdings. Since you've discovered this discrepancy now, you might want to increase your withholdings for the remaining pay periods this year to avoid underpayment penalties, regardless of which filing status you ultimately choose. Also, keep in mind that some states have different rules for married filing separately vs. jointly, and this can sometimes affect your federal return calculations indirectly. If you're in a state with its own income tax, make sure you're running the numbers for both federal AND state returns under each scenario. The fact that you took the initiative to compare both filing methods is really smart - most people just assume joint is always better and never check. This discovery could save you money not just this year, but potentially for years to come if your income situation stays similar. Just remember to re-evaluate annually since tax law changes and income fluctuations can shift which option is more beneficial.

One thing nobody mentioned yet - if your brothers self-employment income is really small (like under $400 net profit) he doesn't have to pay self-employment tax on it, but still has to report the income. Saved me some $$$ when I was just starting my side gig!

Another important thing to consider is recordkeeping! For your brother's freelance work, he needs to track EVERYTHING - receipts, mileage, client payments, business equipment purchases, even home office expenses if he works from home. The IRS requires good documentation for all business deductions. I learned this the hard way when I couldn't find receipts during an audit. Now I use a simple spreadsheet or app to track expenses monthly rather than scrambling at tax time. For mixed-use expenses like his phone or internet, he'll need to calculate the business percentage based on actual usage. The key is being able to prove the business purpose if ever questioned. Also, since he has both W-2 and 1099 income, he should definitely consider making quarterly estimated tax payments for the freelance portion. The IRS expects you to pay taxes throughout the year, not just at filing time, and there can be penalties if you owe too much in April.

Be careful about state residency too!! The Substantial Presence Test is for federal taxes, but states have their own rules for residency. Some states are super aggressive about claiming you as a resident if you spend a certain number of days there. For example, NY considers you a resident if you maintain a permanent place of abode and spend 183 days or more in the state. California is even worse - they'll try to claim you're a resident based on much less. State taxes can be a huge additional burden depending on where you live.

This is such a common situation that catches people off guard! I went through the exact same transition two years ago and it was overwhelming at first. One thing I'd add to the great advice already given - make sure you understand the timing of when you need to start making estimated quarterly tax payments. Once you're a tax resident, you're subject to the same pay-as-you-go requirements as US citizens. If your employer is still withholding at nonresident rates, you might end up owing a significant amount at year-end and potentially face underpayment penalties. I'd recommend calculating your expected tax liability early in the year and either asking your employer to increase withholding or starting to make quarterly estimated payments. The IRS doesn't care that this is your first year as a resident - they expect you to figure it out! Also, start gathering all your foreign account statements now. The FBAR filing deadline is different from your tax return deadline (October 15th with automatic extension vs. April 15th), and the penalties for not filing or filing incorrectly can be severe. Better to be over-prepared than scrambling at deadline time.