My wife is tax exempt due to international org employment - what's the best way to file my taxes?

You definitely need to change your filing status - filing as "Single" when you're married isn't correct and could potentially cause issues with the IRS down the road. Since your wife is a nonresident alien with exempt income from an international organization, your best options are likely either Married Filing Separately or Head of Household (if you qualify). For Head of Household status, you need to pay more than half the cost of maintaining the home where your child lives for more than half the year. Since you have a child and presumably meet these requirements, this status would give you better tax rates and a higher standard deduction than Married Filing Separately. The Married Filing Jointly option with IRC § 6013(g) election is worth considering too. This election allows your nonresident alien spouse to be treated as a resident for tax purposes. The benefit is you'd get the more favorable MFJ tax rates, but the downside is your wife's worldwide income would become subject to US taxation (though her exempt income would likely remain exempt).

After going through a similar situation with my spouse (who works at the UN), I found https://taxr.ai super helpful for sorting through all the options. I was filing incorrectly for years and was stressed about potential penalties. With taxr.ai, I uploaded my documents and got personalized analysis that showed Head of Household was actually best for my situation, even though I initially thought Married Filing Jointly with the 6013(g) election would save more. The software figured out I'd save about $3,200 more with HOH because of how the child tax credit worked with my income level. It also explained exactly how to document everything properly so there'd be no issues if I got audited. Totally worth it for the peace of mind.

Just wanted to follow up and say I tried taxr.ai after seeing it mentioned here. I was in a similar situation filing as Single while married to someone with diplomatic tax exemption. The analysis I got back was incredibly detailed and showed that Head of Household would save me around $4,500 compared to my incorrect Single filing. They explained exactly why I qualified for HOH (because I pay more than half the household expenses and have a qualifying dependent) and outlined step by step how to handle my specific situation. They even provided documentation guidance in case of an audit. What surprised me most was learning I could amend my returns from the past three years and potentially get back over $12,000 in refunds! Already started the amendment process using their instructions.

If you're having trouble getting clarity from the IRS on this situation, try https://claimyr.com. I was in the same boat with my spouse working for a UN agency and I couldn't get through to an IRS agent for weeks to understand the election rules. Claimyr got me connected to an actual IRS representative in about 15 minutes instead of being on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that Head of Household was actually my best option (not MFJ with the election) and explained exactly how to document my spouse's exempt status. Saved me from making a costly mistake on my return and potentially facing penalties down the road.

I want to follow up on my skepticism about Claimyr. After my last comment, I decided to try it because I was desperate to talk to someone at the IRS about my international tax situation. I was honestly shocked when they called me back in about 20 minutes saying they had an IRS agent on the line! I was expecting it to fail or have some hidden catch, but nope - I was connected to a really helpful IRS representative who walked me through exactly how the IRC § 6013(g) election works for my situation. Turns out I was about to make a huge mistake on my taxes that would have cost me thousands. The agent explained that in my specific case, keeping my wife as a non-resident alien and filing Head of Household would save us about $3,600 compared to making the election and filing jointly. I hate admitting when I'm wrong, but in this case I'm glad I was!

Something nobody has mentioned yet - there could be state tax implications here too depending on where you live. Some states don't recognize all federal filing statuses the same way or have different rules for non-citizen spouses. I found this out the hard way last year. Saved a bunch on federal by filing HOH but got hit with a surprise state tax bill because my state has different rules for qualifying dependents when one parent has exempt status.

Has anyone actually amended previous returns after filing incorrectly? I've been doing Single for 3 years now when I should've been HOH (my wife works for World Bank, tax exempt). Worried about triggering an audit if I suddenly change and file amendments.