Hi, this has been driving me nuts for a while.
My wife has been studying in the US for the past 6 months on a F1 visa and she has no SSN or ITIN. I am on a H1-B visa.
We got married in Nov 2007. We are now in California.
I have finished my 2007 return.I am now changing my W4 status.
1) What should I change my status to?
2)Should it be head of household?
3)Can I file as married filing jointly?
4)Does my wife need a ITIN in order for me to do any of the above?
5) If I claim her as a dependent will more money be withheld from my paycheck?

It is surprising that you have finished your 2007 return without even knowing what your filing status should be.

1. If you have spend last 31 days of 2007 on H1-B in the U.S. you can file resident tax return as Married Filing Jointly. You will have to wait to file the return till you complete the SPT test. For ITIN you will attach W7 with your tax return.
If you make this choice, any income during F1 is not exempt from FICA taxes.

2. You are not Head of Household. Spouse is not considered a dependent.

Thanks Mukata,
My status for 2007 was single hence I've filed it as single. I have been on H1 since 2004 so my SPT is not in question.
My wife will be claimed as a dependent for 2008 not 2007, since she does not have a ITIN and I am now applying for one.By the time I file the return for 2008 she would have met the SPT.
Sorry I shouldve mentioned this earlier but I was asking about the year ahead i.e 2008 and not 2007. Now to rephrase my question.What would my options on the change of W4 for 2008 be? Married filing jointly or head of household?

Actually, you can file SINGLE and claim your non-resident alien wife as a dependent, but filing jointly with her will result in a much better tax refund.