I am a resident alien and my wife is non resident alien (on H4 Visa). However, for tax purpose, I filed joint return last year by showing her as resident. This year she earned a bonus interest income (from opening a bank account, will receive form 1042 as per the bank) and as per IRS, such income is not taxable. This year also, I will file as 'Married, filing Jointly'. In this case, do we need to declare that income?

I guess so aslongas you file your return as mfj with your nonresident alien spouse, you need to declare the nontaxable interest income.the payer needs to file info return of f1042 Form 1042 needs to be prepared to report the tax withheld on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, or etc or 2% excise tax due on specified foreign procurement payments;