Hello,

I live and work in New York. My husband is a student at a state school in Indiana. He is a resident of Indiana for tuition purposes. However, his permanent residence is in New York, with me.

We're filing federal taxes MFJ. There's no confusion about my income in New York that makes up the larger chunk, but we're not sure about his income.

In 2008 he had about $600 of IN income (earned throughout the year)
and about $9,000 of NY income.

Does my husband need to file state taxes in both New York and Indiana separately? I've heard that it's possible to get credit from one of the states? Please help. Thanks a lot!

If you are present in a state, then any income earned during this period, must be reported to the state.

To your resident state, you must report your worldwide income for the year or for the residency period. If you paid taxes to another state, then you will claim credit for those taxes.
Read: Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)