Your wife should have filed as normal for 2016 as she was in the US for essentially the entire 2016 tax year. If you were married as of December 31, she would have filed 'married filing separately' to avoid adding your income into the mix - something you definitely want to avoid. This is the link to the overall guide which you need to read:
https://www.irs.gov/publications/p54. Of course it is written in 'federalese' compounded by IRS obscurity, but essentially everything for a simple return is in there. I use the 'Free Fillable Forms' to file, as my returns are simple at the moment - see
https://www.freefilefillableforms.com/#/fd. Many folks use TurboTax.
She has to file Form 8965 to claim the ACA exemption for 2017. Her income for 2017 needs to be converted to US$, and there is no official rate. Read this to see what is acceptable:
https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates. As she was present in the UK for all of 2017, she does quality for FEIE under both the bona fide residence test and the physical presence test.
She may or may not need to file Fin-Cen 116 (AKA FBAR). That kicks in if at any point during the tax year (calendar year) the aggregate maximum value of all financial accounts (either owned by the taxpayer or an account over which the taxpayer has signature authority) hits the magic $10K threshold. There's fuzzy math involved which could come into play. For example, if she had an account with $5K at bank A, and switched to bank B, and moved all of the money, despite having only $5K in *real money*, the Treasury Department considers it $10K - and she would need to file. It's an on-line informational filing only, and goes to the Treasury Dept., not the IRS. It is normally due on April 15th of the year following the tax year.
Your wife will likely NOT owe any US tax, but with £11K in income, she would need to file for 2017. Going forward, it is wise to file even if she doesn't need to do so - it's a much needed paper trail in some cases.
