I am a US Citizen who is married to a Japanese National. I live here in the US and she lives in Japan. We both work. I will be relocating to Japan in January 2010. With that said:

In comparing Married Filing Jointly vs. Married Filing Separately, it's in our best interest to file separately. However, after reading various posts and sources online, I am curious to know if I can claim my wife as a dependent. It seems the most important question asked in deciding if this exemption is possible is if my wife had any income. But is it referring to US income or worldwide income?

She did live/work in Japan and earned income. But since she's not a US citizen and we are not filing jointly, I don't know how the rules apply to her - it seems like they don't.

Also, if someone knows this - once relocated overseas, and working in Japan, would I still have to file a US State tax form? I know the IRS requires federal filing no matter where you live in the world, but I don't know how state tax would work, since I would not be living in any of the 50 states (I currently live in NJ - but once I move, the only thing I will have in the usa is a bank account in pnc bank branch in nj).

Thanks.