This to file tax year 2008

I entered the united state on 01/21/2007 as tourist visa both of us me and my wife I got my H-1 on 10/1/2007 as my wife H-4 should I filed as resident alien both of us and should filed ITIN for my wife because she does not have SSN and in which category should I pick in ITIN (W-7) form.

You should have filed as dual status for 2007. You should file as a resident alien for 2008. For the W-7 for your spouse, you should choose box e (spouse of resident alien).

Yes, for 2008, you can file joint return as residents. Attach W7 (ITIN application) with your tax return.

Hijjawia:

In my opinion, you can also file jointly with your wife and you both choose to be treated as resident aliens for 2007 as well. If you have the ITIN for your wife for the 2008, you can amend the 2007 return to file jointly.

Note that doing this will require that you report ALL world-wide income earned in 2007, but, given your circumstances, that should not be a show-stopper.

By amending your return to file jointly, I believe you would get an additional refund on your 2007 tax return.