| Tons2Think:
1) Yes, you can file jointly.
2) Because of the duration of the time you were in country from 2000 for you; from 1999 for your wife), your F-1 visa status has expired in terms of it giving you and your wife an "exempt status". For this reason, you must file as resident aliens (which is why you can file jointly).
3) You are entitled to claim personal exemptions of $3,200 each and standard deductions of $5,000 each. You can claim any credit that is due a U.S. citizen.
The withholding of Social Security and Medicare taxes from your wife's salary was correct. Further, you should have been paying these taxes as well in 2005. However, unless you intentionally withheld your duration in the U.S. from your employer, you should not be held reponsible for those taxes in 2005.
You must, however,inform your employer that you are no longer exempt from the Social Security and Medicare taxes and that he should begin withholding immediately. He may withhold taxes for January and February 2006. I do not beleive he can recover the withholding for any of 2005. | 
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